This book is intended as information and not as legal advice. Readers requiring legal or other advice regarding the matters discussed in this book should consult with experienced legal counsel.

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© 2019 by the American Staffing Association All rights reserved.

Manager’s Guide to Employment Law
First Edition © 1987 by the National Association of Temporary Services
Second Edition © 1988 by the National Association of Temporary Services
Third Edition © 1989 by the National Association of Temporary Services
Fourth Edition © 1990 by the National Association of Temporary Services
Fifth Edition © 1992 by the National Association of Temporary Services
Sixth Edition © 1994 by the National Association of Temporary Services
Seventh Edition © 1996 by the National Association of Temporary and Staffing Services
Eighth Edition © 1998 by the National Association of Temporary and Staffing Services
Ninth Edition © 2000 by the American Staffing Association
Employment Law for Staffing Professionals
10th Edition © 2004 by the American Staffing Association
11th Edition © 2007 by the American Staffing Association
12th Edition © 2011 by the American Staffing Association
13th Edition © 2015 by the American Staffing Association
14th Edition © 2019 by the American Staffing Association

Contents

Preface

Chapter 1: Equal Opportunity Laws

A. Federal Law Prohibits Employment Discrimination

1. Key Principles of Equal Employment Opportunity Law

2. Issues Commonly Faced by Temporary Services Companies

3. Classes Protected by the Equal Employment Opportunity Laws

4. Coverage, Enforcement, and Requisite Reports and Records

B. Federal Law and Affirmative Action

1. Executive Order 11246

2. The Rehabilitation Act of 1973

3. The Vietnam Era Veterans’ Readjustment Assistance Act of 1974

C. State-by-State Analysis of Fair Employment Practices Laws

Chapter 2: Wrongful Discharge

A. Erosion of the Employment-at-Will Rule

1. The Public Policy Exception

2. The Express or Implied Promise of Job Security/Breach of Contract Claim

3. The Implied Covenant of Good Faith and Fair Dealing

B. Other Claims Commonly Advanced by Terminated Employees in Wrongful Discharge Lawsuits

1. Fraud or Misrepresentation

2. Intentional Infliction of Emotional Distress

3. Defamation

4. Invasion of Privacy

5. Negligence

6. Interference With Contractual Relations

7. Interference With Prospective Economic Advantage

8. Promissory Estoppel

C. State-by-State Analysis of Wrongful Discharge Laws

Chapter 3: Wage and Hour Laws

A. The Fair Labor Standards Act

1. Who Is Covered by the FLSA?

2. Who Is Exempt From FLSA Coverage?

3. Child Labor Provisions

4. Who Is Liable for Paying Overtime That Is Owed to Temporary Employees?

5. Record-Keeping Requirements

6. Enforcement

B. Government Contract Laws

C. Wage and Hour Investigations: What Should You Do?

D. State Laws Affecting Wages and Hours

E. State Meal Break and Rest Period Requirements

Chapter 4: Employment Agreements, Employee Handbooks, and Restrictive Covenants

A. Express Employment Agreements

1. Advantages of Employment Agreements

2. Disadvantages of Employment Agreements

3. Illustrative Provisions

B. Restrictive Covenants

1. What Is a Restrictive Covenant?

2. Types of Restrictive Covenants

3. Legal Concerns

4. Business Considerations

5. Restrictive Covenants and the Prospective Employer

6. State-by-State Overview of Restrictive Covenants

C. Implied Employment Agreements

1. General

2. Employee Handbooks

3. Common Employee Handbook Topics

4. Provisions That Should Be in Every Employee Handbook

D. Arbitration Agreements

1. Advantages of Arbitration

2. Disadvantages of Arbitration

Chapter 5: Immigration Reform and Control Act

A. Employers Cannot Hire Unauthorized Workers

1. Effective Date

2. Unauthorized Aliens

B. Employers Must Verify That Employees Are Authorized to Work

1. Verification Procedures

2. Responsibility for Compliance in the Staffing Industry

3. Covered Employees

4. Time for Compliance for Temporary Employees

5. Repeated Verification (Reverification)

6. Enforcement

7. Penalties

C. IRCA’s Antidiscrimination Provisions

1. National Origin Discrimination

2. Citizenship Status Discrimination

3. Preference for Nationals and Citizens

4. Retaliation or Intimidation Prohibited

5. EEOC Policy Statements

6. Enforcement of EEO Laws Against Undocumented Workers

7. Local Laws

8. Penalties for Discrimination Under IRCA

Chapter 6: Substance Abuse and Drug Testing in the Workplace

A. Nature of the Problem and Purposes of This Chapter

B. Legal Implications of Drug Testing

1. General

2. Federal and State Constitutional Provisions

3. Federal and State Antidiscrimination Laws

4. State Common Law Theories

5. State and Local Drug-Testing Laws

C. The Drug-Free Workplace Act of 1988

1. Requirements

2. Coverage

3. Penalties

4. Enforcement

D. Responding to Client Requests for Drug Testing

1. General Considerations

2. Why Should a Staffing Firm Have a Substance Abuse Policy?

3. Form and Components of a Substance Abuse Policy

4. Selection of a Laboratory

E. Must All Applicants and Employees Be Drug-Tested?

1. Applicants

2. Existing Employees

3. Authorization and Release Forms

4. Volunteers

F. Dealing With the Employee Who Tests Positive

1. Limitations on Drug Testing

2. Dissemination of Test Results

3. Common Employee Responses

4. Retesting

5. Dealing With the Confirmed Positive Test Result

6. Deciding How to Treat an Employee Who Has Tested Positive

7. Unemployment Compensation Issues

8. Workers’ Compensation Issues

G. Current Drugs of Abuse

1. Alcohol

2. Amphetamines

3. Ice

4. Barbiturates

5. Cannabis

6. Cocaine

7. Crack

8. Heroin

9. Prescription Opiates

H. Drug-Testing Methods

1. Initial Screening Methods

2. Confirmation

3. Limitations of Drug Tests

Chapter 7: The Pre-Employment Process

A. Recruitment

1. Word-of-Mouth Recruiting

2. Job Advertisements

3. Walk-In Hiring

B. Pre-Employment Inquiries

1. General Considerations

2. Americans With Disabilities Act

3. Other Restrictions on Pre-Employment Inquiries

4. Legitimate Areas of Inquiry

C. Polygraph Tests

D. Employment References

E. Protecting Against Negligent Hiring or Assignment Claims

F. Arrest and Conviction Records

G. Credit and Background Reports

1. Reports Prepared by Consumer Reporting Agencies

2. Reference Checks Conducted by Staffing Firm Personnel

H. Social Media-Based Background Checks

Chapter 8: Measures Designed to Reduce the Likelihood of Employment-Related Claims

A. Policies and Training

B. ADA Compliance Measures

C. Employment-at-Will Policy

D. Employment Applications

E. Employee Handbooks

F. Job Descriptions

G. Interviewing and Evaluations

H. Offers of Compensation

I. Performance Appraisal Systems

J. Document Performance Problems

K. Progressive Discipline

L. Termination

M. Reductions in Force

N. Alternative Dispute Resolution

O. Discriminatory Client Requests

P. Protecting Against Negligent Hiring

Q. Insurance

R. Indemnification Provisions

S. Reducing the Risk of Violations of Wage and Hour Laws

T. Reducing the Risk of IRCA Violations

U. New Hire Reporting Laws

V. Conclusion

Chapter 9: The Occupational Safety and Health Act

A. Coverage of the OSH Act

B. Application of the OSH Act to Staffing Firms

C. Providing a Safe Workplace

D. Hazard Communication

E. Record-Keeping Requirements

F. Enforcement

G. Penalties

H. States With Approved Plans

Chapter 10: Family and Medical Leave Act

A. Leave Entitlements Under the FMLA

1. Covered Employers

2. Qualified Employees

3. Leave Entitlement Under the FMLA

4. Responsibility for Compliance in the Staffing Industry

B. Employee and Employer Requirements Under the FMLA

1. Employee Requirements

2. Employer Requirements

C. Remedies for FMLA Violations

1. Violations

2. Civil Suits by Employees

3. Action by the Department of Labor

4. Arbitration

D. Employer Business Credit for FMLA

Chapter 11: The Affordable Care Act

Chapter 12: Independent Contractor Versus Employee Status

A. Categories of Employees

B. Section 530 of the Revenue Act of 1978

1. Consistency Test

2. Reasonable Basis Test

C. Section 1706 of the Tax Reform Act of 1986

D. The Benefits to the Employee of Being Classified as an Independent Contractor

E. The Benefits to a Business of Classifying Workers as Independent Contractors

F. Internal Revenue Code Section 3509

G. Worker Status Under Other Laws

H. The Fair Labor Standards Act

I. State Unemployment and Workers’ Compensation Laws

J. The ABC Test

Chapter 13: Per Diem Regulations

A. Business Connection

B. Substantiation

C. Return of Amounts in Excess of Expenses

1. Safe Harbors

2. Business Transportation Rules for Temporary Employees

Chapter 14: The H-1B Worker in a Specialty Occupation

A. The Required Wage Determination

B. The Labor Condition Application

C. Form I-129H for Submission to USCIS

D. Special Circumstances

E. Proposed Changes to H-1B Process

Chapter 15: Laws Specific to Health Care Staffing

A. Americans With Disabilities Act

1. When Health Care Workers Are “Employees” Under the ADA

2. Health Care Employees as Direct Threats

B. Anti-Kickback and the Stark Laws

1. The Anti-Kickback Statute

2. The Stark Law

C. Health Care Credentialing Requirements

1. Legal Risks

2. Peer Review Protections

3. Best Practices

D. Locum Tenens as Independent Contractors

1. The Benefits of Locum Tenens

2. Employee vs. Independent Contractor

E. Malpractice Issues

1. Negligence

2. Informed Consent

3. The Res Ipsa Doctrine

4. Vicarious Liability

5. Respondeat Superior and Independent Contractors

6. State Legislation Affecting Malpractice Actions

7. If Named in a Lawsuit

F. Mandatory Vaccination Policies for Health Care Personnel

1. Mandatory Vaccination Policies

2. Exemption Provisions

3. Medical Issues With Vaccinations

4. Religious Issues With Vaccinations

5. Legal Issues for Employers With Mandatory Vaccination Policies

6. Other Legal Issues

7. EEOC Guidance Regarding Employee Requests for Exemption From Vaccination Requirements on Medical or Religious Grounds

8. General Rule: Employers May Be Required to Accommodate Legitimate Exemption Requests Absent Undue Hardship

9. The Employer May Request Evidence to Support an Exemption Request

10. Accommodation of Employees Exempt From Vaccination Requirements

11. Summary of Employer’s Duty With Respect to Employee Request for Exemption From Mandatory Vaccination Policy

G. Medical Information Privacy

1. HIPAA

2. Covered Entities

3. Business Associates

4. What Information Is Protected: Protected Health Information

5. Exclusion—Employment Records

6. The Privacy Rule

7. Exceptions

8. Valid Authorizations

9. The Security Rule

10. The Breach Notification Rule

11. Plan Sponsor Obligations

12. GINA

H. When Is Continuing Education Time Compensable?

1. Time Spent in Continuing Education Classes Is Evaluated in Accordance With a Four-Part Test

2. Outside of Regular Working Hours/No Productive Work Performed

3. Voluntary Attendance

4. Not Directly Related to the Employee’s Job

5. Independent Training Is Not Compensable Time

6. Time Is Not Compensable Where Class Is for the Benefit of the Employee/Corresponds to Courses Offered by Bona Fide Institutions

7. Employer Provided/Paid Programs

8. Statutes May Mandate the Compensability of Continuing Education Time

Appendix A: Directory of Federal and State Agencies

1. U.S. Equal Employment Opportunity Commission

2. State Fair Employment Practices Agencies

3. U.S. Department of Labor

4. State Departments of Labor

5. Office of Federal Contract Compliance Programs

6. U.S. Citizenship and Immigration Services

7. U.S. Immigration and Customs Enforcement

8. Office of Special Counsel for Immigration-Related Unfair Employment Practices

Appendix B: Record-Keeping Requirements of Selected Federal Laws

Appendix C: EEOC Guidelines on Application of EEO Laws to Contingent Workers

Appendix D: EEOC Enforcement Guidance on Pre-Employment Disability-Related Inquiries

Appendix E: Sample Policies, Forms, Contracts, and Language

1. Equal Employment Opportunity Policy

2. Employee Acknowledgment and Pledge To Comply With Company’s Equal Employment Opportunity Policy

3. Prohibition of Harassment Policy

4. Alcohol and Drug-Free Workplace Policy

5. Release and Consent Form for Substance-Abuse Testing

6. Applicant Authorization and Consent Form for Employment References and Education Verification

7. FCRA Compliance Letters and Documents

8. Arbitration Agreement

9. Application for Employment for Temporary Employee

10. Employment Agreement With Temporary Employee

11. Application for Employment for Regular Employee

12. Employment Agreement With Regular Employee

13. Family and Medical Leave Act Policy

14. FMLA ‘Poster’ (U.S. Department of Labor Publication)

15. OSHA Fact Sheet: HIPAA and OSHA Whistleblower Complaints

Appendix F: Summary of Selected State Employment Discrimination Statutes Relevant to Private Employers

Appendix G: Index

Preface

The American Staffing Association is pleased to present the 14th edition of Employment Law for Staffing Professionals. Along with Co-Employment: Employer Liability Issues in Third-Party Staffing Arrangements, published by ASA, Employment Law serves as a reference textbook for the ASA Certified Staffing Professional® and Technical Services CertifiedSM programs. Employment Law also serves as an invaluable stand-alone guide that provides detailed practical guidance for staffing firms seeking to comply with key employment laws, and emphasizes preventive measures and techniques aimed at reducing the risk of legal liability for employment law violations. It remains an unequaled resource because it comprehensively assesses and discusses how myriad employment laws and rules affect the staffing industry specifically.

The 14th edition of Employment Law reflects significant changes in the law in recent years, including the following highlights:

■   Specific content for health care staffing professionals

■   Extensive discussion of each state’s law in the rapidly evolving area of fair employment practices, including new protections against discrimination based on gender identity, pregnancy, and medical marijuana use

■   An explanation of the Occupational Safety and Health Administration’s record-keeping requirements, Temporary Worker Safety Initiative, and Hazard Communication Standard

■   An updated discussion of the distinctions between independent contractors and employees

■   Analysis of the H-1B visa for workers in specialty occupations, the common form of employment authorization for foreign nationals

■   An updated compendium of model contracts, forms, policies, and other materials designed to help staffing firms comply with their employment law obligations and reduce their risk of liability

Gerald L. Maatman Jr., a partner with Seyfarth Shaw LLP, oversaw that firm’s review and update of the entire 14th edition of Employment Law. It is important to remember that Employment Law is an overview of various aspects of employment law and how that law may affect staffing firms and the services they provide. It is not intended to be legal advice. Also, the sample documents and policies set forth are intended to serve as a starting point for general consideration, not as a final product suitable for every firm in every state. If a specific legal question arises, you should consult with legal counsel familiar with employment law and the staffing industry.

1

Equal Opportunity Laws

There is an extensive body of civil rights law, at both the federal and state levels, designed to ensure that all qualified individuals are afforded equal job opportunities. Federal law prohibits most employers from discriminating against employees or job applicants because of race, color, sex, age, religion, disability, national origin, citizenship, genetic information, or veteran status. In addition to these prohibitions, many employers that have entered into government contracts or subcontracts are required by federal law to take affirmative measures to eliminate discrimination within their organizations.

Most states (and some municipalities) have also enacted laws prohibiting discrimination in employment. These state laws vary considerably. Such laws may reach employers not subject to federal law, are generally enforced differently than federal law, and may prohibit discrimination for categories other than those protected by federal law (e.g., marital status, arrest record).

This chapter is intended to provide a basic explanation of the federal equal employment opportunity (EEO) laws, including the Americans With Disabilities Act, and a state-by-state survey of fair employment legislation, including EEO laws, family leave provisions, disability laws, and smokers’ rights. This book does not attempt to describe each and every requirement of these laws. Rather, it discusses those requirements that are more likely to affect a staffing firm and offers practical comments and suggestions designed to assist employers in understanding and complying with these laws.

A. Federal Law Prohibits Employment Discrimination

1. Key Principles of Equal Employment Opportunity Law

a. Disparate Treatment

A principal theory of prohibited discrimination is known as disparate treatment. Disparate treatment occurs when an employer treats an employee or applicant differently than another similar applicant or employee because he or she is a member of any class protected by the law (e.g., refusal to hire an applicant because of race, disability, national origin, sex, religion, or age). This is the most prevalent type of alleged discrimination a staffing firm is likely to encounter.

To prevail in a disparate treatment claim, the complainant must prove that the employer intended to discriminate. In order to successfully defend against a disparate treatment claim it is almost always necessary for an employer to establish that it had a legitimate, nondiscriminatory reason to have taken the complained-of action (e.g., discharge, promotion). The burden then shifts back to the employee to demonstrate that the employer’s proffered reason was not the true reason for the employment decision, but a pretext for discrimination. The Supreme Court has ruled that even if the employee shows that the employer’s proffered reason was not true, the employee would not automatically prevail. The employee would still have to prove that the “real” reason for the adverse employment action was unlawful discrimination. Tip 1

Tip 1—Disparate Treatment

Let us illustrate a disparate treatment claim. If a female employee is discharged for violating the company’s policy on excessive absenteeism, she can file a charge alleging sex discrimination if similarly situated male employees with the same number of absences were not discharged. This would be a classic disparate treatment case. The focus of the case would be on comparing the treatment afforded to male and female employees—not whether the company’s attendance policy was lawful or reasonable on its face.

b. Disparate Impact

The second major theory of employment discrimination is known as disparate impact. Unlike disparate treatment, proof of discrimination under the disparate impact theory focuses upon the impact or consequences of employment practices, rather than the employer’s motive or intent. Statistical evidence is frequently determinative in disparate impact cases.

Under the disparate impact rule, an employer may not use an employment practice (e.g., a pre-employment aptitude test) that, even though neutral on its face and applied to all applicants or employees, disproportionately excludes members of a protected category. An employer can defend its reliance on such an employment practice only if the employer proves that the challenged practice is job related for the position in question and consistent with business necessity.

Applicants for employment, promotion, or other employment benefits who challenge the denial of the benefit to them will have to prove that the specific employment practice at issue had a disparate impact, unless they prove that the elements of the employer’s decision-making process are not capable of separation for analysis, in which case the entire decision-making process may be analyzed as one employment practice.

The Equal Employment Opportunity Commission has long advocated the “80%” (or “four-fifths”) rule to assess when a particular employment practice has an unlawful disparate impact. Some standard is necessary because all employment criteria exclude some applicants or employees.

Essentially, the EEOC has determined that if the selection rate of a particular employment practice for a protected category is less than 80% of the selection rate for the relevant comparison group, that employment practice has a disparate impact. While the administrative 80% rule has not been incorporated into statute, the EEOC and the courts look to the rule as a guide in determining disparate impact challenges. Tip 2

Tip 2—Disparate Impact

To illustrate: Let us assume a staffing firm requires that all applicants for word processing positions have a high school diploma and one year of word processing experience. If these requirements exclude 10% of Caucasian candidates and 40% of African-American candidates, these requirements would have an unlawful disparate impact on African-Americans, because their “pass” rate of 60% is less than 80% of the Caucasian “pass” rate of 90% (i.e., 60% × 90% = 54%)

The staffing firm could defend these requirements only by showing that they were job related and consistent with business necessity—a difficult standard to meet.

c. Retaliation

Many federal and state statutes provide protection against retaliation. For example, Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act, the ADA, the Fair Labor Standards Act, the Equal Pay Act, and the Family and Medical Leave Act all prohibit employers from taking adverse action against an employee for having engaged in “protected activity.” It is unlawful for an employer to retaliate (e.g., fire, demote, transfer to less attractive duties) against an employee, a former employee, or an applicant because that individual has engaged in protected activity, such as (a) opposing discriminatory practices by the employer; or (b) filing charges, testifying, assisting, or participating in any proceeding, investigation, or hearing concerning prohibited discriminatory practices. An employer that retaliates against an employee who has exercised his or her rights under the discrimination laws may be held liable for engaging in unlawful conduct—even if the employee’s original discrimination claim proves to be without merit.

In order to prove a claim of retaliation, an employee must establish a causal connection between the protected activity and an adverse employment action (e.g., termination, demotion, transfer to a less desirable position, poor employment reference). Very often, this causal connection is established by showing that the adverse employment action occurred in close temporal proximity to the protected activity. The shorter the period between the two actions, the greater the inference of retaliatory motive.

The number of retaliation charges filed with the EEOC has grown significantly. There were 7,906 retaliation charges filed with the EEOC in 1991; by 2001, the number of retaliation charges filed almost tripled to 22,257; in 2018, the number grew to 41,097 retaliation charges. Successful retaliation claims tend to yield high jury awards. For example, in September 2001, the EEOC obtained a jury award of $2.2 million on behalf of a woman who was terminated after complaining about unequal pay. Accordingly, care must be taken to avoid claims of retaliation when an employee files a discrimination charge or even lodges an informal protest over some employment practice he or she views as discriminatory. Tip 3

Tip 3—Protection

A staffing firm that has been formally charged with discrimination by one of its employees may want to consider taking the following steps to maximize its protection against a subsequent retaliation claim by that employee:

1. Do not discuss the discrimination charge with the employee who made the charge or, unless absolutely necessary, with other employees. Any discussions concerning the charge should be limited to those supervisors and officials with a strong need to know. The decision maker’s lack of knowledge that the employee had made a complaint is a strong defense to a claim of retaliation.

2. Do not take disciplinary action against an employee for making a complaint of harassment or discrimination that is ultimately found to be without merit.

3. If contacted by prospective employers concerning job references for the employee in question, do not inform the prospective employers about the discrimination charge. Because the anti-retaliation rules also protect former employees, this “tip” also applies to job reference inquiries concerning former employees.

4. Treat the employee in question as if he or she had not made the discrimination charge. Do not, for example, instruct superiors to “watch” and “report on” the employee, deny the employee privileges (e.g., coffee breaks, personal telephone calls) that he or she had prior to making the claim, or penalize the employee for minor offenses that had previously been ignored.

5. If discipline or termination of the employee is justified by valid employment considerations, be sure to document thoroughly the employee’s offense and the resulting disciplinary decision. Before taking adverse action against an employee who has engaged in protected activity, review and follow established disciplinary procedures.

d. Harassment

In recent years, claims by applicants or employees that they have been “harassed” have increased. While sexual harassment is perhaps the most notorious type of unlawful job-related harassment, it is also unlawful for employers to harass or condone the harassment of applicants or employees on the basis of race, age, religion, national origin, disability, or other protected class status. As a general proposition, it is unlawful for employers to harass applicants or employees on any of these bases or to permit such harassment by supervisory personnel. An employer is also likely to be responsible for harassment by nonsupervisory personnel if the employer knew or should have known about the harassment.

Because forms of harassment based on race, national origin, and sex are more commonly alleged than other forms of harassment, this section discusses these three proscribed grounds in more detail.

i. Racial Harassment. The EEOC has long held that it is unlawful for members of management to address employees in racially derogatory terms, because an employer has a responsibility to maintain a working environment free of racial intimidation. This principle includes prohibiting a work environment in which an employer tolerates racial or ethnic jokes or slurs by co-workers.

To sustain an unlawful racial harassment claim, the aggrieved individual must generally show more than an isolated or sporadic racial comment; rather, there must be a concerted pattern of harassment or a working environment heavily charged with racial slurs and epithets. In addition, provided that no managers were involved in the offensive conduct, most courts require the employee to establish that the employer failed to take reasonable steps to prevent or remedy the racial harassment.

Claims of racial harassment are often interposed along with a claim that some employment benefit was denied because of the applicant’s or employee’s race. For example, an employee who claims to have been denied a promotion because of his or her race may point to racial remarks or slurs to buttress his or her claim that the promotion was denied because of race.

In cases alleging racial harassment, the employee may proceed under several different laws and have a trial by jury that may award compensatory and punitive damages. In addition, a successful complainant in a harassment case may recover his or her reasonable attorneys’ fees from the employer.

ii. National Origin Harassment. In the wake of the events of Sept. 11, 2001, the EEOC has paid particular attention to claims of harassment based on national origin (i.e., the country of one’s ancestry, especially in the context of harassment against individuals of Arab descent). In fact, an undocumented worker may bring a claim of discrimination under Title VII of the Civil Rights Act, as amended, and neither the EEOC nor the courts will inquire into the worker’s immigration status.

Derogatory epithets based on national origin, like comparable epithets based on race, are illegal if made by management and occur with relative frequency. Where derogatory epithets are uttered by co-workers, the question of whether the employer has violated federal law generally depends on the frequency and egregiousness of the comments and upon whether a manager knew or should have known of the improper conduct.

As with racial harassment, isolated epithets or comments will not be sufficient to establish unlawful national origin harassment. The actions of the employer or the employer’s failure to correct and prevent epithets or harassment on the basis of national origin will be relevant to assessing the employer’s liability.

The same remedies and procedures available in racial harassment cases are also available in national origin harassment cases.

iii. Sexual Harassment. Sexual harassment in the workplace is a form of discrimination on the basis of sex. In 1998, the Supreme Court held that sex discrimination consisting of same-sex harassment is also prohibited by federal law. Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, prohibits discrimination “because of … sex” and therefore protects men as well as women harassed by members of the same sex. Sexual harassment is sometimes defined by the EEOC as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature directed at an employee. Claims alleging sexual harassment fall into two broad categories:

Quid Pro Quo Harassment. This type of sexual harassment occurs when (1) an employee suffers a job detriment (e.g., a termination or demotion, or loss of a promotion or raise) for refusing to accede to unwelcome sexual demands, requests for sexual favors, or other verbal or physical conduct of a sexual nature, or (2) a job benefit (e.g., a promotion or raise) is conditioned upon submission to such unwelcome sexual conduct. This type of harassment always involves a supervisory-level employee and a subordinate.

Hostile or Offensive Working Environment. This type of sexual harassment occurs when an employer creates or allows a sexually discriminatory or abusive work environment to exist. To be unlawful, the sexual harassment must be sufficiently severe and pervasive so as to alter the conditions of the employee’s employment or create an abusive environment. This type of harassment can arise from the action of managers, supervisors, or co-workers.

iv. Liability for Harassment. Whether a staffing firm will be liable for harassment depends not only on the harassment alleged to have occurred but also on the type of position the alleged harasser holds. A staffing firm may be liable for (1) the acts of its supervisors and managers, (2) the acts of one employee toward another, and (3) the acts of a client, its employees, or both, particularly if the staffing firm knows or reasonably should know that one of its employees is being harassed and fails to take prompt action to remedy it and/or to insist that the client do so.

Supervisors and Managers. An employer is automatically liable for quid pro quo sexual harassment committed by its supervisors and managers. This means that a staffing firm will be responsible for unlawful sexual harassment by a manager or supervisor even though the senior management may not have known of such conduct.

In a “hostile environment” case, an employer is liable for a hostile environment created by a supervisor or manager. However, when no tangible employment action is taken against the employee, such as discharge, demotion, or undesirable reassignment, an employer may raise an affirmative defense to a hostile environment claim by proving (1) that the employer exercised reasonable care to prevent and correct the harassing behavior, and (2) that the employee unreasonably failed to take advantage of any preventive or corrective opportunities or to avoid harm (e.g., an internal corporate complaint procedure).

Co-Employees. An employer will be liable for a “hostile environment” created by its nonsupervisory employees if the employer knew or should have known about the offensive atmosphere, unless it took immediate and appropriate corrective action designed to eliminate and prevent further harassment.

Clients. A staffing firm may be liable for harassment committed by its clients, nonemployees, and other third parties if it knew or should have known of the harassment and failed to take immediate and appropriate corrective action. Tip 4

Tip 4—Sexual Harassment Complaints

As co-employers with potential joint and/or individual liability, staffing firms and clients need to cooperate with each other to resolve sexual harassment complaints.

V. Preventive Measures. Establishing and enforcing a carefully drafted policy against harassment, including sexual harassment, is a good way for a staffing firm to help prevent harassment from occurring and to assist the staffing firm in defending any claims that do arise. This means that it is critically important for a staffing firm to develop, disseminate, and enforce anti-harassment policies and complaint procedures. If a staffing firm employee claiming harassment ignores such policies and procedures, the staffing firm may avoid liability for the harassment. Tip 5, Tip 6

Tip 5—Policy

Staffing firms should develop a written sexual harassment and discrimination policy to be posted, communicated, and distributed to all employees, including its office staff as well as employees assigned to work at client work sites. To maximize its effectiveness, such a policy should include

1. A prohibition against engaging in sexual as well as other conduct that could be offensive to other employees based upon sex, race, religion, age, disability, national origin, or other characteristics protected by law

2. Explicit notice that violation of the harassment and discrimination policy will result in discipline, including possible discharge

3. A detailed, user-friendly, internal complaint procedure that provides appropriate assurances of confidentiality and enables employees to report allegations of sexual harassment to designated management or human resource personnel without fear of reprisals

4. Notice of the employer’s intent to investigate such allegations

A sample anti-harassment policy is reproduced in Appendix E.

Tip 6—Investigation

A staffing firm must act quickly when confronted with a complaint of sexual harassment. Once a complaint has been made, the most prudent course for a staffing firm to take is to consult with employment counsel and to investigate the allegation. The investigation could include one or more of the following actions:

1. Interview(s) of the alleged victim

2. Interview(s) of the alleged harasser, who should be advised of the prohibition against retaliation against the complainant or any witnesses

3. Interview(s) with witnesses or other persons who may have knowledge of the harassment or the parties’ relationship

4. Interview(s) with the alleged harasser’s supervisor

5. A physical inspection of the work site

6. An examination of relevant documents and records

Investigations should be conducted expeditiously to maintain the credibility of the system and prevent lingering suspicions and damage to employee morale. They will also help an employer avoid accusations that it condones or is attempting to “cover up” harassment. Any investigation should be kept as confidential as the circumstances permit. Only those individuals with a “need to know” (e.g., witnesses and those who will make the decisions) should be informed.

Each, in turn, should be advised not to speak with others about the investigation. Failing to maintain confidentiality could lead to claims by the victim or the accused, including claims of invasion of privacy, infliction of emotional distress, or defamation.

vi. How to Proceed After the Investigation. If, upon completion of the investigation, the staffing firm determines that the complained-of harassment occurred, prompt remedial action reasonably calculated to end the harassment is required. Such action may consist of one or more of the following: (1) discipline of the harasser up to and including termination of employment; (2) counseling of the harasser, sending the harasser for EEO or sexual harassment prevention training, or both; (3) remedying any loss of employment or tangible job benefit denied to the victim; and/or (4) reassigning the harasser to avoid reoccurrence or retaliation. It may be appropriate to advise the complainant that action was taken so he or she is aware that the employer is taking remedial steps to end the harassment. Tip 7

Tip 7—What to Do

Staffing firms should follow these guidelines:

■   Train managers and supervisors about what to do in the event that they witness any incident or receive a complaint of sexual harassment.

■   Do not penalize or even give the appearance of penalizing the complainant under the guise of solving the problem (e.g., transferring the complainant).

■   Treat the matter seriously.

■   Avoid overbroad promises of confidentiality and/or anonymity.

■   Take steps to ensure the employee is not subjected to retaliation.

■   Scrupulously adhere to the “need to know” rule.

■   Safeguard privacy and documents.

vii. Remedies for Sexual Harassment Claims. In quid pro quo sexual harassment cases, the aggrieved individual is entitled to back pay with interest, reinstatement or advancement to the position unlawfully denied, attorneys’ fees, and costs. In addition, under the Civil Rights Act of 1991, victims of any form of sexual harassment may sue to recover compensatory and punitive damages. The availability of monetary damages for sexual harassment of the “hostile environment” variety has increased the number of such cases.

e. Mixed Motive Cases

In a 1989 decision, the Supreme Court first addressed the situation where an employer claimed that even if discrimination had occurred, the employer would have taken the same action in any event for nondiscriminatory reasons.

The Court held in these so-called “mixed motive” cases that an employer could avoid liability for an unlawful discriminatory act by proving it would have taken the complained-of action in any event for legitimate reasons.

The Civil Rights Act of 1991 overturned this decision. The act provides that when a complaining party demonstrates that unlawful discrimination was “a motivating factor” underlying a particular employment decision, the decision remains unlawful even if other, nondiscriminatory factors also motivated the decision.

However, if an employer proves that it would have taken the same action even in the absence of the impermissible factor, the remedies that a court may grant are limited. In a proven mixed motive case, the remedy is a declaration of his or her rights and an award of the complainant’s attorneys’ fees, but no damages or back pay, and no order compelling the employer to undo the challenged decision.

2. Issues Commonly Faced by Temporary Services Companies

a. Application of Equal Opportunity Laws in the Client Setting

In December 1997, the Equal Employment Opportunity Commission issued a “Policy Guidance on Contingent Workers” that explains how the EEOC intends to enforce federal equal employment opportunity laws that apply to contingent workers placed by temporary help firms and other staffing firms. (The EEOC’s guidance is reproduced in Appendix C.) The EEOC decided to issue the guidance in light of ASA statistics showing the dramatic growth of the temporary help industry during the 1990s.

The guidance is not legally binding on the courts but, like any regulatory guidance from a federal agency, is instructive to courts in cases involving temporary workers. In general terms, the guidance concludes that in the typical temporary help assignment, where both the staffing firm and the client have the right to control the employee, they will be considered joint employers and both will be liable for unlawful discriminatory conduct directed towards temporary employees, provided they both have the statutory minimum of employees (i.e., 15 employees for Title VII and ADA coverage, and 20 employees for Age Discrimination in Employment Act coverage). As such, the EEOC disagrees with certain lower court rulings that staffing firms are not employers of temporary employees whom they hired and placed in job assignments.

Other key points emphasized in the guidance follow:

■   Staffing firms must hire and make job assignments in a nondiscriminatory manner.

■   Staffing firms have an obligation to take immediate corrective action if they learn that one of their employees has been discriminated against or harassed by a client, and to “insist” that their clients do so as well.

■   Even if the client and the staffing firm do not qualify as joint employers of the temporary employee, either of them could still be liable under the EEO laws if it interferes with the employee’s employment opportunities for an unlawfully discriminatory reason.

■   Welfare recipients participating in work-related activities are protected by the federal antidiscrimination laws.

■   A staffing firm is liable if it honors a discriminatory job order or if it knows the client is rejecting employees in a protected class.

■   A staffing firm that replaces an employee who was removed from an assignment by a client for a discriminatory reason is viewed as participating in the discriminatory conduct and is liable for such discrimination.

In 2000, the EEOC Enforcement Guidance on Application of ADA to Contingent Workers was issued. The purpose of the 2000 Enforcement Guidance is to “address unique issues not addressed in the EEOC’s 1997 enforcement guidance…” and the guidance is important for cases in litigation involving temporary workers. The guidance clarifies the following points:

■   A staffing firm or client may not make pre-employment disability-related inquiries or require medical examinations.

■   An offer to place an individual on a roster for future assignments is not an offer of employment, whereas giving an employee an assignment with a client is.

■   A staffing firm or client may make disability-related inquiries and require medical examinations after the firm offers an individual “an actual work assignment with a client and before his or her duties begin,” so long as the inquiry is made of all individuals within the same job category.

■   A staffing firm or client may revoke an offer of employment if the results of a medical examination are not received before an assignment begins.

■   A staffing firm or client may ask questions about a disability or require a medical examination after an employee is employed, so long as the questions or examination are job-related and consistent with business necessity.

■   “Typically, only the staffing firm is an applicant’s prospective employer during the application process”; therefore, the staffing firm is “obligated to provide a reasonable accommodation for the application process.”

■   Both the client and staffing firm “are obligated to provide a reasonable accommodation that the worker needs on the job.”

■   Either the client or the staffing firm may “claim undue hardship if a reasonable accommodation cannot be provided quickly enough to enable a staffing firm employee to begin, or to complete, a temporary work assignment in a timely manner.”

■   Both the client and staffing firm may claim undue hardship if an accommodation requires “significant expense,” but if one entity’s resources alone are insufficient to provide an accommodation and the other entity refuses to contribute, only the entity that made a good faith effort to obtain a contribution from the other may claim undue hardship. If the staffing firm can claim undue hardship and the client cannot, the staffing firm should offer the employee the next available assignment for which the employee is qualified, and an entity that refuses to contribute to the cost of a reasonable accommodation may be liable for a failure to accommodate even if the other entity has provided the accommodation.

■   An entity that has the resources to provide a reasonable accommodation must do so even if the other entity refuses.

■   A staffing firm and/or its client will be liable for violating the ADA if the entity applies a qualification standard, either directly or at the direction of the other entity, that tends to screen out individuals with disabilities and is not job-related and consistent with business necessity, or knows, or has reason to know, that the other entity is applying such a standard.

■   Pre-employment tests used to screen applicants must accurately measure job skills and not the individual’s disability. Tip 8

Tip 8—Clients

If a staffing firm believes that a client has discriminated against one of the staffing firm’s employees, it should take appropriate corrective measures, which may include the following:

1. Ensuring that the client is aware of the alleged misconduct

2. Asserting the staffing firm’s commitment to protect its employees from unlawful discrimination and harassment

3. Insisting that prompt investigative and corrective measures be taken

4. Giving the employee the opportunity to take a different job assignment at the same rate of pay

5. Ensuring that the employee is not retaliated against for asserting concerns

According to the EEOC, the staffing firm should not replace a temporary employee removed by a client for discriminatory reasons, and it should not assign other employees to that work site unless the client has undertaken corrective and preventive measures to ensure that the alleged discrimination does not recur. Otherwise, the staffing firm could be liable, along with the client, if an employee later assigned to that client is subjected to similar discriminatory conduct.

b. Employment Qualifications

Federal discrimination law does not prohibit the use of employment qualifications or tests that are tailored for the job in question. However, employment decisions that are based on qualifications and tests that screen out a disproportionate number of members of a protected class may be unlawful. In addition, an employer cannot intentionally exclude a particular protected group (e.g., “no women need apply”) from consideration for a job.

However, it is not unlawful for an employer to discriminate in hiring or promoting people on the basis of an employee’s religion, sex, or national origin where such a factor is a bona fide occupational qualification (BFOQ) that is reasonably necessary to the normal operation of the employer’s business. While this BFOQ exception for religion, sex, and national origin applies only to hiring and promotion decisions, in limited circumstances age also can be a BFOQ that employers may lawfully consider in making termination decisions, provided that the age of employees is reasonably necessary to the normal operation of the employer’s business.

The courts have interpreted the BFOQ exception extremely narrowly and have placed the burden on the employer to demonstrate the existence of a BFOQ. Thus, while a sex-based BFOQ exists in the small number of cases where the job absolutely requires employees with the particular characteristics of one sex—an actor or locker room attendant—a BFOQ cannot be based on stereotyped characteristics of the sex (e.g., that women are less capable of aggressive sales work than men) or on client preference (e.g., the client states a desire to work only with persons of one sex or only with younger employees).

c. Recruitment

A detailed discussion of the labor and employment law issues affecting the recruitment process is presented in Chapter 7.

d. Job Referrals

Federal law prohibits a staffing firm from (1) failing or refusing to refer an individual because of his or her protected status, and (2) classifying or referring an applicant for employment based on his or her protected status.

Under this rule, it is unlawful for an employer to maintain separate files of applicants based on their protected status (e.g., white vs. black, male vs. female), where members of one protected group are consistently referred to lower-paying jobs. It is also unlawful for a staffing firm to accept a discriminatory job order (e.g., “don’t send me any women”) from a client. Client preference is no defense to a discrimination charge.

e. Hiring

It is unlawful under federal law to refuse to hire an individual because of his or her race, sex, religion, disability (if he or she is qualified for the job), national origin, age (40 years of age and over), or other protected category (such as on the basis of genetic information). Discriminatory hiring claims often arise in one of three situations:

1. Several candidates apply for a particular position and the employer selects a nonminority candidate who appears to have paper credentials weaker than those of candidates who are members of protected classes.

2. An employer’s existing workforce contains few members of a protected class, and qualified applicants from that class are rejected during a period when the employer is seeking new employees.

3. An employer relies substantially on subjective hiring criteria (e.g., personal interviews by supervisors) and the ultimate employment decision appears based on personal preference rather than job-related criteria such as skill or experience.

Moreover, certain hiring criteria, while nondiscriminatory on their face, have the effect of screening out a disproportionate number of individuals in a protected class. For example, an employer’s rejection of applicants based on their height or weight or an English-language requirement may result in discrimination on the basis of sex or national origin. Unless the employer can show that these criteria are justified by strict business necessity—i.e., are related to the applicant’s ability to perform the job—employers should avoid relying on such criteria in rejecting applicants. Tip 9

Tip 9—Assignments

Care must be taken to avoid creating the impression that unlawful factors are taken into account in making assignment decisions. For example, do not record data about a temporary employee that could not be lawfully taken into account in making the hiring decision (e.g., “looks like Mike Tyson”; “has a limp”; “attends St. Joseph Church”).

Photographs of temporary employees are problematic.

Photographs in personnel files or on a computer screen often reveal an employee’s age, disability, race, sex, national origin, or religion. It is therefore unwise to review or rely upon photographs of temporary employees before making an assignment because that practice may be viewed as evidence of a staffing firm’s intent to rely upon unlawful criteria in making employment or assignment decisions.

f. Terms and Conditions of Employment

After an employee is hired, the prohibitions against discrimination apply to virtually every decision an employer makes concerning an employee’s terms and conditions of employment. Thus, an employer is prohibited from discriminating when it trains, assigns, promotes, demotes, transfers, disciplines, terminates, pays, or provides benefits to employees, as well as in giving references post-termination.

g. Discipline and Termination

A basic test to determine whether an employer’s disciplinary or termination decision is discriminatory is whether similarly situated employees engaging in similar conduct were treated in a similar fashion.

3. Classes Protected by the Equal Employment Opportunity Laws

This chapter now turns to a discussion of the classes or groups protected by the equal employment opportunity laws and certain problems and issues specific to each class. The above-discussed general principles governing employment discrimination law and key issues faced by employers should be kept in mind when reviewing this section.

a. Race

Employers are prohibited from discriminating against employees or job applicants on the basis of race by both Title VII of the Civil Rights Act of 1964 (as amended by the Civil Rights Act of 1991) and the Civil Rights Act of 1866.

b. Sex

Sex discrimination in employment, including sexual harassment, is prohibited by Title VII. In addition, the Equal Pay Act of 1963 prohibits wage differential on account of sex for equal work in jobs that require substantially equal skill, effort, and responsibility and that are performed under similar working conditions.

Three particular types of sex discrimination issues merit additional discussion because they are likely to be confronted by temporary help services: treatment of pregnant employees, state protective laws, and compensation practices.

i. Pregnant Employees. In 1978, Congress amended Title VII by enacting the Pregnancy Discrimination Act (PDA), which provides that discrimination on the basis of “pregnancy, childbirth, or related medical conditions” is equivalent to discrimination on the basis of sex. Under the PDA, it is unlawful for an employer to differentiate between pregnancy-related and other temporary physical disabilities in making employment decisions (e.g., hiring, promotions, assignments) or in granting fringe benefits, including leave policies. Here are some examples of what this means:

■   If a health insurance policy covers 80% of the costs of employee illnesses, it must cover 80% of pregnancy-related expenses.

■   Any policy that is applied to pregnant employees, such as requiring a physician’s statement, must be applied to employees with other disabilities.

■   Subject to the Family and Medical Leave Act, if applicable, a nondisability-related child care leave should be granted or declined on the same basis as leave to employees for other nonmedical reasons.

■   A uniform maximum length for a leave due to a pregnancy-related disability cannot be established, unless there is a maximum length of time for other medical disabilities.

■   Employers must provide the same health benefits to the pregnant spouses of male employees as are provided to female employees.

■   However, the PDA’s proscription against differential treatment based on pregnancy-related disabilities does not preclude a state from establishing minimum benefits for pregnant employees that are more generous than those provided for other temporary disabilities. For example, a California statute requires employers to provide up to four months’ unpaid leave for pregnancy-related disabilities, even if an employer provides less time for other disabilities.

The Supreme Court has ruled that a state may disqualify a pregnant employee who quits her employment from receiving unemployment compensation, provided the state also disqualifies claimants who quit their jobs for other reasons not directly connected to their work.

In mid-2014, the Equal Employment Opportunity Commission adopted enforcement guidance on pregnancy discrimination and related issues. This document replaces guidance issued in 1991 on how the PDA applies to pregnant workers, and even to workers who have the potential to get pregnant. While the EEOC acknowledges that pregnancy itself is not a disability, workers may have a pregnancy-related impairment or limitations arising from the interaction of the pregnancy with an underlying impairment that could make them eligible for reasonable accommodations.

Widening its focus beyond what may constitute violations of the PDA, the EEOC also considers whether employers must comply with the Americans With Disabilities Act in their treatment of pregnant workers. The guidance determines that some pregnant workers could have either a pregnancy-related impairment that substantially limits a life activity or limitations resulting from the interaction of the pregnancy with an underlying impairment. In either situation, those workers would be considered by the EEOC to have a disability, as that term is defined by the ADA, and would be eligible to receive reasonable accommodations from their employers. This accommodation could include light-duty assignments in some circumstances, as required by the ADA.

The reasonable accommodations involving the alteration of how job functions are performed and light-duty assignments would be particularly pertinent to employers in manufacturing, where numerous types of jobs routinely entail physical activity such as standing, climbing, lifting, pushing, or bending. Above all, this guidance puts employers on notice that similar reasonable accommodations are to be provided to pregnant workers, just as they are provided to disabled workers, in order to best achieve compliance.

Several hypothetical scenarios are provided in the guidance as some of the examples of reasonable accommodations pregnant workers might receive. These include:

■   Redistributing marginal functions (non-fundamental or non-essential job duties) that the employee is unable to perform due to a disability

■   Altering how an essential or marginal job function is performed (for example, by modifying standing, climbing, lifting, or bending requirements)

■   Modification of workplace policies

■   Purchasing or modifying equipment and devices

■   Modified work schedules

■   Granting leave (which may be unpaid if the employee does not have accrued paid leave) in addition to what an employer would normally provide under a sick leave policy for reasons related to the disability

■   Temporary assignment to a light-duty position

ii. State Protective Laws. In the early 1900s, many states adopted laws intended to protect women from the perceived perils of industrial life. Those laws included restrictions on the number of hours a woman could work per day, or prohibitions on work by women for certain periods of time before and after childbirth. Courts have generally held that an employer facing a claim of sex discrimination cannot rely on these laws as a valid defense to the claim or as a basis for a BFOQ exception.

iii. Discriminatory Compensation. There are essentially two types of claims alleging sex-based discrimination in rates of pay: equal pay claims and comparable worth claims.

The theory of recovery underlying each type of claim is radically different. Equal pay claims allege sex discrimination in pay between jobs that are substantially similar in the amount of skill, effort, and responsibility they require and that are performed under similar working conditions. Thus, equal pay claims have been successfully brought by female bank tellers whose wages were less than male tellers, female stock clerks paid less than their male counterparts, and female hospital aides paid less than male orderlies.

Equal pay claims may also arise when a male employee is replaced by a female employee paid at a lower rate than her predecessor. In such a situation, the employer should be able to identify other objective factors justifying the pay differential (e.g., length of service).

Comparable worth claims, on the other hand, allege sex discrimination in jobs that are dissimilar in content but that are of comparable “worth” or “value” to the employer. Under this theory, whole classes of jobs are undervalued because traditionally they have been segregated by sex (e.g., comparing administrative assistants, a position where females traditionally predominate, with carpenters, a position frequently held by males). Most claims alleging comparable worth have been rejected by the courts, although the theory continues to be pressed by many groups, and it is not yet clear whether this theory will ultimately become an accepted part of federal discrimination law.

iv. ‘Glass Ceiling.’ An evolving issue in the area of sex discrimination is the claim that some companies decline to promote women to senior executive positions (i.e., they create a “glass ceiling” above which women cannot advance).

In 1995, one large staffing firm was found liable for denying women promotions to senior positions because of their sex, and the jury awarded more than $5 million in damages. All staffing firms should periodically review their criteria for promotion and advancement to ensure that they do not inadvertently create their own glass ceiling.

c. Religion

Title VII prohibits employers from discriminating on the basis of religion. This prohibition generally arises in two contexts. First, an employer cannot treat an employee differently as to his or her terms or conditions of employment because of religion. Thus, for example, an employer cannot refuse to promote an employee because that employee is a Muslim.

Second, an employer is required to reasonably accommodate the religious needs of its employees. The question of accommodation usually arises in the conflict between religious practices and work schedules (e.g., an employee’s religious beliefs forbid work on a day on which he or she is scheduled to work). An employer must attempt to reasonably accommodate the needs of an employee whose religious beliefs conflict with work, unless such an accommodation causes undue hardship to the conduct of its business.

Significantly, an employer need not incur more than minimal costs, in terms of lost efficiency or extra expenses, to accommodate the employee’s religious beliefs. Thus, one court held that an employer met its duty to accommodate an Orthodox Jewish employee’s religious needs by offering him the chance to work on nonreligious holidays in exchange for not working on his days of religious observance. The employer was not required to go so far as to hire a substitute employee, have a supervisor substitute, do without the employee, or direct other employees to trade with him. In addition, the Supreme Court has held that an employer meets its duty by offering any reasonable accommodation; an employer need not accept the employee’s preferred accommodation. Tip 10

Tip 10—Religion

A staffing firm faced with a religion-based scheduling problem may consider attempting to reach a reasonable accommodation with the employee through the following alternatives:

■   Attempt to find a voluntary substitute to swap days off with the employee

■   Allow the employee to transfer or change the conflicting job assignment

Institute flexible scheduling, which might include the use of lunchtime in exchange for early departure, or the use of floating or optional holidays

d. National Origin

Discrimination on the basis of national origin is prohibited by the Civil Rights Act of 1866. Title VII also prohibits discrimination on the basis of national origin by employers of 15 or more employees. Employers of between four and 14 employees are prohibited from discriminating on the basis of national origin under the Immigration Reform and Control Act. An individual’s national origin is defined as the country from which that individual came or from which that individual’s forefathers came. Thus, national origin discrimination claims can be brought by foreign-born individuals (e.g., a person born in Hungary) as well as individuals who are born in this country but whose ancestors came from a foreign country (e.g., a person of Spanish descent).

National origin claims commonly arise in two contexts:

i. Hiring Criteria. Because of their effect of excluding a disproportionate number of members of a particular national origin group, some hiring criteria used by employers may be unlawful (e.g., minimum height or weight requirements) unless the employer can demonstrate that those criteria are necessary to the performance of the employee’s duties.

ii. English-Only Rule. A rule requiring applicants to speak or write English fluently or prohibiting employees from speaking their native language on the job may violate the ban on national origin discrimination unless these rules are justified by business necessity.

Courts are more likely to uphold limited language restrictions. For example, work rules requiring sales personnel to speak English to clients or insisting that secretaries answer the telephone in understandable English would probably be sustained, whereas a rule prohibiting the use of another language between two employees in a private conversation on the employer’s premises while on a break would be very difficult to sustain in light of the probable absence of any business need to justify such a sweeping rule.

However, an employer can properly enforce a limited, reasonable, and business-related English-only rule against an employee who can readily comply with the rule but who voluntarily chooses not to as a matter of individual preference. For example, a bilingual disc jockey failed to produce sufficient evidence of discrimination when he was discharged for speaking Spanish on the radio in violation of the station’s English-only format.

A closely related problem is the termination of an employee because of the employer’s belief that the employee was unsuitable for employment because of a foreign accent. Unless an employee’s lack of English skills actually interferes with his or her ability to perform the job, an employer risks violating the ban on national origin discrimination if it relies on an accent as the basis for exclusion from that job. Tip 11

Tip 11—English-Only Rule

An English-only rule at the workplace may be found lawful if

■   The rule is applied only at certain places and times (e.g., in areas open to clients or while the employee is on duty)

■   It is justified by business necessity (e.g., the clients speak English)

■   The employer has notified the employees of the rule, preferably in writing

e. Age

Unlike the other previously discussed bases of discrimination, age discrimination is not prohibited by Title VII. Instead, age discrimination is proscribed by the Age Discrimination in Employment Act of 1967, which prohibits discrimination in employment against individuals age 40 years and older. The Supreme Court has interpreted the ADEA to prohibit both disparate treatment discrimination, as well as disparate impact discrimination.

An individual may state an ADEA violation even if his or her replacement (i.e., the person who got the job or to whom his or her duties were reassigned) is also over the age of 40. Tip 12

Tip 12—Age Discrimination in Employment Act

The closer in age the individual claiming an ADEA violation is to the replacement, the weaker the inference of age discrimination, even if the replacement is under 40 years old. However, if the individual claiming an ADEA violation is substantially older than the replacement, the inference of age discrimination is stronger, even if the replacement also is over the age of 40.

i. Defenses. The ADEA specifically provides for six defenses to an age discrimination claim:

1. The employer’s decision was based on “reasonable factors other than age” (RFOA).

2. Age was a bona fide occupational qualification.

3. The employer’s compliance with the ADEA would violate the laws of a foreign country where the employer is located.

4. The employer observed the terms of a bona fide seniority system.

5. The employer observed the terms of a bona fide employee benefit plan.

6. The employer discharged or disciplined the individual for good cause.

ii. RFOA or Good Cause. The crux of both the RFOA defense and the good cause defense is that the employer’s action was based not on the employee’s age but on some other legitimate business reason. For example, an employer’s decision not to hire a particular applicant aged 44 because he does not possess the necessary educational background is based on a reasonable factor other than age and does not violate the ADEA. Similarly, an employer’s decision to terminate a 52-year-old employee for unsatisfactory job performance is not discrimination because it is based on good cause.

iii. Bona Fide Occupational Qualifications (BFOQ). The BFOQ defense is used by employers to justify blanket age limitations, such as a refusal to consider any applicant over age 50. To establish a BFOQ, the employer must show both of the following:

■   An age limitation is reasonably necessary to the essential operation of the employer’s business.

■   There is a substantial basis for believing that all persons who are beyond the age limitation could not perform the job safely or efficiently, or it is highly impractical to deal with persons over or under the age limitation on an individual basis to determine if each has the necessary qualifications. Tip 13

Tip 13—Age-Based BFOQs

A refusal to consider applicants over age 40 for interstate bus driver positions and a mandatory retirement age of 60 for private airline pilots have been upheld as BFOQs. Very few age-based BFOQs have been successfully established by employers, except when dealing with jobs involving public safety.

iv. Bona Fide Seniority System. Actions taken by an employer in observing the terms of a bona fide seniority system are not unlawful. To be bona fide, a seniority system must meet the following requirements:

■   The system must be communicated and applied to all employees regardless of age.

■   It may take into account merit, capacity, and ability, but it must make length of service the primary criterion for making employment decisions.

■   It should not give employees with longer service lesser rights.

Importantly, even if a seniority system is bona fide, it cannot require involuntary retirement of any employee on the basis of age.

v. Bona Fide Employee Benefit Plan. Employers do not violate the ADEA in observing the terms of a bona fide employee benefit plan (such as a retirement, pension, or insurance plan) that is not a subterfuge to avoid the purposes of the ADEA. An employee benefit plan is bona fide if its terms have been accurately described in writing to all participants, and it actually does provide the benefits to participants.

Whether bona fide or not, no such employee benefit plan can require the involuntary retirement of any individual on the basis of age. There is, however, one major exception to the ban on compulsory retirement. The ADEA permits the compulsory retirement of an employee who is at least 65 years of age; has held a bona fide executive or high policy-making position for the two-year period immediately before retirement; and is entitled to an immediate, nonforfeitable annual retirement benefit from a pension, profit-sharing, or deferred compensation plan of at least $44,000.

While nothing in the ADEA makes it unlawful for an employer to institute a plan providing for voluntary early retirement, the plan must be truly voluntary. Thus, an employer who presents an early retirement plan that suggests that the employees will be discharged if they do not accept the offer risks violating the ADEA. Tip 14

Tip 14—Early Retirement Plans

Employers desiring to maximize their chances of establishing that their early retirement plans are voluntary have taken the following measures in implementing a retirement plan:

1. Employees are clearly informed that the plan is entirely voluntary and a decision to reject the offer will not have an adverse effect on their employment.

2. The plan is presented to employees in individual counseling sessions by someone other than their immediate supervisor.

3. Employees receive a follow- up phone call or counseling session in which their concerns are addressed and the voluntary nature of the plan is reiterated.

4. The employer documents its efforts to ensure that the plan is entirely voluntary.

vi. Reductions in Force. Where business considerations require an employer to reduce its workforce, care should be taken to avoid terminating or laying off only or primarily older employees. Before individual employees are selected for layoff or termination, the employer should ensure that it can defend its selection decisions by objective factors other than the employee’s age (e.g., performance evaluations). For example, if a long-term employee has had a history of stellar performance reviews but received his or her first poor review immediately prior to his or her layoff, a jury could believe the real reason for the layoff was the employee’s age and not performance. Development of an overall plan and documentation of the reasons for the reduction in force and the criteria for selecting which employees will be laid off are very important.

f. Disability

The Americans With Disabilities Act prohibits discrimination against any qualified individual with a mental or physical disability. The following is a summary of the major provisions of Title I of the ADA. Tip 15

Tip 15—Ticket to Work

On Dec. 17, 1999, the Ticket to Work and Work Incentives Improvement Act was signed into law. It allows disabled individuals to join the workforce without losing their Medicaid coverage for up to four and a half years even if their income exceeds government-imposed limits.

i. Definition of Disability. A disability is defined as a physical or mental impairment that “substantially limits” one or more “major life activities.” The ADA protects not only those who are actually and currently disabled, but also those individuals who have a record of disability, those who are regarded as being disabled, and those who are known to have a relationship or association with another who is known to have a disability.

An individual currently using illegal drugs is not disabled within the meaning of the ADA and, therefore, an employer may refuse to hire or terminate such a person without violating the act. However, a former drug addict or a current drug addict who is no longer using drugs and is participating in a rehabilitation program is protected by the ADA. In contrast, an alcoholic is considered an individual with a disability even if that individual is currently abusing alcohol and is not in a rehabilitation program. Homosexuality, bisexuality, transvestism, transexualism, compulsive gambling, pyromania, and kleptomania are not considered disabilities under the ADA. Tip 16

Tip 16—Americans With Disabilities Act

Staffing firms should expect that many clients will be resistant to utilizing disabled employees and will pressure the staffing firm to assign only able-bodied individuals. Such discrimination is illegal and should be avoided. Where you suspect that an employee has been rejected because of a disability, every effort should be made to reassign that employee, and the former assignment with the client should not be filled.

ii. Psychiatric Disabilities. In 1997, the Equal Employment Opportunity Commission issued a guidance on psychiatric disabilities and the ADA. The guidance generally treats psychiatric and other mental disabilities no differently than physical disabilities under the ADA, but it has very broad definitions of those psychiatric conditions that the EEOC believes qualify as disabilities under the ADA. The guidance has been the subject of controversy, and it has not been overwhelmingly endorsed by the courts. For example, a mental impairment that causes an individual to have regular, high levels of hostility toward co-workers or a supervisor is deemed a disability by the EEOC but not by a majority of courts. Tip 17

Tip 17—Workplace Conduct

Workplace conduct standards should be job-related for the position and consistent with business necessity. Discipline for violence, threats of violence, theft, destruction of property, and the like may be imposed on all employees, with and without a disability.

iii. Substantial Limitation of Major Life Activity. The ADA defines a major life activity as a basic activity that the average person can perform with little or no difficulty, such as walking, seeing, hearing, breathing, sitting, standing, lifting, and reaching. A major life activity is substantially limited if the individual is unable to perform it at all or can only perform it for a restricted period of time or in a restricted manner. In 1999, the Supreme Court broadly interpreted the term “major life activity” to find that an individual with asymptomatic HIV infection had an ADA “disability.” On Sept. 25, 2008, President Bush signed the Americans With Disabilities Act Amendments Act of 2008. The act retains the ADA’s basic definition of “disability” but provides additional direction on the “major life activities” that must be substantially limited in order for an impairment to qualify as a disability. The act lists specific examples of activities similar to those that the EEOC had recognized (e.g., walking, bending, communicating) and also includes major bodily functions, such as “functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.” The act states that mitigating measures other than “ordinary eyeglasses or contact lenses” should not be considered in assessing whether an individual has a disability, and it clarifies that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.

Regulations and guidance on the ADAAA, developed by the EEOC, went into effect on May 24, 2011. The EEOC’s May 2011 regulations add sitting, reaching, and interacting with others to the non-exhaustive list of “major life activities.” The EEOC guidance also provides examples of conditions or impairments to “major bodily functions” that qualify as disabilities under the amended statute. That list includes functions of the special sense organs, skin, genitourinary, cardiovascular, hemic, lymphatic, and musculoskeletal systems. The regulations go further still, providing a list of conditions that “in virtually all cases” meet the definition of disability based on characteristics associated with them. The list of per se disabilities includes autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia. Tip 18

Tip 18—Substantial Limitation

The effect of the amendments is to make it easier for an individual seeking protection under the ADA to establish that he or she has a disability within the meaning of the ADA. Now, the determination of whether a person has a “disability” under the ADA must not take into consideration use of a mitigating measure, such as medication, a prosthesis, or a hearing aid. Thus, a person who experiences no substantial limitation in any major life activity when using a mitigating measure still may meet the definition of having a “disability.”

iv. Qualified Individual With Disability. In order to be considered a qualified individual with a disability, the individual must meet the employer’s education and/or experience requirements and be able to perform the “essential functions” of the job with or without a “reasonable accommodation.”

v. Essential Functions of the Job. The essential functions of a job are the primary, as opposed to marginal, duties of the position in question. In identifying an essential function to determine if an individual with a disability is qualified, the employer should focus on the purpose of the function and result to be accomplished, rather than the manner in which the function is currently performed. A function will be considered essential if it entails one of these factors:

■   The position exists to perform the function.

■   There are a limited number of other employees available to perform the function or among whom the function can be distributed.

■   The function is highly specialized, and the person in the position is hired for special expertise or ability to perform it. Tip 19

Tip 19—Job Descriptions

Employers are encouraged to prepare detailed position descriptions stating the essential functions of each job and including any physical requirements associated with the position (e.g., shipping and receiving requires lifting of boxes weighing approximately 20 pounds to heights of 5 feet). Staffing firms should request copies of these descriptions from their clients and review the essential job functions when assigning employees for work in order to ensure that the employees are able to perform those functions, with or without a reasonable accommodation.

One federal court has held that regular attendance “is considered a minimum function of any job.” Consequently, an employee who is unable to come to work may not be considered a qualified individual under the ADA, unless the employee could perform the essential functions of the job with a reasonable accommodation (e.g., working from home) or could regularly attend work with a reasonable accommodation (e.g., a special parking space).

Because the law is unsettled regarding temporary leaves of absence and reasonable accommodations, experienced labor counsel should be consulted before terminating a disabled employee for failure to report to work.

vi. Reasonable Accommodation. An employer is required to provide a reasonable accommodation in three situations: (1) to ensure disabled individuals equal opportunity in the application process; (2) to enable disabled employees to perform the essential functions of the job held or desired; and (3) to allow disabled employees to enjoy equal benefits and privileges of employment.

Pre-employment: Examples of accommodations an employer may have to make at this stage of the employment process include ensuring physical access to interview sites and providing large print or Braille applications and pre-employment tests, readers or sign language interpreters, and a telecommunication device for the deaf (TDD) telephone number.

During employment: Reasonably accommodating a disabled employee so that the employee can perform the essential functions of the job and enjoy the benefits and privileges of employment may involve making physical alterations (e.g., installing ramps, rearranging furniture, providing access to lunchrooms and lounges) or providing employees with special instruments to perform their jobs (e.g., a magnification device for a computer screen or a TDD). An employer may also have to restructure the manner in which the job is performed, although the employer is not required to reallocate any of the essential functions of the job. Additional accommodations may include a part-time or reduced work schedule, or reassignment of the employee to a vacant position the employee is capable of performing. However, an employer is not required to create light-duty assignments for employees with non-work-related disabilities.

To satisfy this requirement, a temporary help company will have to work very closely with its clients. A thorough understanding of each client’s requirements and environment will be necessary before an educated determination can be made as to whether an accommodation is reasonable. In certain cases, the temporary help company may be required to provide its employee with some forms of accommodation (e.g., a step stool for a dwarf employee), but it will not be required to make physical changes to its client’s premises.

The client is obligated to provide access to its facilities to disabled individuals, including disabled temporary employees. In other cases, the client may be required to make more extensive accommodations (e.g., providing special equipment for the hearing or sight-impaired), especially if some of its own full-time employees require such assistance; consequently, the client is already under an obligation to provide accommodation and may be able to spread the cost more economically than the temporary help company.

vii. Undue Hardship. Employers are required to reasonably accommodate an otherwise qualified individual unless to do so would cause the employer “undue hardship.” Undue hardship is defined as action requiring “significant difficulty or expense.” The U.S. Supreme Court has held that it would be an undue hardship on the employer and other employees to permit a reasonable accommodation request to trump an existing seniority system. Factors to be taken into consideration in determining undue hardship include the cost of the accommodation, the overall financial resources of the employer and the impact of the accommodation on those resources, the nature of the employer’s operations and the impact of the accommodation on those operations, the overall size of the employer and number of its employees, and the length of the assignment. Factors that should not be considered include the relative cost of the accommodation as compared with the employee’s salary and the effect of the accommodation on overall employee morale.

These factors may be taken into account in the temporary help setting:

■   Length of Assignment. It may be considered an undue hardship for a client to provide an accommodation for a disabled individual on a three-day assignment, but not if the assignment is long-term or indefinite. The EEOC and the courts will certainly be willing to impose greater burdens on the client to make those accommodations for long-term or indefinite assignments.

■   Existing Accommodation. The client will be hard pressed to deny a particular accommodation to a temporary employee that is already, or has in the past, been provided to its regular employees.

■   Nature of the Assignment. Obviously, undue hardship will vary depending on the type of assignment.

■   Number of Temporary Employees. If temporary employees constitute a significant proportion of the client’s workforce, courts are more likely to require accommodations by that client than in the case of an occasional temporary employee assigned to fill in for an absent employee.

viii. Direct Threat to Health or Safety. An employer does not have to hire an applicant or continue to employ an employee who poses a direct threat to his or her own health or safety or that of others. This determination must be based on an individualized assessment of the individual’s present ability to safely perform essential job functions, and the “direct threat” standard must apply to all applicants or employees, and not just to individuals with disabilities. If an employer determines that an individual poses a direct threat as a result of a disability, the employer must determine whether a reasonable accommodation would either eliminate the risk or reduce it to an acceptable level.

In order to establish that a direct threat exists such that an employer may refuse to hire or continue to employ a disabled individual, the employer must show

■   There is a significant risk of substantial harm.

■   The risk is specifically identified.

■   The risk is current rather than speculative or remote.

■   The assessment of the risk is based upon objective medical or other factual evidence regarding a particular individual.

■   The risk cannot be eliminated or reduced to an acceptable level by reasonable accommodation. Tip 20

Tip 20—Threat to Health and Safety

Although the client’s identification of the danger or risk of a particular job or work site would probably be considered as evidence in ascertaining whether there is a direct threat to health or safety, a staffing firm should familiarize itself with the risk factors of a client’s job assignments and work site so that it can make an independent determination of whether a threat exists before rejecting an applicant or employee for a particular assignment.

ix. Pre-Employment Inquiries. Employers are prohibited from asking job applicants about their health, medical history, or disabilities. An employer may ask an applicant if he or she can perform specific functions and ask the applicant to describe how he or she would perform them. Excerpts from the EEOC Enforcement Guidance on Pre-Employment Disability-Related Inquiries are set forth in Appendix D. A detailed discussion of pre-employment inquiries is contained in Chapter 7.

x. Medical Examinations and Inquiries. Medical exams and inquiries before a job offer is made are not permitted under any circumstances. After a conditional offer of employment is made, such examinations and inquiries are permissible under the circumstances discussed in Chapter 7.

xi. Other Pre-Employment or Post-Employment Testing. Tests that tend to screen out individuals with disabilities may not be used unless they are job related and consistent with business necessity. Tip 21

Tip 21—Testing

A staffing firm should ascertain a client’s testing requirements for a specific job order and assess whether such testing appears to be job-related or may adversely affect a disabled applicant.

xii. The ADA and Workers’ Compensation Laws. An employer may not inquire into an applicant’s workers’ compensation history before making an offer of employment. After making a conditional job offer, an employer may ask about a person’s workers’ compensation history in a medical inquiry or examination if such inquiry or examination is required of all applications in the same job category. In addition, an employer may not base an employment decision on the speculation that an applicant may cause increased workers’ compensation costs in the future.

An employer may screen out applicants with a history of fraudulent workers’ compensation claims, and it may refuse to hire or terminate an individual who knowingly provides a false answer to a lawful post-offer inquiry about his or her medical condition or workers’ compensation history. Note that while some state workers’ compensation laws release an employer from its obligation to pay benefits if an employee falsely represents his or her health or physical condition at the time of hire and is later injured on the job as a result, the ADA permits an employer to use this defense only if that information was requested as part of a post-offer medical examination or inquiry.

xiii. The ADA and the Pregnancy Discrimination Act. As discussed in the Title VII section of this chapter, the Pregnancy Discrimination Act requires employers to provide the same benefits to employees with pregnancy-related disabilities as they give to employees with other short-term medical disabilities. The PDA was broadened with the enactment of the ADA Amendments Act of 2008. Of particular relevance to pregnancy is that there is no requirement under the ADAAA that an impairment must last a particular length of time to be considered substantially limiting. Consequently, the EEOC predicts that it is likely that a number of pregnancy-related impairments that impose work-related restrictions will be substantially limiting, even if they are only temporary. It is acknowledged, however, in 2014 guidance issued by the EEOC, that pregnancy itself is not deemed to be an impairment within the meaning of the ADA, and thus by itself is not a disability.

xiv. The ADA and the Family and Medical Leave Act. The coverage and eligibility requirements under these two laws are quite different, and employers should be careful to differentiate between them. For example, the ADA covers employers with 15 or more employees, whereas the Family and Medical Leave Act only covers employers with 50 or more employees. The ADA applies to qualified applicants and employees with a disability, whereas the FMLA only covers employees, and they do not have to have a disability.

An employee eligible for FMLA medical leave also may be a qualified individual with a disability entitled to reasonable accommodation under the ADA if the employee’s “serious health condition” as that term is defined under the FMLA also meets the ADA’s definition of a “disability.” However, FMLA leave is an entitlement rather than an accommodation, and covered employers must provide the leave to eligible employees regardless of whether it causes the employer undue hardship. If an employee’s serious health condition also qualifies as a disability under the ADA, the employer may have to do more to accommodate the employee than simply providing the leave required by the FMLA, and in some instances it may be required to provide additional leave as a reasonable accommodation.

Only injured employees who meet the ADA’s definition of an “individual with a disability” will be considered disabled under the ADA, regardless of whether the employees satisfy the criteria for receiving workers’ compensation benefits. Thus, not every employee injured on the job will meet the ADA definition, because work-related injuries do not always cause a physical or mental impairment severe enough to “substantially limit” a major life activity.

xv. The ADA and Social Security Disability Insurance. Although Social Security disability insurance (SSDI) provides benefits for “disabled” persons who are unable to work or who cannot engage in substantial gainful employment, an employee who qualifies for SSDI benefits may nevertheless pursue an action for disability discrimination under the ADA because the employee might be able to perform the essential functions of the job with reasonable accommodation. In 1999, the Supreme Court held that application for and receipt of SSDI benefits do not bar an employee from pursuing an ADA claim, although the employee will be required to explain the apparent inconsistency with the necessary elements of an ADA claim.

4. Coverage, Enforcement, and Requisite Reports and Records

a. Title VII

i. Coverage. Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, applies to all employers in the U.S. engaged in an industry “affecting commerce” that have 15 or more employees on payroll for each working day in each of 20 or more calendar weeks in the current or preceding year. As a practical matter, once an employer meets the size requirements, it almost always meets the “commerce” criterion.

“Employee” is broadly defined as an individual employed by an employer; thus, part-time and seasonal employees, as well as executives and supervisors, are included in calculating the number of employees for Title VII coverage purposes. Once coverage attaches, the employer remains subject to Title VII’s coverage for two calendar years.

ii. Joint Employers. When a temporary employee alleges discrimination arising while on an assignment to a client (e.g., a client terminates the assignment because of the temporary employee’s race or religion, etc.), the staffing firm and the client may be considered “joint employers” under Title VII. Thus, an employee may allege that a client exercises sufficient day-to-day direction and control so as to make that client his or her co-employer. If the employee can establish the joint employer relationship, both the staffing firm and the client will be liable for a discriminatory act taken against that temporary employee. Tip 22

Tip 22—Joint Employers

Under the Equal Employment Opportunity Commission Guidance (see Appendix C), the staffing firm and the client will be viewed as joint employers in the typical staffing arrangement.

iii. Enforcement. The Equal Employment Opportunity Commission is the federal agency charged with enforcing Title VII.

The Discrimination Charge. The enforcement of Title VII begins with the filing of a discrimination charge with the EEOC by a charging party, who is generally the person claiming to be aggrieved. All charges must be in writing, signed, and verified. Within 10 days after the filing of a charge, the EEOC must send a copy of the charge to the employer.

Deferral and Time for Filing. The time within which a charge must be filed with the EEOC depends on whether the alleged discrimination occurred in a state or locality that has a fair employment practice law enabling an administrative agency to investigate a discrimination charge of the type prohibited by Title VII, and whether that agency has been approved as a “deferral” agency by the EEOC. In states or localities without such a deferral agency, a charge must be filed with the EEOC within 180 days of the alleged violation.

In states or localities with a deferral agency, a charge can be filed with that agency or with the EEOC. If the charge is filed with the state or local agency, the person aggrieved cannot file a charge with the EEOC until 60 days after commencement of proceedings under the state or local law, unless those proceedings are terminated earlier. The EEOC charge must be filed within 300 days of the alleged discrimination or within 30 days of the termination of the state or local proceedings, whichever is earlier. An individual who files a charge with a state agency that is untimely under state law is still entitled to the 300-day federal filing period.

If a charge is filed with the EEOC without first filing with the state or local agency or before the 60 days have elapsed, the EEOC refers the charge to the state or local agency on behalf of the charging party while holding the charge in abeyance. To be considered timely, a charge filed in the first instance with the EEOC (when there is a state or local deferral agency) should be filed within 240 days of the alleged discriminatory act. If the charge is filed with the EEOC 240 days or more after the alleged discriminatory act, the charge will be timely only if the EEOC defers the charge to the deferral agency and that agency terminates its proceedings prior to the 300th day or the EEOC assumes jurisdiction of the charge pursuant to a work-sharing agreement between the EEOC and the deferral agency prior to the 300th day.

Investigation. Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, provides that an EEOC representative shall “have access to” and “the right to copy” any evidence that “is relevant to the charge being investigated.” Courts have interpreted the “relevancy” requirement broadly. Thus, for example, the EEOC may be permitted to investigate an employer’s hiring practices when the charge alleges a discriminatory termination.

An EEOC investigator will often rely on written requests for information and interrogatories to obtain information. The investigator may also schedule a fact-finding conference with both the employer and the charging party to further the investigation.

As part of its investigative authority, the EEOC is empowered to issue subpoenas, which are enforceable in federal district court, requiring the attendance and testimony of witnesses and the production of documents. Although the party served with the subpoena can request review of the subpoena (on the grounds, for example, that it requests irrelevant information or is worded too vaguely), courts have interpreted federal law to give the EEOC very broad power to subpoena witnesses and documents, and EEOC subpoenas generally have been enforced.

Reasonable Cause Determination. After the completion of its investigation, the EEOC issues a written determination as to whether there is reasonable cause to believe that the charge is true. If it finds no reasonable cause, the EEOC dismisses the charge; and if the EEOC finds reasonable cause, it then attempts to “eliminate the alleged discrimination by informal methods of conference, conciliation, and persuasion.”

Conciliation. Once the EEOC has made a reasonable cause determination, the employer is notified that the EEOC will undertake conciliation efforts and that an EEOC representative will attempt to arrange a date for discussion. The EEOC representative will then attempt to secure, through these discussions, an agreement that the employer will eliminate the alleged unlawful employment practice and take any other appropriate remedial action.

If the discussions demonstrate that the parties may be able to reach such an agreement, the EEOC will draft a proposed conciliation agreement. The employer may then make a counterproposal. If a conciliation agreement is reached, it is signed by the EEOC, the charging party, and the employer. In such cases, the EEOC will cease the administrative processing of the charge (except for compliance follow-up to the extent specified in the agreement). In addition to specific relief for the charging party (e.g., back pay and/or reinstatement), the conciliation agreement may require such measures as affirmative action by the employer in recruitment, hiring, and promotion, or impose reporting requirements on the employer.

If the EEOC is unable to obtain a conciliation agreement, it is empowered to bring a civil action in federal district court against the employer for its alleged violation of Title VII.

Notice of Right to Sue. After receiving a “right to sue” notice from the EEOC, an individual who files a charge with the EEOC has the right to bring a lawsuit. The right to sue notice may be issued at any of three junctures in the administrative process:

1. At the request of the charging party or person aggrieved, after the expiration of the 180-day period following the date the charge was filed

2. Following dismissal of the charge by the EEOC

3. Following failure of conciliation, if the EEOC has decided not to file a civil suit against the employer

The lawsuit must be filed within 90 days of the receipt of the right-to-sue notice.

Available Relief. Federal courts possess broad power to remedy Title VII violations. Thus, in lawsuits brought by either the EEOC or individuals, the relief awarded may include back pay, back benefits, reinstatement, retroactive seniority, front pay, an injunction enjoining unlawful employment practices, attorney’s fees, and litigation costs.

A back pay award is limited to no more than that accrued during the two years prior to the filing of a charge.

The Civil Rights Act of 1991 expanded the remedies available for violations of Title VII to include compensatory and punitive damages, and it provided for trials by jury instead of by judges. In 1999, the Supreme Court explained the standard for holding an employer liable for punitive damages. Punitive damages may be awarded when an employer acts with malice or reckless indifference, not as to the employer’s awareness that it is engaging in discrimination, but as to its knowledge that it may be in violation of federal law. Evidence of “egregious behavior” may provide a means by which an employee can show the malice or reckless indifference needed to qualify for a punitive damages award, but it is not explicitly required to sustain an award of punitive damages. The court also held that an employer may not be liable for punitive damages based upon discriminatory decisions of managerial agents when those decisions are contrary to the employer’s good faith effort to comply with Title VII (i.e., by establishing and implementing anti-harassment policies and grievance procedures).

Compensatory damages may be awarded for loss of future earnings, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonmonetary losses. Congress has “capped” the total amount of damages (punitive or compensatory) that may be awarded in accordance with the size of the employer as follows:

Number of Employees

Maximum Damages

15–100

$50,000

101–200

$100,000

201–500

$200,000

More than 500

$300,000

Staffing firms are also subject to suit under state and local laws. Depending on the jurisdiction, the damages recoveries available under those laws may not be capped.

iv. Reports and Records. Employers must keep personnel and employment records, including applications and records pertaining to hiring, promotion, layoff, termination, salary, and selection for training or apprenticeship, for a period of one year from the date the record is made or the personnel action taken, whichever is later. Employers are now required to maintain employment records for a period of one year for all temporary or seasonal employees, also. When an employee is involuntarily terminated, records on the individual must be kept for a period of one year after the termination. Other federal laws, as well as state laws, may have additional record-keeping requirements for employee records. When a discrimination charge has been filed, records of both the charging party and others holding similar positions must be preserved until final disposition of the charge.

Employers with 100 or more staff or leased employees (50 or more for government contractors) are also required to file annually an Employer Information Report, known as an “EEO-1” report. The filing date for EEO-1 reports is May 31. This report requires detailed information on the racial, ethnic, and sexual makeup of the employer’s workforce. The EEOC discourages employers from using pre-employment inquiries that require employees to provide information as to race, color, religion, sex, or national origin to obtain the information necessary for the EEO-1 reports. Visual inspection of the workforce or postemployment records are the preferred sources for such information. Tip 23

Tip 23—Form EEO-1

In December 1965, an American Staffing Association representative appeared at a public hearing on record keeping and reporting held by the EEOC, and pointed out the practical impossibility of a staffing firm making a visual inspection to meet the reporting requirements. Subsequently, in March 1966, the American Staffing Association formally requested that staffing firms be exempt from the reporting requirement.

Thereafter, in January 1967, the EEOC’s instruction booklet accompanying the EEO-1 form was revised to provide that the term “employee” shall not include persons on the payroll of a staffing firm who are referred by such firm for work to be performed on the premises of another employer under that employer’s direction and control.

Effective April 1989, the EEOC again revised the definition of employee for the purposes of EEO-1 reporting. The definition now provides that the term “employee” shall not include persons (except leased employees) on the payroll of an employment agency who are referred by such agency for work to be performed on the premises of another employer under that employer’s direction and control. For the purposes of the EEO-1 reporting, the EEOC includes staffing firms under the term “employment agency.”

The EEO-1 instruction booklet defines “leased employee” as a permanent employee provided by a staffing firm for a fee to an outside company for which the staffing firm handles all personnel tasks, including payroll, staffing, benefit payments, and compliance reporting. Please note that this definition of leased employee is not the same one that is used in the Internal Revenue Code.

In short, a staffing firm must count its staff employees and leased employees, as defined in the EEO-1 instruction booklet, for purposes of determining whether it employs 100 or more employees (50 or more for federal government contractors) and must report information concerning those employees on the EEO-1 form. Temporary employees do not have to be counted for EEO-1 reporting purposes.

b. Civil Rights Act of 1866

The Civil Rights Act of 1866 guarantees to all persons the same right to make and enforce contracts as is enjoyed by white citizens. The act has been interpreted by the U.S. Supreme Court to prohibit discrimination by private employers against all races and ethnic groups, not only African-Americans and Hispanics.

i. Coverage. In 1989, the Supreme Court limited the scope of the act, holding that it covers only the employer’s conduct at the time of “formation of the contract”—that is, hiring or promotion to a new and distinct position—and the employer’s conduct that interferes with the employee’s right to enforce the contract through the legal process.

However, the Civil Rights Act of 1991 overturned that Supreme Court decision and amended the act to clarify that it applies to all employment decisions by public and private employers.

ii. Enforcement. Unlike suits brought under Title VII, individuals who believe they have been discriminated against need not first file a charge with the EEOC. Instead, they may file a lawsuit directly in court.

Limitation Period. The act does not contain a specific time limit in which lawsuits must be brought. However, the U.S. Supreme Court has found that a four-year statute of limitations applies.

Available Relief. In addition to the back pay, reinstatement, and injunctive relief, plaintiffs suing under the act are eligible to receive compensatory damages for pain and suffering arising out of the alleged discrimination (i.e., embarrassment, humiliation, and mental anguish). A back pay award under the act is not restricted to the two-year period specified for back pay recovery under Title VII. In addition, punitive damages may be awarded where the plaintiff can show malice or reckless indifference by the employer. There is no cap on available damages.

Generally, plaintiffs seeking compensatory and punitive damages under the act are entitled to a jury trial. However, if the only relief sought by the plaintiff is back pay and reinstatement, a request for a jury trial may be denied.

iii. Reports and Records. There are no reporting or record-keeping requirements under the act.

c. Equal Pay Act

i. Coverage. The Equal Pay Act is an amendment to the Fair Labor Standards Act. Coverage under the FLSA is discussed in Chapter 3.

ii. Enforcement. Although responsibility for enforcing the EPA is vested in the EEOC, a person making an EPA claim is not required to file a charge with the EEOC before bringing a lawsuit. Thus, an EPA claimant has two options: file a discrimination charge with the EEOC or bring a lawsuit directly in court.

If an EPA claim is filed with the EEOC, it will investigate the charge. If it finds a violation, the EEOC issues a letter of violation and is empowered to institute a civil suit against the employer for the violation. If the EEOC brings suit, the individual loses the right to bring a private lawsuit.

Limitation Period. An EPA lawsuit must be filed within two years of the alleged violation; for a willful violation, however, a suit may be brought within three years. A willful violation exists if the employer either knew or showed reckless disregard as to whether its conduct was a violation of the EPA.

The running of these limitations is not stopped by the filing of a charge with the EEOC. Thus, if the EEOC fails to bring a suit on behalf of an individual within the prescribed limitation period, the individual loses his or her right to recovery under the EPA.

Available Relief. Under the EPA, employees can recover not only back wages owed as a result of the violation, but, if the violation is found to be willful, they also can recover an equal amount in liquidated damages. In addition, the EPA authorizes the recovery of costs and attorneys’ fees as well as injunctive relief. Compensatory damages for pain and suffering and punitive damages are not recoverable.

iii. Reports and Records. The record-keeping and reporting requirements under the FLSA, of which the EPA is a part, are discussed in Chapter 3.

d. Age Discrimination in Employment Act

i. Coverage. The Age Discrimination in Employment Act applies to all employers engaged in an industry affecting commerce that have 20 or more employees on payroll for each working day in each of 20 or more calendar weeks in the current or preceding year.

ii. Enforcement. As with Title VII and the EPA, authority for enforcing the ADEA is vested in the EEOC.

Filing of Charge. The time period in which a charge must be filed with the EEOC depends on whether the alleged discrimination occurred in a state or locality with a law prohibiting age discrimination and a deferral agency approved by the EEOC.

In states or localities without such an agency, a charge must be filed within 180 days of the alleged violation. In states or localities with a deferral agency, the charge must be filed with the EEOC within 300 days of the alleged discrimination or within 30 days of the termination of state or local proceedings, whichever is earlier.

Investigation and Conciliation. Once the charge is filed with the EEOC, it will investigate the charge and determine whether there is a reasonable basis to conclude that a violation of the ADEA exists. If it finds such reasonable basis, the EEOC issues a letter of violation and attempts to conciliate the charge.

Suits by the EEOC. If conciliation fails, the EEOC is empowered to file a lawsuit on behalf of the charging party. If the EEOC does commence such a lawsuit, the charging party has no right to file a private lawsuit.

Suits by Individuals. If the EEOC dismisses a charge or otherwise terminates a proceeding, the EEOC must notify the charging party in writing. The charging party may commence a lawsuit within 90 days after receipt of such notice. An individual may also opt out of the administrative proceeding 60 days after filing with the EEOC and commence a lawsuit in court, regardless of whether the EEOC has completed its investigation.

Available Relief. The ADEA authorizes the recovery of unpaid wages (back pay), and if a willful violation is proven, an equal amount as liquidated damages. Courts may also order reinstatement, front pay, injunctive relief, attorneys’ fees, and costs. Punitive and compensatory damages are not recoverable for ADEA violations.

Persons who bring suit under the ADEA are entitled to a jury trial.

Waivers and Releases. For many years employers faced with potential age discrimination suits from discharged employees have entered into agreements with those employees whereby the employee agreed to waive his or her right to file a claim under the ADEA in exchange for additional benefits or other monetary consideration offered by the employer.

The Older Workers’ Benefit Protection Act amended the ADEA to set forth minimum requirements that waivers or releases of claims under the ADEA must meet to be effective. A prelitigation waiver—that is, one entered into before an EEOC charge or lawsuit is commenced—must meet the following requirements:

■   It must be in writing.

■   It must be written in language that can be understood by the person signing it.

■   It must specifically refer to rights and claims under the ADEA being waived.

■   It may not waive claims arising after the date it is signed.

■   It must be supported by consideration in addition to anything of value to which the individual is already entitled.

■   The person signing it must be advised in writing to consult an attorney before signing the release.

■   The person must be given at least 21 days to consider the agreement before signing it.

■   The individual must be given seven days after signing the agreement to revoke it.

■   If the prelitigation waiver is obtained as part of an early retirement incentive program or similar employment termination program, additional steps must be taken as well. The individual must be given 45 days instead of 21 days in which to consider the agreement. Also, he or she must be informed in writing at the beginning of the 45-day period of: the class of individuals covered by the program, eligibility requirements for the program, any time limits that may apply to it, the job title and ages of all employees eligible for the program, and the ages of all employees in the same job classification or organizational unit who are not eligible. This information is typically called an “OWBPA notice.”

Postlitigation waivers of ADEA claims—those signed after an EEOC charge or court action alleging age discrimination is commenced—are subject to many of the same requirements. However, the special provisions concerning early retirement incentive programs do not apply, and there is no requirement that the individual be given seven days after signing in which to revoke a postlitigation waiver. Also, rather than having 21 or 45 days to consider the release, the individual must be given a “reasonable period of time” to consider a postlitigation waiver. Tip 24

Tip 24—Waivers and Releases

If a particular older employee is not performing acceptably, it would be wise to consider the possibility of negotiating an amicable departure with that employee rather than simply discharging him or her. For a variety of reasons, older employees are more likely to sue, and age discrimination cases are often costly and difficult to defend before a jury likely to be sympathetic to the employee.

The staffing firm should be careful to follow the requirements of the Older Workers’ Benefit Protection Act, described above, in obtaining such releases, and in providing OWBPA notices, if applicable. That act puts the burden of proof on the employer to show the validity of the release in any later court action. Also, the act’s requirements are minimum standards only. Thus, in particular situations a court may decide that the employer must do more than meet the requirements of the act for the release to be considered “knowing and voluntary,” and therefore valid. For these reasons, it is very important to consult with knowledgeable employment law counsel when negotiating these releases.

iii. Reports and Records. Employers are required to keep records that contain the following information about each employee: name, address, date of birth, occupation, rate of pay, and amount of pay earned each week. These records must be kept for three years.

In addition, to the extent that an employer keeps other personnel records, it must keep records relating to hiring, promotion, demotion, transfer, training, layoff, recruitment, test papers, the results of physical examinations, and job advertisements for a period of one year. Copies of employee benefit plans and seniority and merit systems must be kept by an employer for as long as the plans and systems remain in effect and for at least one additional year after termination.

A special rule provides that application forms and other pre-employment records of applicants for jobs that are known to be of a temporary nature must be kept for a period of 90 days. It is unclear whether this rule applies to the staffing industry. The EEOC has informally advised ASA that, because the relationship between a staffing firm and its temporary employees is often viewed as more than casual, this special rule might not apply.

The ADEA does not impose reporting requirements.

e. The Americans With Disabilities Act

i. Coverage. The employment provisions of the Americans With Disabilities Act apply to employers with 15 or more employees.

ii. Enforcement. Authority for enforcing the ADA is vested in the EEOC.

Filing of Charge. The time for filing a charge is the same as under Title VII.

Investigation and Conciliation. Same as under Title VII.

Suits by the EEOC. Same as under Title VII.

Suits by Individuals. Same as under Title VII.

Available Relief. The ADA authorizes the recovery of back pay, front pay, attorneys’ fees, expert witness fees, and court costs. In addition, courts may order hiring, promotion, reinstatement, or reasonable accommodation. Remedies may also include compensatory damages (e.g., emotional pain and suffering, mental anguish, loss of enjoyment of life, etc.) and even punitive damages if the plaintiff can show that the employer acted with malice or reckless disregard for the individual’s federally protected rights. There is a cap on the amount of compensatory and punitive damages a plaintiff can be awarded, based on the number of employees the employer has. However, compensatory and punitive damages may not be awarded if the employer can show that it made a good faith effort, in consultation with the disabled individual, to provide reasonable accommodation.

There are no reporting or record-keeping requirements under the ADA.

f. Notice Posting Requirements

Title VII, the EPA, the ADEA, and the ADA require that notices that clearly set forth the rights of employees and job applicants under these laws be posted in conspicuous places for all employees to read.

The EEOC has consolidated on one poster the information that must be publicly displayed by employers under federal antidiscrimination laws. Copies can be obtained from local EEOC offices. Tip 25

Tip 25—EEOC Notice

Courts have held that an employer’s failure to post the EEOC’s notice may extend an employee’s time period for filing a discrimination charge against that employer. Thus, staffing firms should make certain that the required antidiscrimination notice is posted in a conspicuous place.

B. Federal Law and Affirmative Action

Many staffing firms that directly or indirectly do business with the federal government are required to do more than refrain from employment discrimination. Under Executive Order 11246, the Rehabilitation Act of 1973, the Vietnam Era Veterans’ Readjustment Assistance Act of 1972, and the regulations implementing each of these laws, companies that enter into government contracts or subcontracts have dual obligations:

■   Companies must not discriminate against employees or applicants because of their race, color, religion, sex, national origin, or their status as a qualified handicapped individual, a disabled veteran, or veteran of the Vietnam era.

■   Companies must take affirmative action measures to ensure that all employees and applicants are treated without regard to such factors.

Under each of the above laws, coverage is premised on the existence of a government contract or subcontract. In general, a government contract is any agreement between any department or agency in the executive branch of the federal government and any person (e.g., an individual, corporation, partnership, or unincorporated association) for the furnishing of supplies or services or the use of real or personal property, including leases.

A subcontract is any agreement between a government contractor and any person

■   either for the furnishing of supplies or services or for the use of real or personal property, including leases, that, in whole or in part, is necessary to the performance of one or more government contracts; or

■   under which any portions of a government contractor’s or subcontractor’s obligation under any one or more contracts are performed, undertaken, or assumed.

Thus, a government subcontractor may include those firms that contract directly with a government contractor, as well as those firms that contract with government subcontractors.

For 40 years, however, the American Staffing Association has taken the position that the affirmative action rules do not apply to temporary employees. This position is based on the express exclusion of temporary employees from the definition of “employee” in the guidelines for completing EEO-1 reports, thus relieving employers of any obligation to include temporary employees in their reports. ASA takes the position that, because the OFCCP affirmative action rules expressly refer to the EEO-1 report as the basis for developing and monitoring employer affirmative action plans, staffing firms and clients are not required to include temporary employees in their affirmative action plans. Tip 26

Tip 26—Affirmative Action

Office of Federal Contract Compliance Programs field auditors have on occasion disagreed with the industry’s position that the EEO-1 exclusion for temporary employees exempts temporary employees from affirmative action requirements. The government, however, has never challenged the industry’s position in court or issued regulations that specifically apply affirmative action rules to temporary employees.

In light of this lack of response, ASA believes that the exclusion of temporary employees for EEO-1 reporting purposes provides a basis for asserting that the affirmative action rules do not apply to temporary employees.

1. Executive Order 11246

This Executive Order, issued by President Johnson in 1965, sets forth the primary affirmative action obligations of government contractors and subcontractors.

a. Requirements

i. Equal Opportunity Clause. Executive Order 11246 requires that all government contracts and subcontracts exceeding $10,000 must include an equal opportunity clause. If an employer enters into government contracts or subcontracts, each of which is less than $10,000, and if over any 12-month period the aggregate value of the contracts exceeds $10,000, the employer is considered to have met the $10,000 threshold and must include the equal opportunity clause.

Under the equal opportunity clause, the contractor or subcontractor agrees to take the following actions:

■   Refrain from discriminating against employees or applicants because of race, color, religion, sex, or national origin

■   Take affirmative action to ensure that applicants and employees are treated “without regard” to race, color, religion, sex, sexual orientation, gender identity, or national origin

■   Post government-supplied notices setting forth the provisions of the equal opportunity clause

■   Refrain from discharging or in any other manner discriminating against any employee or applicant because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant

■   State in all job advertising that applicants will receive consideration “without regard” to race, color, religion, sex, sexual orientation, gender identity, or national origin

■   Notify appropriate labor unions of its commitments under Executive Order 11246

■   Comply with the executive order and the implementing regulations

■   Furnish information and reports as required by the executive order and implementing regulations

■   Include the equal opportunity clause in every subcontract or purchase order

In addition, the contractor or subcontractor must ensure that facilities provided for employees are maintained in a non-segregated manner (sex-segregated restrooms excepted) and must require each of its subcontractors to certify that it does not and will not maintain any facilities it provides for employees in a segregated manner.

ii. Affirmative Action Program. Although the equal opportunity clause requires government contractors and subcontractors to “take affirmative action,” the regulations implementing Executive Order 11246 impose special affirmative action requirements on each government contractor and subcontractor that employs 50 or more employees and has either a government contract or subcontract amounting to $50,000 or more, or has government bills of lading in any amount. A government contractor or subcontractor that meets these criteria must develop, implement, and maintain a written affirmative action program (AAP) for each of its establishments within 120 days after commencement of the contract or subcontract. Under the regulations, an AAP is a set of “specific and result-oriented procedures” to increase employment opportunities for minorities (defined as blacks, Spanish-surnamed Americans, American Indians, and Orientals) and women.

There has been no definitive ruling whether the term “employee” includes temporary employees employed by a staffing firm, and therefore the exclusion of temporary employees for EEO-1 reporting purposes may provide a basis for asserting that temporary employees should not be counted when determining whether a staffing firm that contracts with the government employs 50 or more employees.

As required by the regulations implementing Executive Order 11246, an AAP consists of the following three principal components:

Utilization Analysis. The utilization analysis is designed to identify those areas in which the contractor or subcontractor is deficient in the utilization of minorities and women. That determination is made by the following procedures:

■   Dividing the entire workforce into job groups, which are groups of jobs having similar job content, wage rates, and promotional opportunities

■   Determining the number of male, female, and minority incumbent employees in each job group

■   Calculating, for each job group, the availability of minorities and women in the immediate labor area who are qualified to perform the job

■   Comparing, for each job group, the percentage of available qualified minorities and women with the percentage of minorities and women utilized, or actually employed, by the employer

Where utilization falls short of availability, “underutilization” exists for that job group.

Goals and Timetables. Once the contractor or subcontractor identifies those job groups in which minorities or women are underutilized, it must establish a set of goals and timetables designed to correct the deficiencies. The timetable for meeting the established goals is generally the one-year period following the establishment of the AAP.

Implementation Procedures. This component consists of a narrative outline of the contractor or subcontractor’s plans for implementing its affirmative action program. In it, the contractor or subcontractor

■   Affirms its commitment to equal employment opportunity without regard to race, religion, color, national origin, sex, sexual orientation, or gender identity

■   Assigns to responsible management officials the tasks of implementing the policy

■   Outlines specific steps for disseminating the policy both internally and externally

■   Outlines affirmative action measures to recruit, hire, and promote minorities and women

■   Maintains detailed personnel records concerning its hiring, termination, promotion, and transfer policies

The AAP must be reviewed and updated annually.

b. Enforcement

Executive Order 11246 is enforced by the Department of Labor through the Office of Federal Contract Compliance Programs. The executive order is enforced in two ways: through the OFCCP’s compliance reviews, and through the filing of complaints with the OFCCP.

i. Compliance Reviews. Compliance reviews, which are periodic investigations and audits of government contractors’ and subcontractors’ compliance with their obligations under the executive order, are the principal means by which the OFCCP enforces the executive order. A compliance review begins with a letter from an OFCCP compliance officer to a contractor or subcontractor requesting its affirmative action program, which must be submitted to the OFCCP within 30 days following receipt of the letter.

The compliance officer, as part of his or her review, analyzes the AAP and may conduct an on-site review of the contractor’s or subcontractor’s establishment. If, after the review, the compliance officer determines that the contractor or subcontractor has violated its obligations under the executive order (e.g., has not developed an AAP or has developed an AAP that does not comply with the applicable regulations), the OFCCP will give the contractor or subcontractor a 30-day period to remedy the violations. During this 30-day period, the OFCCP will attempt to resolve the situation through “conciliation, mediation, and persuasion.” If the conciliation efforts fail, the OFCCP is empowered to institute administrative enforcement proceedings culminating in an administrative hearing and the possible imposition of sanctions on the contractor or subcontractor.

ii. Complaints. In addition to periodic compliance reviews, the regulations implementing Executive Order 11246 also provide for a second enforcement mechanism: Individuals alleging violations may file written complaints with the OFCCP within 180 days of the alleged violation. If the complaint alleges a violation based on disability or status as a protected veteran, it must be filed within 300 days unless the time for filing is extended for good cause shown. After receipt of a complaint, the OFCCP may either conduct an investigation or refer the complaint to the EEOC for processing under Title VII. If the OFCCP conducts an investigation and finds that a violation exists, it attempts to resolve the matter by “informal means,” which may include a compliance conference. If the matter is not resolved in this manner, the OFCCP, as in the compliance review process, is empowered to institute enforcement proceedings that may result in sanctions.

iii. Sanctions. The executive order provides that the following sanctions may be imposed upon a contractor or subcontractor violating equal employment obligations:

■   “Publication” of the contractor’s or subcontractor’s name as having failed to comply with its equal opportunity obligations

■   Recommendation to the Department of Justice that court proceedings be brought to enforce the contractor’s or subcontractor’s obligations

■   Cancellation, termination, or suspension of the government contract or subcontract

■   Debarment of the contractor or subcontractor from future contracting, including extensions or modifications of existing contracts, until compliance is established

Except for referrals by the OFCCP to the Department of Justice, sanctions may be imposed only after an administrative hearing.

c. Reports and Records

Executive Order 11246 and its implementing regulations do not require that specific records be kept by government contractors or subcontractors. However, as a practical matter, the development of an AAP entails the preparation of detailed records of the minority and female makeup of the workforce. Contractors and subcontractors are required to afford the OFCCP, during its compliance reviews and complaint investigations, access to such records “as may be relevant to the matter under investigation.”

Government contractors and subcontractors with 50 or more employees and a contract or subcontract of $50,000 or more must file annually an Employee Information Report, or “EEO-1” report. The EEO-1 report must be submitted to the contracting agency within 30 days after the award of a contract or subcontract unless the contractor or subcontractor has submitted the report within the last 12 months to the same contracting agency.

2. The Rehabilitation Act of 1973

The Rehabilitation Act of 1973 was enacted by Congress to prohibit discrimination against, and promote the employment of, otherwise qualified handicapped individuals by government contractors and subcontractors.

a. Persons Protected by the Act

The Rehabilitation Act protects the same persons to the same extent as the ADA. The term “disability” used in the ADA means the same thing as “handicap” under the Rehabilitation Act.

b. Requirements

i. Accommodation. Under the Rehabilitation Act, government contractors and subcontractors have the duty to make a reasonable accommodation to handicapped individuals to enable them to perform the job—unless the accommodation would impose an undue hardship on the conduct of the business. Again, the requirements of the Rehabilitation Act in this regard are identical to those of the ADA.

ii. Affirmative Action Clause. All government contracts and subcontracts of $2,500 or more must include an affirmative action clause in which the contractor or subcontractor agrees to

■   Refrain from discriminating against qualified employees or applicants on the basis of a handicap

■   Take affirmative action to employ, advance in employment, and otherwise treat qualified handicapped individuals without discrimination

■   Post government-supplied notices setting forth the provisions of the affirmative action clause

■   Notify labor unions of its commitments under the act

■   Include the affirmative action clause in every subcontract of $2,500 or more

iii. Affirmative Action Program. The regulations implementing the Rehabilitation Act require that each government contractor and subcontractor that employs 50 or more employees and has a contract or subcontract amounting to $50,000 or more must develop, implement, and maintain a written AAP with respect to the handicapped. Such an AAP must be prepared within 120 days of the commencement of the contract or subcontract.

Unlike the requirements under Executive Order 11246, an AAP under the Rehabilitation Act does not require a utilization analysis or the development of goals and timetables for disabled applicants or employees. Instead, an AAP under the Rehabilitation Act is designed to ensure that all barriers to the employment and promotion of qualified handicapped individuals are removed. Thus, in an AAP under the Rehabilitation Act, a contractor or subcontractor is required to follow these procedures:

■   Invite applicants and employees who believe themselves handicapped under the act to voluntarily identify themselves

■   Undertake appropriate outreach and recruiting actions to attract qualified handicapped individuals

■   Review all physical or mental job requirements to ensure that, to the extent they screen out qualified handicapped individuals, those requirements are job-related

■   Provide for internal dissemination of its affirmative action policies

■   Review and modify personnel practices to ensure a careful and systematic consideration of job qualifications of known handicapped applicants and employees for job vacancies

A Rehabilitation Act AAP may be integrated into or kept separate from a contractor’s or subcontractor’s other AAPs. It must be reviewed and updated annually.

c. Enforcement

Like Executive Order 11246, the Rehabilitation Act is enforced by the OFCCP through compliance reviews of contractors and subcontractors and the filing of complaints with the OFCCP.

A handicapped person who believes that a contractor or subcontractor has violated the Rehabilitation Act may file a written complaint with the OFCCP within 180 days of the alleged violation. When a complaint is filed against a contractor or subcontractor that has established an internal review or grievance procedure, the complaint is first referred for processing under that procedure. If the complaint has not been resolved within 60 days of its referral to internal review, it will be referred to the OFCCP for investigation.

If no violation is found, the complainant will be notified and may seek review by the director of the OFCCP within 30 days. If a violation is found, the OFCCP will attempt to secure compliance through “conciliation and persuasion.” Settlement of the complaint at this stage must be through a specific written commitment by the contractor or subcontractor to take corrective action.

When the complaint cannot be resolved, the OFCCP is empowered to institute enforcement proceedings culminating in an administrative hearing and the possible imposition of sanctions.

d. Sanctions

Possible sanctions include financial penalties, cancellation of existing government contracts and subcontracts, and debarment from future contracts and subcontracts.

e. Reports and Records

The regulations implementing the Rehabilitation Act require that contractors and subcontractors must retain for one year records relating to discrimination complaints made by handicapped persons and actions taken by the contractor or subcontractor as a result. The regulations further require that contractors and subcontractors afford the OFCCP, during the compliance reviews and complaint investigations, access to such records “pertinent to compliance with the act.”

There are no reporting requirements under the Rehabilitation Act.

3. The Vietnam Era Veterans’ Readjustment Assistance Act of 1974

The Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (Vietnam Veterans’ Act) is designed to promote employment of qualified disabled veterans and veterans of the Vietnam era by government contractors and subcontractors.

For purposes of the Vietnam Veterans’ Act, a “disabled veteran” is defined as a person entitled to disability compensation for a disability rated as 30% or more, or rated 10% or 20% in the case of a veteran who has a serious employment handicap as defined by the act, or a person who was discharged for a disability incurred or aggravated in the line of duty. A disabled veteran is qualified if he or she is capable of performing a particular job with reasonable accommodation by the contractor or subcontractor. A Vietnam veteran is defined as a person who served on active duty for 180 days or more, any part of which occurred during the Vietnam era, and was not dishonorably discharged; or who was discharged with a service-connected disability after serving on active duty for any period during the Vietnam era.

a. Requirements

i. Affirmative Action Clause. All government contracts and subcontracts of $10,000 and more must include an affirmative action clause in which the contractor or subcontractor agrees to

■   Refrain from discriminating against qualified disabled veterans and veterans of the Vietnam era

■   Advise the employment service system in each state where it has establishments of the name and location of each hiring location in the state

■   List all job openings except those to be filled from within the organization at the appropriate office of the state employment service

■   List job openings except those to be filled from within the organization with the state employment service concurrently with other recruiting efforts

■   Comply with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the act

■   Post in conspicuous places a notice setting forth the contractor’s or subcontractor’s affirmative action obligations under the law

■   Notify labor unions of its commitments under the act

■   Include the affirmative action clause in every subcontract of $10,000 or more

■   Establish annual hiring benchmarks for protected veterans

■   Document and update annually several quantitative comparisons for the number of veterans who apply for jobs and the number of veterans hired. Invite applicants to self-identify as protected veterans at both the pre-offer and post-offer phases of the application process

ii. Job Listing Requirements. The Vietnam Veterans’ Act requires all federal contractors and subcontractors with government contracts of $10,000 or more per year to immediately list with the local office of their state employment service all “employment openings,” including temporary jobs lasting more than three days. However, the regulations issued under the act provide that employers are not obligated to list positions that will be filled from within the contractor’s organization, including openings to be filled from regularly established “recall” lists. This exception does not apply to a particular opening once an employer decides to consider applicants outside his or her own organization. Tip 27

Tip 27—Job Listing Requirements

The American Staffing Association has taken the position that client orders filled from a staffing firm’s database of qualified employees who have already been screened and hired are filled “from within” the staffing firm’s own organization within the meaning of the regulations and, therefore, do not have to be listed with the state employment service. However, the American Staffing Association believes that classified recruitment ads placed by a staffing firm for the purpose of filling a specific client’s order that cannot be filled from the firm’s existing list of qualified employees, or to replenish its inventory of qualified employees in certain job categories, could be construed as announcements of “employment openings” to which the job listing requirement would apply. In this situation, staffing firms should comply with the law by providing copies of those recruitment ads to the local state employment service in a timely manner.

iii. Affirmative Action Program. Like an AAP under the Rehabilitation Act, the Vietnam Veterans’ Act does not require that an AAP include a utilization analysis or the development of goals and timetables. Instead, an AAP under the act is designed to ensure that a contractor or subcontractor takes affirmative action to employ and advance in employment qualified disabled veterans and veterans of the Vietnam era. Thus, in an AAP under the Vietnam Veterans’ Act, a contractor or subcontractor must

■   Invite applicants and employees who are disabled veterans and veterans of the Vietnam era to voluntarily identify themselves

■   Undertake appropriate outreach and recruitment activities to attract qualified disabled veterans and veterans of the Vietnam era

■   Review all physical or mental job qualifications to ensure that, to the extent qualification requirements tend to screen out qualified disabled veterans, they are job related

■   Provide for internal dissemination of its affirmative action policy

■   Review personnel processes to ensure a careful and systematic consideration of the job qualifications of known disabled veterans and Vietnam veteran applicants for job vacancies

The AAP, which may be integrated with, or kept separate from, a contractor’s or subcontractor’s other AAPs, must be reviewed and updated annually.

b. Enforcement

Like Executive Order 11246 and the Rehabilitation Act, the Vietnam Veterans’ Act is enforced by the OFCCP in two ways: through the OFCCP’s compliance reviews of contractors and subcontractors, and by the filing of complaints with the OFCCP.

An applicant or employee who believes that a contractor or subcontractor has violated the Vietnam Veterans’ Act may file a complaint with the Veterans Employment Service of the Department of Labor through the veterans’ employment representative at the local state employment office. The complaint must be filed within 180 days of the alleged violation.

When a complaint is filed against a contractor or subcontractor that has established an internal review or grievance procedure, the complaint is first referred for processing under that procedure. If the complaint is not resolved within 60 days of referral to internal review, it will be referred to the OFCCP for investigation.

If no violation is found, the complainant will be notified and may seek review by the director of the OFCCP within 30 days. If a violation is found, the OFCCP will attempt to secure compliance through “conciliation and persuasion.” Settlement of the complaint at this stage must be through a specific written commitment by the contractor or subcontractor to take corrective action.

When a complaint cannot be resolved, the OFCCP is empowered to initiate enforcement proceedings, which may culminate in an administrative hearing and the possible imposition of sanctions. The OFCCP may also seek judicial enforcement of the contractual provisions.

c. Sanctions

Sanctions employed by the OFCCP to secure compliance with the Vietnam Veterans’ Act include cancellation of existing government contracts and subcontracts, and debarment from all future contracts and subcontracts.

d. Reports and Records

The Vietnam Veterans’ Act’s regulations mandate that copies of reports required to be submitted to the state employment service must be retained at each hiring location for one year after final payment under the government contract or subcontract. Contractors and subcontractors must also retain for one year records relating to complaints alleging violations of the Vietnam Veterans’ Act, and actions taken as a result. The regulations further require that contractors and subcontractors afford the OFCCP, during its compliance reviews and complaint investigations, access to such records “pertinent to compliance with the act.”

Each contractor and subcontractor must inform the employment service system of the name and location of each facility where it hires in the state and must submit to the state employment service periodic reports, at least quarterly, that indicate for each hiring location the total number of persons hired during the reporting period, the number of nondisabled veterans of the Vietnam era hired, the number of disabled veterans of the Vietnam era hired, and the total number of disabled veterans hired.

In addition, federal contractors must file annually a form called the VETS-100, indicating the number of special disabled and Vietnam era veterans employed, by job category and hiring location; the total number of new hires during the previous 12 months; and the total number of special and Vietnam veterans hired during that period.

The accompanying regulations specifically exclude temporary employees from the definition of “employee” for reporting purposes. The definition provides that the term “employee” shall not include persons on the payroll of a temporary help service who are referred for work to be performed on the premises of another employer under that employer’s direction and control. However, the regulations do not exempt a temporary help service from the reporting requirements with respect to its own staff, if such temporary help service is deemed to be a federal contractor or subcontractor.

C. State-by-State Analysis of Fair Employment Practices Laws

Many states have enacted fair employment practices laws that prohibit discrimination on a broader number of bases than the federal statutes. A state, in addition to banning discrimination on the basis of race, sex, age, religion, and national origin, may also proscribe discrimination on such grounds as marital status, disability, political affiliation, sexual preference, or personal appearance. The following is a summary of the principal fair employment practices laws enacted by each state and certain municipal ordinances. This summary is an overview, not an exhaustive statement, of each state’s law regarding the overall subject of fair employment practices. Unlike the uniform set of rules under federal law, state laws vary widely in terms of statute of limitations, coverage (in terms of the size of an employer covered by the state law, see Appendix F), and damages limits and caps.

Many states have enacted additional protections in several areas: disability discrimination (including AIDS, AIDS-related complex, and HIV status), family leave (including extending coverage to same-sex couples), social media privacy, arrest history, and smokers’ rights. Several jurisdictions have passed laws requiring employers to grant reasonable accommodations for conditions related to pregnancy and childbirth. Additionally, several states have extended protected status to include sexual orientation and gender identity. These provisions are summarized as well.

Alabama

The Alabama Age Discrimination Law prohibits employment discrimination against individuals 40 years of age and over by employers of 20 or more employees. The Alabama Industrial Relations and Labor Law sets forth specific regulations governing, among other things, the employment of minors in nonagricultural occupations. Otherwise, Alabama does not have a comprehensive fair employment practices law that applies to private employers. Thus, only federal law applies.

Alaska

The Alaska Human Rights Law prohibits employment discrimination on the basis of race, religion, color, sex, national origin, ancestry, age, physical or mental disability, marital status, changes in marital status, pregnancy, childbirth, or parenthood. The Human Rights Law covers all employers who employ one or more persons, and is administered by the Alaska Commission for Human Rights. In addition, employers with 15 or more employees are required to post a sexual harassment notice defining sexual harassment and advising employees where to make complaints or inquiries concerning sexual harassment. This notice is prepared by and may be obtained from the Alaska Commission for Human Rights.

Notably, the Human Rights Law is broader than the federal Equal Pay Act in that it prohibits an employer from employing “a female in an occupation…at a salary or wage rate less than that paid to a male employee for work of comparable character or work in the same operation, business, or type of work in the same locality.”

Arizona

The Arizona Civil Rights Act prohibits employment discrimination on the basis of race, color, religion, sex, age (40 or older), disability, national origin, or genetic information. The Civil Rights Act prohibits employers from using qualification standards, employment tests, or other selection criteria, including those based on an individual’s uncorrected vision, that tend to screen out individuals with disabilities unless shown to be job-related and consistent with business necessity.

Impairments caused by recent alcohol or drug use are not protected by the Civil Rights Act. However, under Arizona’s Medical Marijuana Act, unless a failure to do so would cause an employer to lose a monetary or licensing-related benefit under federal law or regulations, an employer may not discriminate against a person based upon either (1) the person’s status as a cardholder; or (2) a registered qualifying patient’s positive drug test for marijuana components or metabolites, unless the patient used, possessed, or was impaired by marijuana on the premises of the place of employment or during the hours of employment.

The Civil Rights Act specifically excludes aliens employed outside any state, and it does not apply to certain employees of religious institutions.

The Civil Rights Act applies to employers with 15 or more employees for each working day in 20 or more calendar weeks in the current or preceding calendar year. In sexual harassment cases, the act applies to businesses with one or more employees. The statute is administered by the Arizona Civil Rights Division. All employers subject to the act must post a notice that is prepared or approved by the division that sets forth excerpts of pertinent provisions.

Arizona’s Equal Pay Act prohibits wage discrimination on the basis of sex. Under Arizona’s Constructive Discharge Law, before an employee can claim that he or she resigned for intolerable working conditions, the employee must have provided notice to the employer and given the employer an opportunity to correct the conditions. Arizona law also prohibits employers from maintaining or enforcing any policy that would prohibit an individual from storing a firearm that is locked in the individual’s vehicle and not visible from the outside.

Arkansas

The Arkansas Civil Rights Act prohibits employment discrimination on the basis of race, religion, national origin, ancestry, sex (including pregnancy, childbirth, and related medical conditions), or the presence of any sensory, mental, or physical disability. Conditions explicitly excluded from the definition of disability are compulsive gambling, kleptomania, pyromania, current use of illegal drugs, and alcoholism. The Civil Rights Act applies to all employers that employ nine or more persons in the state of Arkansas in 20 or more calendar weeks in the current or preceding calendar year. This act does not apply to certain employees of religious institutions. The Arkansas Equal Pay Law prohibits an employer from paying “any female…salary or wage rates less than the rates paid to male employees for comparable work.” The Arkansas Labor and Industrial Relations law requires employers to provide reasonable break time to employees who need to express breast milk, unless it would create an undue hardship, and to make a reasonable effort to provide a private, secure, and sanitary room or other location in close proximity to the work area.

Employers with nine or more employees may not discriminate against applicants or employees based on past or present status as a medical marijuana cardholder or as a designated caregiver for a physically disabled medical marijuana patient. Employers may take adverse action against an employee based on a good faith belief that the employee used, possessed, or was impaired by medical marijuana on company property or during work hours. A positive drug test alone is not sufficient grounds for a good faith belief. Employers may, however, exclude employees from safety-sensitive positions based on a positive drug test.

In Arkansas, a private employer or a local government employer may have a voluntary veterans’ preference policy.

California

The California Fair Employment and Housing Act prohibits employment discrimination on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, registered domestic partner status, family care leave status, military and veteran status, marital status, age (40 and older), sex, sexual orientation, gender, gender identity, gender expression, pregnancy, childbirth, genetic information, or related medical conditions. Any health impairment related to or associated with a diagnosis of cancer for which a person has been rehabilitated or cured, based on competent medical evidence, and genetic information are protected under the act within the definition of “medical condition.”

Under the California Pregnancy Disability Leave Act, employers must treat pregnancy-related disabilities in the same manner as any other temporary disability, and, in addition, employees disabled by pregnancy, childbirth, or any related condition (including severe morning sickness) may take an unpaid leave of absence for a reasonable period of time not to exceed four months. The leave can be taken intermittently.

California requires an employer with five or more employees to grant an employee’s request for reasonable accommodation for a condition related to pregnancy, childbirth, or a related medical condition, upon the advice of her physician. The accommodation may include a transfer to a less strenuous or hazardous position if the transfer can be reasonably accommodated. The law also prohibits employers from retaliating against employees for exercising their rights under the law. Employers must provide reasonable advance notice of these rights to employees.

FEHA applies to all employers with five or more employees and is administered by the California Fair Employment and Housing Commission. FEHA specifically states that it applies to employment agencies. All employers covered by FEHA are required to display prominently a notice of its provisions and to distribute to all employees sexual harassment sheets provided by the Department of Fair Employment and Housing.

California law also prohibits an employer from inquiring about an applicant’s arrest record if the arrest did not lead to a conviction. The law allows such requests only when the position applied for involves access to patients or drugs, or is with a criminal justice agency. The law, which protects not only “an applicant’s arrest record” but also the fact of detention, does not allow inquiries into whether a person has participated in a diversion program or has misdemeanor marijuana convictions more than two years old. Employers with five or more employees must not include on any application for employment any question that seeks the disclosure of an applicant’s conviction history, or inquire into or consider the conviction history of an applicant until that applicant has received a conditional offer; or, when conducting a conviction history background check, employers must not consider, distribute, or disseminate information related to specified prior arrests, diversions, and convictions. California law also requires an employer to make full disclosure and obtain authorization in writing before procuring an investigative consumer report for employment purposes other than suspicion of wrongdoing or misconduct.

California law also prohibits an employer from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant. The law prohibits an employer from seeking salary history information about an applicant for employment and requires an employer to provide the pay scale for a position to an applicant for employment upon reasonable request.

Under the California Family Rights Act of 1991, employers of 50 or more employees must grant employees up to four months’ leave for the birth or adoption of a child, or for the serious illness of the employee or the employee’s child, parent, grandparent, grandchild, sibling, parent-in-law, or spouse. Discrimination against employees who exercise their family leave rights is prohibited. Leave taken under the state law will run concurrently under the federal Family Medical Leave Act, except for any leave taken on account of pregnancy, childbirth, or related medical conditions. The Family Rights Act conforms to the requirements of the federal Family and Medical Leave Act. Effective Jan. 1, 2011, California’s Organ Donation law also requires private employers to permit employees who have exhausted available sick leave to take a leave of absence with pay, not exceeding 30 days for the purpose of organ donation and not exceeding five days for bone marrow donation. California law permits a mother to breast-feed her child in any workplace where the mother and child are otherwise authorized to be present. Discrimination against a woman based on breast-feeding is prohibited.

Under California law, employers also must provide not less than 10 days per calendar year of unpaid Civil Air Patrol leave to an employee responding to an emergency operational mission of the California Wing of the Civil Air Patrol, without first requiring exhaustion of other available leave. The California Military and Veterans Code allows employees who are enlisted members of the California National Guard to take leave for military duty in the service of the state. Another California state law prohibits discrimination in the payment of wages to anyone performing work equal in skill, effort, and responsibility to work by employees of the opposite sex. California’s Confidentiality on Medical Information law protects the confidentiality of AIDS test results. Both Los Angeles and San Francisco have municipal ordinances prohibiting employment discrimination on the basis of AIDS or an associated condition or sexual orientation.

Under the Parental Leave Law for School Visits, employers with 25 or more employees may not discharge or discriminate against an employee who is the parent, guardian, or grandparent with custody of one or more children in grades K through 12, and who takes off up to 40 hours each school year per child (but no more than eight hours per month) to visit the child’s school or participate in school activities, provided that the employee gives reasonable prior notice of the planned absence. In addition, no employer shall discriminate against or discharge an employee who is the parent or guardian of a pupil for taking time off to appear in the school of a pupil, if the employee provides the employer with notice. Employers are prohibited from discriminating against employees who take time off to appear in court because they or a relative (spouse, parent, child, sibling, or guardian) has been a victim of certain crimes (i.e., felony child abuse, assault resulting in the death of a child, felony domestic violence, felony stalking, sexual assault). An employee must give reasonable advance notice unless it is not reasonable to do so.

Employers are prohibited from taking any adverse employment actions against victims of domestic violence, sexual assault, or stalking who take time off from work. Employers must engage in the interactive process and provide reasonable accommodation to victims of stalking who request accommodations for safety at work—the employee must disclose his or her status as victim to trigger the process. Employers are required to permit an employee who performs emergency duty as a volunteer firefighter, reserve peace officer, or emergency rescue personnel to take temporary leaves of absence—up to 14 days per calendar year—to engage in fire, law enforcement, or emergency rescue training.

Colorado

The Colorado Anti-Discrimination Act prohibits discrimination in employment or admission to any apprenticeship, training program, or other occupational instruction, on the basis of disability, race, creed, color, sex, age (40 and older), genetic disorder, marital status, military status, sexual orientation, national origin, or ancestry. Colorado law prohibits discrimination on the basis of transgender status as part of the protections afforded for sexual orientation. Disability is defined to include mental as well as physical impairments and includes HIV infection. An employer with 25 or more employees is also prohibited from discharging or refusing to hire a person because the person is married or plans to marry another employee of the employer. The act specifically prohibits an employment agency from refusing to list and properly classify for employment or to refer an individual for employment in a known available job for which such individual is otherwise qualified because he or she is a member of a protected class. In addition, the Colorado Wage Equality Regardless of Sex Act bans wage discrimination on account of sex.

The act applies to all employers. Notices informing applicants and employees of their rights under the act must be prominently displayed. The act is administered by the Colorado Civil Rights Commission.

Colorado’s Adoptive Parents Leave Act requires that employers that provide leave to biological parents after the birth of a child must provide the same time off for employees adopting a child. The law does not require that employers provide time off or benefits but only that, if they do so, the leave and benefits provided must be equal for biological and adoptive parents. Colorado law also requires employers to provide employees leave, not to exceed six hours in any one-month period and not to exceed 18 hours in any academic year, for the purpose of attending an academic activity for or with the employee’s child.

Under Colorado’s Family Care Act, employers must extend leave under the federal Family and Medical Leave Act to permit eligible employees to care for their civil union partner or domestic partner who has a serious health condition. An employer can require an employee seeking to take expanded FMLA leave to provide the same certification as the employer can require under the federal FMLA. An employee who uses 12 weeks of leave under the federal FMLA cannot also take expanded leave within the same 12-month period.

Termination of employment for engaging in any lawful activity away from the work site during nonworking hours also is prohibited unless such restrictions are related to a bona fide occupational requirement or are necessary to avoid a conflict of interest or the appearance of a conflict of interest.

Connecticut

The Connecticut Fair Employment Practices Act prohibits employment discrimination on the basis of race, color, religious creed, age, sex (including bias related to pregnancy, childbearing capacity, status as a parent or potential parent, sterilization, fertility, or related medical conditions), gender identity or expression, marital status, national origin, ancestry, present or past history of mental disorder, mental retardation, physical disability, and learning disability. Other statutes also prohibit discrimination on the basis of a criminal record (arrest or conviction) that has been erased, sexual orientation, or genetic information. Sexual orientation is defined as having a preference for heterosexuality, homosexuality, or bisexuality; having a history of such a preference; or being identified with such a preference. Any difference in pay based on sex qualifies as discrimination under Connecticut law. The act permits mandatory retirements of bona fide executives who have reached the age of 65 years and are entitled to an immediate retirement benefit of at least $44,000 a year.

In addition, it is unlawful in Connecticut for an employer to deny an employee a reasonable leave of absence for a pregnancy-related disability, to fail to reinstate the employee to her original or an equivalent position with equivalent pay, seniority, and benefits, and to fail to make a reasonable effort to transfer a pregnant employee to a suitable temporary position that may be available when the employee gives written notice of her pregnancy and the employer or employee believes that continuing employment in that position may cause injury to the employee or fetus. An employer also must provide a qualified employee leave to attend court proceedings related to a case in which the employee is a victim of family violence and may not discriminate against an employee who is the victim of family violence.

The act applies to all employers with three or more employees and is administered by the Connecticut Commission on Human Rights and Opportunities. All employers subject to the law must display a notice of its provisions.

Connecticut state law requires employers with 50 or more employees to provide supervisory employees training on sexual harassment. The training must include information on both federal and state provisions concerning sexual harassment and remedies for victims.

The Connecticut Equal Pay Law forbids all employers of one or more employees from discriminating on the basis of sex in the payment of compensation for equal work.

Connecticut law requires pre-employment notification of workplace reproductive hazards and prohibits sterilization as a condition of employment.

Connecticut law prohibits any restriction or limitation on the right of a mother to breast-feed her child.

The Connecticut Smokers’ Rights Law prohibits discrimination by employers against individuals who smoke or use tobacco outside the course of their employment, unless the employer’s primary purpose is to discourage use of tobacco products by the general public.

Connecticut’s Palliative Use of Marijuana law permits medical marijuana use by Connecticut residents who have registered with the Connecticut Department of Consumer Protection. The law prohibits an employer from discriminating against an employee solely on the basis of the person’s status as a qualifying patient. The law permits employers to prohibit use of intoxicating substances and to discipline employees for being under the influence of such substances during work hours. The law also allows employers to take action required by federal law or to obtain federal funding.

Connecticut’s Family and Medical Leave Law requires employers with 75 or more employees to grant up to 16 weeks of unpaid leave within any two-year period to employees for the birth or adoption of a child, or for illness of a parent, spouse, or child, and up to 16 weeks of medical leave for the employee’s own serious illness.

Connecticut law requires employers with 75 or more employees to provide family military leave of up to 26 workweeks during any 12-month period to an eligible employee who is the spouse, son or daughter, parent, or next of kin of a current member of the armed forces who incurred serious injury or illness in the line of duty.

Connecticut law prohibits employers from reducing hospital or medical insurance coverage of employees, or their spouses, over age 65 who are receiving Medicare benefits, except for employers of fewer than 20 employees, to the extent coverage is provided by Medicare.

Employers in Connecticut may not retaliate against employees who file workers’ compensation claims.

Unless a credit report is substantially related to the employee’s current or potential job, Connecticut employers are prohibited from using credit scores in employment decisions and from requiring employees or applicants to consent to a request for a credit report as a condition of employment.

Delaware

The Delaware Fair Employment Practices Act prohibits employment discrimination on the basis of race, color, age (between 40 and 70), religion, sex (including pregnancy), gender identity, marital status, genetic information, sexual orientation, or national origin. It applies to employers with four or more employees and is administered by the Delaware Department of Labor. Every employer subject to the act must post in conspicuous places a notice of its pertinent provisions.

The Delaware Equal Pay Law requires equal pay for equal work regardless of sex.

Employers may not discriminate against medical marijuana users based on their status as registered cardholders or for testing positive for marijuana on a drug test, unless it would cause the employer to lose money or other licensing-related benefits under federal law. Employers may take adverse action against employees who use, possess, or are impaired by marijuana on company property or during work hours.

The Persons With Disabilities Employment Protections Act prohibits employers of four or more employees within the state from discriminating against persons with disabilities. The law requires employers to make reasonable changes in the workplace to accommodate the needs of a person with a disability. AIDS is considered a disability under Delaware law.

The Delaware AIDS Testing Confidentiality Act requires informed consent before an individual may be tested for AIDS, and it requires that test results be kept confidential and released only in limited circumstances.

District of Columbia

The District of Columbia Human Rights Act prohibits employment discrimination for any reason other than individual merit. Employers who employ one or more employees may not discriminate on the basis of race, color, religion, national origin, sex (including pregnancy, childbirth, or related conditions), age (18 or older unless otherwise prohibited by law), marital status, personal appearance, sexual orientation, gender identity and expression, family responsibilities, mental or physical disability, matriculation, political affiliation, source of income, and place of business or residence. The Department of Human Rights has declared that AIDS is a physical handicap under the District of Columbia Human Rights Act. Employers with more than five employees must make a reasonable accommodation for an employee’s religious observance by permitting the employee to make up work time lost due to such observance unless such an accommodation would cause the employer undue hardship.

The District of Columbia’s Unemployed Anti-Discrimination Act prohibits discrimination in hiring based on an individual’s unemployed status and retaliation against an individual for exercising his or her rights or opposing unlawful practices under this law. The law further prohibits advertisements for job openings that state that unemployment disqualifies an individual for a job.

The District of Columbia’s Smoker’s Rights Law prohibits discrimination against individuals for the use of tobacco or tobacco products. The law does not limit an employer from establishing or enforcing restrictions on smoking in the workplace that are required or permitted by law.

Under the District of Columbia Accrued Sick and Safe Leave Act, employers must provide paid leave for physical or mental illness or injury, to obtain professional medical diagnosis or care, for the purpose of caring for a family member who has any of these conditions or needs, and for purposes of obtaining social or legal services related to stalking, domestic violence, or sexual abuse. The amount of leave varies by the size of the employer; for instance, an employer with 100 or more employees must provide one hour of paid leave for every 37 hours worked, not to exceed seven days per calendar year.

Employers of 20 or more employees in the District of Columbia must grant employees up to a total of 16 weeks of unpaid family leave during any 24-month period to care for a “family member” under the District of Columbia Family Leave Law. The Family Leave Law covers birth, adoption, or the placement of a child in foster care, and the serious health condition of a family member. Employees must give reasonable notice of leave requests, 30 days if possible. The Universal Paid Leave Amendment Act of 2016 provides up to two weeks of annual paid leave to eligible employees for their own serious health condition, up to six weeks for their family member’s serious health condition, and up to eight weeks for reasons related to the birth of their child or the legal placement of a child with them. Under the District of Columbia Parental Leave Law, an employee who is a parent is entitled to up to 24 hours of leave during a 12-month period to attend school-related events. The leave may be unpaid, or paid family, vacation, personal, or compensatory leave.

The family leave law is administered by the DC Office of Human Rights and the DC Commission on Human Rights. All employers subject to the law must prominently display a notice furnished by the Office of Human Rights.

Florida

The Florida Civil Human Rights Act prohibits employment discrimination on the basis of race, color, religion, sex, national origin, age, handicap, or marital status. The Human Rights Act applies to all employers of 15 or more employees for 20 or more calendar weeks in the current or preceding calendar year, and it is administered by the Florida Commission on Human Relations. All employers covered by the act must display conspicuously a notice provided by the commission.

Florida wage discrimination law prohibits wage and compensation discrimination on the basis of sex by employers who employ two or more employees, and the equal pay law prohibits discrimination in pay based on sex, marital status, or race.

Florida law also prohibits employment discrimination on the basis of an individual’s sickle cell trait.

The Florida AIDS Act prohibits discrimination in employment based on HIV status, and it extends protections available to handicapped individuals to persons infected with or believed to be infected with the HIV virus. The act also prohibits employment decisions based on HIV testing unless negative HIV status is a bona fide occupational qualification, and it protects the confidentiality of HIV test results and of employee medical records.

Florida law requires informed consent for DNA analysis, confidentiality of test results, and retesting if information from the analysis is used to deny employment. The law also requires that the subject of the DNA analysis be told that the analysis was performed, the results of the analysis, and the use of the analysis results.

In Dade County (which includes Miami), a family leave ordinance requires companies or municipalities with 50 or more employees to provide up to 12 weeks of unpaid leave to employees for the birth or adoption of a child or to care for a seriously ill parent, spouse, or child. Employees also are guaranteed the same or equivalent position when they return to work. Employees with “highly specialized” or policy-setting duties are exempt, as are businesses that can show that granting leave to other vital employees would lead to “substantial and grievous economic injury” to the company. The Metro-Dade Equal Opportunity Board enforces the leave law.

Florida law also prohibits employers from discharging, reprimanding, or in any other way penalizing a member of the National Guard who is ordered into state active duty because of his or her absence. With limited exceptions, an employer must allow a member of the National Guard to return to work following completion of active duty with the seniority he or she had and any additional seniority he or she would have attained if continuously employed. An employer must not terminate the employee, except for cause, for a period of one year after the employee returns to work.

Georgia

Georgia does not have a comprehensive fair employment practices law that applies to nongovernmental (i.e., private) employers. However, three separate Georgia laws prohibit certain forms of employment discrimination: Age discrimination by all employers against individuals 40–70 years of age is prohibited; equal pay must be provided for equal work regardless of sex by employers with 10 or more employees; and disability discrimination against qualified individuals with disabilities, specifically excluding drug and alcohol addiction, is prohibited by employers with 15 or more employees. The Equal Pay for Equal Work Act requires all covered employers to post a copy of its provisions.

The Georgia AIDS Confidentiality Act provides for the confidentiality of information relating to AIDS patients and tests. Effective July 1, 1999, the BreastFeeding Rights Law authorizes females to breast-feed in any public or private location where they are authorized to be. The law also authorizes employers to provide reasonable unpaid break time each day to an employee to express breast milk, and to provide a private room, other than a toilet stall, for this purpose, but it is not required.

Effective June 4, 2010, Georgia law also prohibits an employer, with limited exceptions, from establishing, maintaining, or enforcing any policy that allows the employer to search the locked, privately-owned vehicles of employees or invited guests on the employer’s parking lot. An employer may not condition employment upon any agreement that prohibits a prospective employee from entering company property when his or her motor vehicle contains a firearm that is locked out of sight in the trunk, glove box, or other compartment.

Hawaii

The Hawaii Fair Employment Practice Law prohibits employment discrimination on the basis of race, sex (including pregnancy, childbirth, or related medical conditions, as well as gender identity and expression), sexual orientation, age, religion, color, ancestry, disability (including genetic information) or association with a disabled person, marital status, assignment of income due to child support status, absence due to National Guard service, credit history or credit report, genetic information, or arrest and court records. The statute applies to all employers in the state and is administered by the Civil Rights Commission and the Hawaii Department of Labor and Industrial Relations. Other parts of the Hawaii FEP Law prohibit employers from using lie detector tests and protect employees from discrimination based on garnishments against them, bankruptcy, or work injury.

In addition, another Hawaii statute prohibits wage discrimination on the basis of sex, race, or religion. Also, effective July 1, 1999, employers are required to allow employees to express breast milk in the workplace during any meal or break period.

In Hawaii, employers are required to make every reasonable accommodation to pregnant women with a disability related to pregnancy, childbirth, or related medical conditions. The law applies to all employers and protects workers regardless of tenure and number of hours worked.

Hawaii law also prohibits an employer from requiring an individual to disclose whether he or she has been tested for the AIDS virus or diagnosed as having AIDS. Employers may not discriminate against an employee or applicant based on known domestic or sexual violence victim status and must make reasonable accommodation for such an employee, including changing contact information, screening the employee’s telephone calls, restructuring job functions, changing work location, installing locks or other security devices, and allowing the employee to work flexible hours unless doing so would cause undue hardship.

The Hawaii Family Leave Act requires employers with 100 or more employees to provide employees who have completed at least six consecutive months of service with up to four weeks of unpaid leave during each calendar year for the birth or adoption of a child, or to care for a child, spouse, or reciprocal beneficiary, or parent with a serious health condition. The term “reciprocal beneficiary” is used to define a family relationship available to couples composed of two individuals who are legally prohibited from marrying. Employers must consider disability due to pregnancy, childbirth, or related medical conditions as justification for leave for a “reasonable period of time,” with or without pay. Employers granting paid or unpaid child-care leave must do so without regard to the sex of the employee.

The Hawaii Marriage Equality Act of 2013 recognizes marriages between individuals of the same sex, and extends to same-sex couples the same rights, benefits, protections, and responsibilities of marriage that opposite-sex couples receive.

Idaho

The Idaho Fair Employment Practices Act prohibits employment discrimination on the basis of race, color, religion, national origin, sex, age, disability, or association with a person with a disability. The act applies to employers of five or more employees, and it is administered by the Idaho Commission on Human Rights. All employers subject to the act must display a poster prepared by the commission. The act does not apply to certain employees of religious institutions.

The equal pay law prohibits all employers from discriminating in the payment of wages on the basis of sex for comparable work.

The Idaho Civil Rights Law declares the right of every person to be free from discrimination because of race, creed, color, sex, or national origin, and to obtain and hold employment without such discrimination. A violation of these civil rights constitutes a misdemeanor.

Illinois

The Illinois Human Rights Act prohibits employment discrimination on the basis of race, color, religion, sex (including sexual harassment), pregnancy (including child birth or related conditions), sexual orientation, gender identity, national origin, citizenship, ancestry, age (over 40, or with respect to training or apprenticeship programs, 18–40), marital status, order of protection status, a determinable physical or mental disability unrelated to the ability to perform a particular job, arrest records, citizenship status (except for legitimate distinctions authorized or required by law), military status, or unfavorable discharge from military service. Illegal use of drugs or alcohol is excluded from the definition of disability. The law applies to employers of 15 or more employees and is administered by the Illinois Department of Human Rights. It is a violation to inquire whether an applicant has ever been arrested, or to retaliate against a person who has opposed job bias or perceived sexual harassment, or who has filed a complaint or assisted with an investigation under the act. The law also applies to employers of one or more employees when the alleged violation is disability discrimination, pregnancy discrimination or sexual harassment, or when the employer is a party to a public contract.

Illinois law prohibits employers from discriminating against an employee on the basis of pregnancy, childbirth, or related medical conditions. Women affected by pregnancy, childbirth, or related medical conditions must be treated the same as other employees for all employment-related purposes, including fringe benefit programs. Further, employers must provide reasonable accommodations for any medical or common condition related to pregnancy, childbirth, or related medical conditions, and may not discriminate against an employee or applicant based on the need for such an accommodation. The employer may not require an employee to accept an accommodation, and may not require an employee to take leave for pregnancy or childbirth where another reasonable accommodation can be provided.

Illinois law prohibits employers from discriminating based solely on status as a registered medical marijuana patient or designated caregiver of a medical marijuana patient, unless it would cause the employer to violate federal law or lose money or licensing-related benefits under federal law. Employers may take adverse action based on a good faith belief that the employee used or possessed marijuana on company property or during work hours. Employers may also take adverse action based on a good faith belief that the employee was impaired while working on company property during work hours, but the employee must be given a chance to challenge the basis for the determination.

The AIDS Confidentiality Act prohibits testing or the release of test results for HIV without written authorization from the test subject or the subject’s legal representative, except in specified instances.

The Genetic Information Privacy Act prohibits employers from disclosing genetic testing information about an employee except in limited instances.

Three Illinois equal pay laws provide for equal pay for equal work. Employers of six or more workers engaged in manufacturing must pay equal pay for equal work regardless of sex. Also, all employers must pay equally for equal work regardless of sex or mental or physical handicap. Employees are prohibited from paying women and minors less than the minimum wage, and it is a misdemeanor if they do. Effective January 2019, the Illinois Equal Pay Act also prohibits pay discrimination against African-American employees.

The Smokers’ Rights Law prohibits discrimination based on the use of lawful products off the premises of an employer during nonworking hours.

The School Visitation Rights Act requires employers with 50 or more employees to provide up to eight hours of unpaid leave, but no more than four hours in a day, for parents to attend school conferences or classroom activities.

Employers may not inquire about or into, consider, or require disclosure of the criminal history of an applicant until determining that the applicant is qualified for the position and notifying the applicant of selection for an interview or, if there is no interview, until after a conditional offer of employment. Employers also are prohibited from inquiring about or using arrest or criminal history record information that has been ordered expunged, sealed, or impounded in employment decisions. Employers may consider criminal records or history when required by law or if certain convictions will disqualify the employee from obtaining a bond.

The Employee Credit Privacy Act, effective Jan. 1, 2011, prohibits most Illinois private employers from using an employee’s or applicant’s personal financial history or other credit information, including credit reports, in making employment decisions. The act permits employers to inquire about and use an individual’s credit information only if a good credit history is an established “bona fide occupational requirement” of the position at issue, which generally means that the position involves money-handling, managerial control of the business, or access to confidential information. The act applies to Illinois employers regardless of size, but it exempts those in certain industries, such as banking and financial institutions, law enforcement or investigative units, and debt collection entities.

Illinois’ Right to Privacy in the Workplace Act makes it unlawful for an employer to ask a potential or current employee for social media passwords, to demand access to accounts, or to request or require any employee to provide a password or account information in order to gain access to an account or profile on a social networking site.

Indiana

The Indiana Civil Rights Law prohibits employment discrimination on the basis of race, religion, color, sex, disability, national origin, or ancestry. The definition of disability excludes current illegal use of drugs (but does not exclude rehabilitated drug users or those currently enrolled in rehabilitation programs), compulsive gambling, kleptomania, pyromania, homosexuality, bisexuality, or gender identity disorder. The Civil Rights Law applies to employers of six or more persons, and it is administered by the Indiana Civil Rights Commission. However, with respect to age discrimination, employers with one or more employees are covered and, with respect to disability discrimination, employers with 15 or more employees are covered.

The Indiana Age Discrimination Act applies to employers that are not covered by the federal Age Discrimination in Employment Act and that have one or more employees. It prohibits age discrimination against individuals between the ages of 40 and 74. The Equal Pay Act, which applies to employers who are not covered by the federal Fair Labor Standards Act and that have four or more employees, requires equal pay for men and women for equal work requiring equal skill, effort, and responsibility. The Equal Pay Act also requires covered employers to post a copy of the law in the workplace.

The Indiana AIDS Testing Law requires the consent of an individual prior to testing and prohibits the disclosure of medical information concerning AIDS patients, except in certain specified instances.

The Indiana Smokers’ Rights Law prohibits job discrimination by current or prospective employers based on the use of tobacco products outside the course of employment.

Indiana law prohibits an employer from disciplining an employee who is a member of a volunteer fire department for being absent from work due to a fire or emergency call, or due to an injury that occurs while the employee is engaged in emergency firefighting or other emergency response for up to six months from the date of the injury.

Indiana employers may not require an applicant or employee to disclose information about whether he or she owns, possesses, uses, or transports firearms or ammunition, unless the disclosure concerns fulfillment of employment duties. Further, employers may not condition employment, rights, or privileges on agreement that applicant or employee forgo the right to lawful ownership, possession, storage, transport, or use of firearms or ammunition.

Indiana law prohibits employers from asking employees or applicants about criminal records that have been sealed or restricted. Employers that decide to ask applicants or employees about their criminal history should ask in a form such as, “Have you ever been arrested for or convicted of a crime that has not been expunged by a court?” An expunged conviction is not admissible in an action for negligent hiring, admission, or licensure.

Iowa

The Iowa Civil Rights Act prohibits employment discrimination on the basis of age (18 and older or otherwise considered by law to be adult), race, creed, color, sex (including pregnancy, childbirth, and related conditions), national origin, religion, gender identity, sexual orientation, or disability. The act applies to employers with four or more employees. The act prohibits sex-based discrimination between leave granted due to temporary disability associated with pregnancy, childbirth, or other pregnancy-related medical conditions and leave granted for other temporary disabilities. Employers are required to grant unpaid leave for a period of temporary disability or eight weeks, whichever is less, even if the employee is not eligible for sick leave or temporary disability benefits. Disability is defined to include a person with a positive HIV test result and a diagnosis of AIDS or any related condition. The Civil Rights Act applies to public and private employers and is administered by the Iowa Civil Rights Commission.

Employers in Iowa are prohibited from taking retaliatory action against employees who report child abuse.

The Iowa AIDS Testing Law protects the confidentiality of any person who has taken an AIDS test, and it requires written authorization for disclosure of test results. The Iowa Genetic Testing Law prohibits employers from soliciting, requiring, or administering genetic tests as a condition of employment.

The Iowa Volunteer Emergency Services Providers Job Protection Act prohibits an employer from terminating an employee for joining a volunteer emergency services unit or organization, including a fire department. Although the employer may take a pay deduction for the time that the employee is absent from work, so long as the employee provides written notice that he or she is a volunteer emergency services provider, the employer may not terminate the individual for being absent or late to work due to performance of such duties.

Kansas

The Kansas Act Against Discrimination prohibits employment discrimination on the basis of race, religion, color, sex, physical or mental disability, genetic information, national origin, or ancestry. The definition of disability excludes current illegal use of a controlled substance. The act applies to employers with four or more employees, and is administered by the Kansas Human Rights Commission. All employers subject to the act must display prominently a copy of its provisions. The act does not apply to religious institutions. Other state laws forbid employment discrimination on the basis of age against individuals 40 years of age and older and require equal pay for equal work regardless of sex.

The Kansas Infectious Disease Act provides for the confidentiality of information relating to AIDS patients and tests, and prohibits discrimination in employment on the basis of HIV infection.

Kentucky

The Kentucky Civil Rights Act prohibits employment discrimination on the basis of familial status, race, color, religion, national origin, sex (including pregnancy, childbirth, or related medical conditions), age (40 and older), disability, and smoking (as long as the person complies with any workplace policy concerning smoking). The act applies to employers with eight or more employees in the state in each of 20 or more calendar weeks in the current or preceding calendar year, and is administered by the Kentucky Human Rights Commission. All employers subject to the act must post and maintain a notice furnished by the commission.

Kentucky’s Equal Pay Act prohibits wage discrimination on the basis of sex for all employers with two or more employees. In addition, Kentucky’s Equal Opportunities Act prohibits discrimination on the basis of physical disability (including AIDS and HIV status). Requiring tests for HIV as a condition of hiring, promotion, or continued employment is prohibited. Employers with eight or more employees are covered by the statute.

The Adoption Leave Law provides that employers upon written request must give employees up to six weeks of unpaid leave upon the adoption of a child under seven.

Louisiana

Louisiana employers with 20 or more employees are prohibited from discriminating in employment on the basis of race, color, religion, sex (including pregnancy, childbirth, or related medical conditions), national origin, disability, sickle cell trait, or age (over 40). Louisiana law also prohibits employers from discriminating against any veteran for taking time away from work to attend medical appointments necessary to meet the requirements to receive veterans’ benefits. State law also prohibits employers from discriminating against persons who have filed workers’ compensation claims.

The Louisiana equal pay law covers all employers covered by the Louisiana Employment Discrimination Law. The act prohibits sex-based wage discrimination for equal work on jobs that require equal skill, effort, and responsibility under the similar conditions. The act also prohibits reducing the wages of other employees to comply with the equal pay law.

State law also provides that the results of genetic tests are confidential medical information. Louisiana’s Discrimination Law prohibits employers of more than 25 employees from discriminating against female employees because of pregnancy, childbirth, or related medical condition, and requires the employer to provide unpaid pregnancy leave for a reasonable period of time, not to exceed four months. Employers must grant a temporary transfer to a pregnant employee, upon her request and with the advice of her physician, to a less strenuous or hazardous position if she can be reasonably accommodated.

The Smokers’ Rights Law prohibits discrimination against smokers or nonsmokers as long as they comply with any workplace rules on smoking.

The Bone Marrow Donor Leave Act provides that an employer with 20 or more employees must permit an employee up to 40 work hours of leave to donate bone marrow.

The Louisiana Parental Leave Act requires employers to give employees up to 16 hours of unpaid leave a year to attend, observe, or participate in educational conferences or classroom activities related to the employee’s dependent children, for whom he or she is a legal guardian, that are conducted at the child’s school or daycare center.

Louisiana has established a Commission on Human Rights to enforce state and federal civil rights laws. State law also requires employers to post notices prepared by the Department of Health and Human Resources regarding discrimination based on age and sickle cell trait.

Louisiana law prohibits employers from requiring employees or applicants to disclose any username, password, or other authentication information for the employee’s or applicant’s online accounts. Employers are also prohibited from discriminating against any employee for not disclosing this information. These restrictions do not apply to certain devices paid for or supplied by the employer, certain accounts used for business purposes, and conducting certain investigations into wrongdoing and mishandling of confidential information.

Maine

The Maine Human Rights Act prohibits employment discrimination based on race, color, sex (including pregnancy and related medical conditions), physical or mental disability, religion, ancestry, national origin, age, sexual orientation, or protected activity under the Workers’ Compensation Act or the Whistleblower’s Protection Act.

The act requires employers to take reasonable measures to eliminate structural barriers for persons with disabilities. According to the Human Rights Commission, AIDS is a disability under the act. Maine law prohibits disclosure of the results of an AIDS test except in limited circumstances. The Human Rights Act further prohibits mandatory retirement at a specified age or after a specified number of years of service. The act applies to all employers in the state regardless of the number of employees, and it requires them to post a copy of its provisions.

The Sexual Harassment Policies Law requires employers with 15 or more employees to provide sexual harassment education and training programs for all new employees. All employers must prominently display a poster explaining the law’s requirements, including a description of unlawful sexual harassment and how to file complaints.

The Smokers’ Rights Law prohibits discrimination against applicants or employees due to their use of lawful tobacco products outside the workplace.

Maine’s Genetic Information Privacy Act prohibits discrimination on the basis of genetic information or the refusal to submit to a genetic test. Furthermore, covered employers may not require medical examinations or make medical inquiries, unless such inquiries are shown to be job-related and consistent with business necessity.

The Maine Equal Pay Act prohibits wage discrimination on the basis of sex.

The Maine Family Medical Leave Act requires employers with 25 or more employees at any one location to provide employees up to 10 weeks of paid or unpaid leave in a two-year period for the birth, adoption, or serious health condition of a child, or for the serious health condition of the employee or of the employee’s parent or spouse.

Maine law with respect to nursing mothers requires an employer to provide adequate unpaid break time, or permit an employee to use paid break time or meal time, to express breast milk for her nursing child for up to three years following childbirth. The employer must make reasonable efforts to provide a clean room or other private location, other than a bathroom, and may not discriminate in any way against an employee who chooses to express breast milk in the workplace.

Maine’s Medical Use of Marijuana Act prohibits an employer from discriminating against an individual due to his or her status as a qualified medical marijuana user, unless failing to do so would put the employer in violation of federal law or cause it to lose a federal contract or funding. An employer may prohibit the smoking of marijuana for medical purposes on the premises of the business if the employer prohibits all smoking in the premises and posts notice to that effect on the premises.

Maryland

The Maryland Fair Employment Practices Act forbids employment discrimination on the basis of race, color, religion, sex, age, national origin, ancestry, marital status, genetic information, sexual orientation, gender identity, or physical or mental disability. AIDS and HIV status are physical disabilities under the act. Another state law prohibits an employer from inquiring about a job applicant’s physical, psychological, or psychiatric illness, disability, handicap, or treatment that does not bear a direct, material, and timely relationship to work performance. Physical disability also includes malformation or disfigurement that is caused by bodily injury, birth defect, or illness.

The Fair Employment Practices Act applies to employers with 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year, and is administered by the Maryland Commission on Human Relations. All employers covered by the act must display a poster prepared by the commission.

Maryland employers with 15 or more employees must also provide their pregnant employees who are temporarily disabled with light-duty assignments or transfers to less strenuous jobs, among other accommodations. Typically, these accommodations remove essential functions from a position, rather than allowing the employee to perform the essential functions. The law also requires that employers post a notice “in a conspicuous location” and devote a section in employee handbooks that explains a pregnant employee’s right to a reasonable accommodation under this law.

Maryland also prohibits employment discrimination on the basis of medical information gained through participation in group medical coverage.

The Disclosing Sexual Harassment in the Workplace Act prohibits waivers of certain rights and remedies to sexual harassment claims in employment contracts and requires employers with 50 or more employees to submit a report to the Maryland Commission on Civil Rights indicating the number of settlements entered into based on allegations of sexual harassment, the number of times the employer has paid a settlement to resolve a sexual harassment complaint against the same employee over the prior 10 years, and the number of settlements of sexual harassment claims that contained non-disclosure provisions.

The Maryland Equal Pay Law applies to all employers and prohibits discrimination on the basis of sex in wages or salaries for work of comparable character or for equal work. Employers are required to post a copy of the law in their workplaces. The Parental Leave Law requires employers that grant paid leave to employees for the birth of a child to grant the same leave to employees who adopt a child.

Maryland’s Flexible Leave Act authorizes employees of employers with 15 or more individuals to use leave with pay for an illness in the employee’s immediate family—a child, spouse, or parent. Leave with pay is considered time away from work for which an employee is paid and includes sick leave, vacation time, and compensatory time. An employee may only use leave with pay that has been earned, and employees who earn more than one type of leave with pay may elect the type and amount of leave with pay to be used. The law prohibits an employer from discriminating against an employee who exercises rights under this law.

Maryland’s Deployment of Family Members in the Armed Services Act permits employees to use unpaid leave to spend time with an immediate family member (i.e., spouse, parent, stepparent, child, stepchild, or sibling) on the day that he or she leaves for, or returns from, active duty outside the United States. The employee must have worked for the employer for one year and at least 1,250 hours during the previous 12 months. Employers may not require an employee to use sick, vacation, or other paid-timeoff leave when taking leave under this law. An employer may require an employee requesting leave to submit proof verifying that the leave is being taken for this purpose. The law does not require an employee to provide advance notice of the leave.

Maryland prohibits employers from requesting or requiring an employee or applicant to disclose his or her user name, password, or other means of accessing an account or service through a computer or other electronic device. An employer is further prohibited from discriminating against an employee for refusing to provide his or her user name or password.

An employer also may not use an applicant’s or employee’s credit report or history in any employment decisions unless: (1) the applicant has received an offer of employment and the information will be used for a purpose other than terms and conditions of employment; or (2) the employer has a bona fide purpose for the information that is substantially job-related and disclosed in writing to the applicant or employee.

Massachusetts

The Massachusetts Fair Employment Practice Act prohibits employment discrimination on the basis of race, color, religious creed, national origin, ancestry, age (over 40), sex (including sexual harassment), gender identity, sexual orientation, physical or mental handicap, military service, genetic information, requesting or refusing to furnish certain arrests or violations without conviction, (convictions of misdemeanors that are more than three years old) or information relating to certain admissions to facilities that treat mental illnesses. At least one court has determined that AIDS and AIDS-related complex, as well as the perception that an individual has the disease, are protected handicaps.

The Fair Employment Practice Act applies to employers with six or more employees and is administered by the Massachusetts Commission Against Discrimination. Covered employers must prominently display a notice of the act’s provisions.

The act requires employers to adopt a sexual harassment policy and to train and educate employees. The commission has adopted a model sexual harassment policy. Massachusetts also provides that employees are not disqualified from receiving unemployment benefits if they became separated from employment due to sexual harassment.

The Equal Pay and Maternity Benefits Act prohibits discrimination in payment of wages on the basis of sex for work of like or comparable character (except on the basis of seniority). This act also requires employers to provide eligible female employees (i.e., those who have completed their employer-set probationary period or who have worked on a full-time basis for at least three months) with up to eight weeks of leave (paid or unpaid) in connection with the birth or adoption of a child, and to restore such an employee to a comparable position, provided the employee notifies the employer at least two weeks before her anticipated departure that she intends to return to work. Effective April 9, 2009, Massachusetts law prohibits any entity from interfering with a mother’s right to breast-feed in any place where she may otherwise lawfully be present.

Under Massachusetts’s medical marijuana law, employers with six or more employees must accommodate off-site, off-duty use, unless there is an equally effective alternative treatment available or it would cause the employer undue hardship.

Under the Small Necessities Law, employers covered by the federal Family and Medical Leave Act are required to provide certain eligible employees (at least one year of employment and 1,250 hours of work) with up to 24 hours of leave (paid or unpaid) in any 12-month period to participate in school activities for a child, or to accompany a child or elderly relative (over 60) to medical or dental appointments. The Equal Rights Act gives all citizens, regardless of sex, race, color, creed, or national origin, the same rights as white males. The Equal Rights for Elderly and Disabled Act gives older persons and persons with disabilities those same rights.

Other state laws require employers to pay equal compensation for equal work, regardless of sex, and authorize the Commissioner of Labor to impose additional sanctions on employers found guilty of discriminating on the basis of age.

Employers are prohibited from requiring employees to submit to an AIDS test as a condition of employment. The law also requires consent for AIDS testing and requires that the test results be kept confidential.

An employer may not, prior to an interview, ask a job applicant to provide any information about his or her criminal history on a written application unless the employer or the position falls within a statutory exception. Employers wishing to question an applicant regarding criminal history must provide a copy of the criminal record information in the employer’s possession. Employers conducting five or more background investigations per year must have a written policy regarding the use of criminal background checks in the hiring process.

Employers may not consider for employment purposes an arrest in which no conviction resulted or a first conviction for certain misdemeanors.

Michigan

The Michigan Civil Rights Act prohibits employment discrimination on the basis of religion, race, color, national origin, age, sex (including pregnancy, childbirth and related medical conditions, sexual harassment, sexual orientation, and gender identity), physical handicap, mental disorder, height, weight, familial status, marital status, or arrest or violation without conviction. The Civil Rights Act applies to employers with one or more employees, and is administered by the Michigan Civil Rights Commission. All employers covered under the act must display notices prepared by the commission.

The Michigan Permissive Preference for Veterans in Private Employment Act allows a private employer to grant preference to a veteran in hiring and promotion. The same preference may also be given to a surviving spouse of a deceased veteran or the spouse of a service-connected disabled veteran with a permanent, total disability.

Under Michigan’s Internet Privacy Protection Act, an employer may not request an employee or applicant to grant the employer access to, allow observation of, or disclose information that allows the employer to access or observe a personal internet account of the employee or applicant.

The Michigan Minimum Wage Law provides for equal pay to employees of both sexes who perform equal work. The Equal Pay Law prohibits employers with two or more employees from discriminating on the basis of sex in the payment of wages, and a violation is a misdemeanor. The Bias Against Persons With Disabilities Law prohibits discrimination because of a handicap that is unrelated to an individual’s ability to perform the duties of a particular job. According to the Michigan Civil Rights Commission, AIDS is a handicap under the act. The Michigan AIDS Testing and Confidentiality Act requires written informed consent prior to AIDS testing and provides for confidentiality of test results. The Michigan Ethnic Intimidation Act makes it a felony for any person to maliciously and specifically intend to intimidate or harass another person because of that person’s race, color, religion, gender, or national origin.

The City of Detroit has enacted an ordinance prohibiting employers from discriminating against individuals with AIDS or any related condition.

Minnesota

The Minnesota Human Rights Act prohibits employment discrimination on the basis of race, color, creed, religion, national origin, sex (including pregnancy, childbirth and related disabilities, and sexual harassment), marital status, status with regard to public assistance, membership or activity in a local commission, disability, sexual orientation, or age (over 18). Minnesota’s Age Discrimination Law prohibits mandatory retirement before the age of 70. The Human Rights Act applies to employers with one or more employees and is administered by the Minnesota Department of Human Rights. All employers covered by the Age Discrimination Law must post a notice in the workplace. State law also requires equal pay for equal work regardless of sex. The BreastFeeding Rights in Employment Law requires employers to provide unpaid break time each day to allow nursing mothers to express breast milk, and to provide a private room for this purpose.

An employer must provide reasonable accommodations to an employee for health conditions related to pregnancy or childbirth if she so requests, with the advice of her licensed health care provider or certified doula, unless the employer demonstrates that the accommodation would impose an undue hardship on the operation of the employer’s business. A pregnant employee cannot be required to obtain the advice of her licensed health care provider or certified doula for certain basic accommodations. The employee and employer must engage in an interactive process with respect to an employee’s request for a reasonable accommodation. An employer is not required to create a new or additional position in order to accommodate an employee, and is not required to discharge any employee, transfer any other employee with greater seniority, or promote any employee.

The Minnesota Parental Leave Act requires employers with 21 or more employees to provide up to 12 weeks’ unpaid leave to an eligible employee after the birth or adoption of a child. Eligible employees must be employed for at least 12 consecutive months immediately preceding the request for at least one-half of the hours of a full-time equivalent position. The act also allows parents to use their own accrued sick leave to care for their sick children. In addition, any employer with one or more employees must grant eligible employees (i.e., those who work at least one-half the hours of a fulltime equivalent position) paid or unpaid leave up to a total of 16 hours during any 12-month period to attend conferences or school-related activities that cannot be scheduled during non-work hours, and paid vacation leave may be used for this purpose.

Minnesota law permits an employee to use sick leave for “safety leave,” whether or not the employee’s employer allows use of sick leave for that purpose. Safety leave may be used for the employee to receive or provide assistance to himself or herself or family members because of sexual assault, domestic abuse, or stalking. An employer may limit the use of safety or personal sick leave benefits provided by the employer for absences due to an illness of or injury to the employee’s adult child, spouse, sibling, parent, mother-in-law, father-in-law, grandchild, grandparent, or stepparent to no less than 160 hours in any 12-month period.

The Minnesota’s Smokers’ Rights Law prohibits employers from discriminating against individuals who use “lawful consumable products” off an employer’s premises during nonworking hours.

Under Minnesota’s medical marijuana law, employers may not discriminate against applicants or employees based on status as a registered medical marijuana patient or for testing positive for marijuana on a drug test, unless it would cause the employer to violate federal law or lose money or licensing-related benefits under federal law. Employers may take adverse action against an employee who uses, possesses, or is impaired by marijuana on company property or during work hours.

Under Minnesota’s Permissive Preference for Veterans in Private Employment Act, a private, non-public employer may grant preference to a veteran in hiring and promotion. The same preference may also be given to a surviving spouse of a deceased veteran or the spouse of a service-connected disabled veteran with a permanent, total disability. In Minnesota, employers may not require as a condition precedent to employment any written statement as to a personal record, including convictions, for more than one year immediately preceding the date of application for employment. An employment application may not use forms or blanks asking for the applicant’s criminal record. Private employers may not inquire into or consider the criminal history of a prospective employee until the applicant has been selected for an interview by the employer, or, if there is not an interview, before a conditional offer of employment is made to the applicant.

Mississippi

Mississippi has no comprehensive state fair employment practices law. Employers are subject only to federal antidiscrimination laws.

Mississippi’s Smokers’ Rights Law makes it unlawful for an employer to require an employee or applicant to abstain from smoking or using tobacco products during nonworking hours.

Missouri

The Missouri Human Rights Law prohibits employment discrimination on the basis of race, color, religion, national origin, sex, ancestry, age (40–70 years), disability, or association with a protected person. The term “disability” does not include current use of illegal drugs (however, rehabilitated drug users may be considered “disabled”). AIDS and AIDS-related complex are disabilities under the Missouri Human Rights Law. Missouri also prohibits disclosure of the results of AIDS testing, except under limited circumstances. The Missouri AIDS Act prohibits discrimination against individuals with HIV infection and AIDS.

The Missouri Human Rights Law applies to all private employers with six or more employees, and is administered by the Missouri Commission on Human Rights. Covered employers are required to display conspicuously a notice of its provisions.

Missouri’s Smokers’ Rights Law prohibits employers from discriminating against individuals for the use of tobacco products off the employer’s premises during nonworking hours.

Another state law provides for equal pay for equal work regardless of sex.

The Genetic Testing Information Bias Law makes genetic information confidential and prohibits employment discrimination on the basis of genetic information.

Montana

The Montana Human Rights Act prohibits employment discrimination on the basis of race, creed, religion, marital status, color, sex, physical or mental handicap, age, political opinion (applies to state employees only), or national origin. The act’s maternity leave provisions prohibit pregnancy discrimination. Another state law prohibits wage discrimination on the basis of sex. The act applies to all employers of one or more persons, and is administered by the Montana Human Rights Commission.

The Montana Maternity Leave Act makes it unlawful for an employer to discharge an employee because of pregnancy, refuse to grant her a reasonable leave of absence, require an employee to take a maternity leave for an unreasonable length of time, or deny an employee who is disabled as a result of pregnancy the disability compensation to which she is entitled. Upon her return to work, an employee must be reinstated to her previous or an equivalent position with equivalent pay and benefits.

The Montana AIDS Prevention Act requires written informed consent prior to testing and provides for confidentiality of AIDS testing. Testing may only be ordered by a health care provider.

Another Montana law prohibits intimidation or harassment of individuals due to their race, creed, color, national origin, or involvement in civil rights or human rights activities.

A Smokers’ Rights Law prohibits discrimination against individuals due to the use of lawful products off the employer’s premises during nonworking hours.

An employer may not discriminate against an individual who lawfully uses marijuana off the employer’s premises during nonworking hours. However, this protection does not extend to the medical use of marijuana if such use affects the individual’s ability to perform job-related employment responsibilities, affects the safety of other employees, or conflicts with a bona fide occupational qualification that is reasonably related to an individual’s employment.

Nebraska

The Nebraska Fair Employment Practices Act prohibits employment discrimination and harassment based on age (40 or over), race, color, religion, sex (including pregnancy and related medical conditions), disability, genetic information, marital status, or national origin. The act specifically excludes sexual behavior disorders, gambling, kleptomania, pyromania, and the illegal use of drugs from the definition of disability.

The Fair Employment Practices Act applies to private employers with 15 or more employees and is administered by the Nebraska Equal Opportunity Commission. All employees subject to the act must display prominently a notice prepared by the commission. Religious institutions are exempt from the act.

The age discrimination laws apply to employers with 20 or more employees, and the equal pay laws apply to employers with two or more employees; they provide for equal pay regardless of sex and prohibit discrimination on the basis of age against individuals 40–70 years of age.

Another Nebraska law prohibits discrimination against individuals with or suspected of having AIDS.

The Adoptive Parents’ Child-Care Leave Law requires employers to provide the same leave for the birth of an employee’s child to an employee who is adopting a child.

While sexual orientation and gender identity are not protected classes under the Nebraska Fair Employment Practices Act, an ordinance in the city of Omaha prohibits discrimination based on sexual orientation or gender identity. Omaha’s ordinance covers private employers with six or more employees located in the Omaha area, as well as employment agencies and placement services.

Nevada

The Nevada Fair Employment Practices Act prohibits employment discrimination on the basis of race, religion, color, sex, gender identity or expression, sexual orientation, genetic information, age (40 and older), national origin, political involvement, and mental, physical, aural, or visual disability. Nevada also has an equal pay law that prohibits wage discrimination on the basis of sex.

The Fair Employment Practices Act applies to all employers with 15 or more employees and is administered by the Nevada Equal Rights Commission. All employers subject to the act must display a notice prepared by the commission.

The act requires that an employer who grants leave with pay, without pay, or without loss of seniority to employees for sickness or disability due to a medical condition must extend the same benefits to any female employee for sickness or disability because of medical condition due to pregnancy.

Smokers are protected from discrimination in employment based upon lawful activity during nonworking hours.

The School Visitation Law prohibits an employer from terminating or threatening to terminate employees for attending school conferences or who are summoned to school for emergencies involving their children. In addition, employers who have at least 50 employees must allow eligible employees up to four hours of leave for each child who is enrolled in school per school year to attend parent-teacher conferences, school-sponsored events, as well as school-related activities during regular school hours. The leave is unpaid and must be taken in increments of at least one hour at a time.

Under Nevada’s medical marijuana law, employers must try to make reasonable accommodations for registered medical marijuana patients, as long as it would not pose a safety threat to people or property, cause an undue hardship, or prevent the employee from fulfilling his or her job responsibilities.

Nevada law prohibits employers from conditioning employment or taking adverse employment action based on a consumer credit report or other credit information. There is an exception for circumstances in which the information contained in the consumer credit report or other credit information is reasonably related to the position of employment.

Nevada law also prohibits employers from conditioning employment on access to an employee’s social media account.

New Hampshire

The New Hampshire Law Against Discrimination prohibits employment discrimination on the basis of race, age, sex (including harassment on the basis of sex, pregnancy, and pregnancy-related medical conditions), religious creed, color, marital status, sexual orientation, national origin, and physical or mental disability. The law excludes current illegal use or addiction to a controlled substance from the definition of disability. New Hampshire’s equal pay law prohibits wage discrimination on the basis of sex. Under another law, employers are prohibited from discriminating against employees for using tobacco products outside the course of employment.

The Law Against Discrimination applies to private employers with six or more employees and is administered by the New Hampshire Commission for Human Rights. Every employer subject to the law must post a notice prepared by the commission.

Another New Hampshire law requires an individual’s informed consent to be tested for AIDS and prohibits the release of information regarding the test except in limited instances. The Genetic Testing Law prohibits genetic testing as a condition of employment.

New Hampshire prohibits employers from requesting or requiring that an employee or prospective employee disclose login information for accessing any personal account or service through an electronic communication device. Employers also may not compel an employee or applicant to add anyone to a list of contacts associated with an electronic mail account or personal account or require an employee or applicant to reduce the privacy settings associated with any electronic mail or personal account. An employer may not discriminate against any employee for such employee’s refusal to comply with such a request.

New Jersey

The New Jersey Law Against Discrimination prohibits employment discrimination on the basis of race, creed, color, national origin, ancestry, age (40 and over for state employees), sex, pregnancy, marital status, affectional or sexual orientation (includes heterosexuality, homosexuality, or bisexuality), familial status, atypical hereditary cellular or blood trait (includes traits for sickle cell, hemoglobin C, thalassemia, Tay-Sachs, or cystic fibrosis), genetic information, refusal to submit to a genetic test or to make the results available to an employer, or service in the armed forces. The law also requires equal pay for equal work regardless of sex. The law specifically includes AIDS or HIV infection within the definition of handicap. The Law Against Discrimination applies to all employers and is administered by the New Jersey Division on Civil Rights. All employers subject to the law must display the official employment poster prepared by the division.

New Jersey’s Family Leave Act provides eligible employees up to 12 weeks of leave in a 24-month period for the birth or adoption of a child or to care for a seriously ill family member, and applies to employers with 50 or more employees. Eligible employees must be employed for at least 12 months for not less than 1,000 hours in the immediately preceding 12-month period. Covered employers are required to post a notice advising employees of their rights under the law.

New Jersey’s Paid Family Leave Law provides eligible employees up to six weeks of paid leave in any 12-month period to care for a seriously ill family member or a new child. Unlike the New Jersey Family Leave Act, which applies to employers with 50 or more employees, the paid leave law covers all employers subject to the New Jersey unemployment compensation laws, regardless of size. The Paid Family Leave Law also has less stringent eligibility requirements. Eligible employees need only be employed as defined under the state’s unemployment compensation law (i.e., worked at least 20 weeks in covered New Jersey employment or earned at least 1,000 times the applicable minimum wage during the prior year). The paid leave law does not alter an employee’s rights under other leave laws; thus, if the employee is eligible for both the paid and unpaid leave, the first six weeks of the employee’s leave would be paid under the law, and leave thereafter would be unpaid.

The Smokers’ Rights Law prohibits discrimination on the basis of the use of tobacco products.

Employers may not discriminate based on an applicant’s employment status. Employers generally may not publish any provision stating that applicants must be currently employed, unemployed applicants will not be considered, or only currently employed applicants will be reviewed.

Another New Jersey law requires employers with 50 or more employees to post workplace notices explaining an employee’s right to be free of gender inequity or bias in pay, benefits, or other terms and conditions of employment. The employer must also distribute the notice to new hires, to all employees annually, and upon request. Employers must obtain an acknowledgement of receipt and understanding from employees. Distribution and acknowledgement can be done electronically.

Further, New Jersey law prohibits employers from retaliating against any employee who requests from another employee or former employee information regarding gender, race, ethnicity, military status, national origin, job title, occupational category, and rate of compensation, including benefits, of any employee or former employee, if the purpose of the request is to investigate or take legal action regarding discrimination in compensation.

The New Jersey Security and Financial Empowerment Act requires employers with 25 or more employees to provide up to 20 days of unpaid leave (per 12-month period) to employees who need to address circumstances resulting from domestic violence or a sexually violent offense. To be eligible, the employee must have worked at least 1,000 hours during the immediately preceding 12-month period. Employers are prohibited from discriminating or retaliating against employees who take or request this leave or who refuse to release information deemed confidential under this law.

An employer may not require or request a current or prospective employee to provide or disclose any user name or password, or in any way provide the employer access to, a personal account through an electronic communications device.

New Mexico

The New Mexico Human Rights Act prohibits discrimination in employment on the basis of race, age, religion, color, national origin, ancestry, sex, spousal affiliation, sexual orientation (including gender identity), physical or mental handicap, or serious medical condition (defined as related to or associated with a diagnosis of cancer). The act applies to all private employers with four or more employees and is administered by the New Mexico Human Rights Commission. For purposes of spousal affiliation discrimination, the act is limited to employers with 50 or more employees and, with respect to sexual orientation and gender identity, the act is limited to employers with 15 or more employees. All employers subject to the act must place in conspicuous areas the employment notice published by the commission.

The New Mexico AIDS Testing Law prohibits the use of AIDS tests as a condition of employment. The law also requires informed consent prior to testing and confidentiality for all AIDS tests and related information.

The New Mexico Employee Privacy Act prohibits discrimination in employment against individuals who smoke so long as employees comply with the employers’ policies concerning smoking on the premises during working hours.

The Breast-Feeding Rights Law authorizes nursing mothers to breast-feed in any public or private place. The Genetic Information Privacy Act prohibits employment discrimination on the basis of genetic information.

The New Mexico Promoting Financial Independence for Victims of Domestic Abuse Act requires an employer to grant an employee domestic abuse leave without interfering with, restraining, or denying the employee’s exercise of rights under the act. It also prohibits an employer from retaliating against an employee for taking domestic abuse leave.

The New Mexico Fair Pay for Women Act prohibits employers with four or more employees from engaging in gender–based wage discrimination. The Fair Pay for Women Act also bars employers from retaliating against an employee for bringing an action, assisting another person in bringing a claim, or informing another person of her rights under this law. New Mexico law prohibits prospective employers from requesting or requiring a prospective employee to provide a password or access to his or her social networking account.

New York

The New York Human Rights Law prohibits employment discrimination on the basis of age (18 and older), race, creed, color, national origin, disability, sex (including employment policies or practices relating to pregnancy), marital status, military record or status, predisposing genetic characteristics, and status as a victim of domestic violence. The Human Rights Law applies to private employers with four or more employees and is administered by the New York Division of Human Rights. Every employer and employment agency subject to the law must display a notice furnished by the division. New York also prohibits employment discrimination against persons with certain genetic disorders (i.e., sickle cell trait and carriers of Tay-Sachs and Cooley’s anemia), against persons with genetic predisposition or carrier status, and against individuals with a history of cancer. In addition, employers generally are prohibited from performing genetic tests without an individual’s written informed consent.

Effective as of October 9, 2018, employers must adopt a sexual harassment prevention policy and provide it to all employees in writing, and must provide sexual harassment prevention training to all employees on an annual basis.

According to the Division on Human Rights, AIDS or HIV status is a disability under the Human Rights Law. New York law also prohibits testing an individual for AIDS without his or her informed consent, and it requires that information regarding the test be kept confidential and released only in limited circumstances.

Under the New York Bone Marrow Donor Leave Law, employers with 20 or more employees must grant up to 24 work hours of leave to undergo a medical procedure to donate bone marrow.

Employers who permit an employee to take a leave of absence following the birth of a child must allow an adoptive parent the same leave following the adoption of a child. Employers who provide funeral and bereavement leave for the death of an employee’s spouse, child, or other relative of the spouse must extend the same leave to an employee for the death of the employee’s same-sex committed partner or the child, parent, or relative of the partner. Other laws provide for equal pay for equal work and prohibit discrimination in employment if the person is accompanied by a guide, hearing, or service dog. Under the Equal Pay Law employers must give employees written notice or publicly post information on sick, vacation, and personal leave and on holidays and hours.

New York’s Civil Rights Law provides a mother’s right to breast-feed in any location the mother is otherwise authorized to be. The law also protects from discrimination persons who refuse to perform abortions because of conscience or religious beliefs.

New York law prohibits employment discrimination for participation in political activities, recreational activities, and legal use of consumable products (e.g., tobacco) during nonworking hours and off the employer’s premises.

New York law prohibits employment discrimination on the basis of nonpending arrests followed by termination of the criminal action or a determination favorable to the individual, with limited exceptions. In addition, New York law imposes limitations on denying employment because of an individual’s criminal convictions.

The Discrimination by Employment Agencies Law prohibits discrimination by employment agencies.

The New York Marriage Equality Act requires that the marriages of same-sex and different-sex couples be treated the same in all respects under the law.

Under New York’s medical use of marijuana law, Employers may not discriminate against applicants or employees based on status as a medical marijuana patient, but they may enforce a policy that prohibits employees from working while impaired by marijuana. Employers with four or more employees must also provide reasonable accommodations to medical marijuana users. Employers are not required to take any action that would cause them to violate federal law or lose a federal contract or funding.

New York City also has an extensive ordinance banning employment discrimination. The ordinance, which is enforced by the New York City Human Rights Commission, places significant burdens on employers and authorizes the imposition of very substantial damages and fines on employers found to have violated its provisions. The New York City ordinance bans discrimination on the grounds of sexual preference in addition to the other categories protected by the state Human Rights Law.

North Carolina

The North Carolina Equal Employment Practices Act prohibits discrimination in employment on the basis of race, religion, color, national origin, age (40 and over for state employees), sex, or handicap. The Persons With Disability Protection Act prohibits discrimination on the basis of physical or mental handicap. The act specifically excludes sexual preferences, active alcoholism, drug disorders, and temporary conditions or disfigurements from the definition of disability.

The Equal Employment Practices Act applies to all employers with 15 or more employees and is administered by the North Carolina Human Relations Commission in the Department of Administration. The Persons With Disabilities Protection Act applies to employers with at least 15 full-time employees.

North Carolina law also prohibits employment discrimination on the basis of genetic information, sickle cell anemia trait, Hemoglobin C trait, and whether an individual has requested genetic testing.

The North Carolina Communicable Disease Law prohibits discrimination on the basis of HIV infection and AIDS with respect to continued employment. North Carolina law also prohibits discrimination against individuals for the lawful use of lawful products (e.g., tobacco) during nonworking hours.

The Parental Leave for School Involvement Law requires employers to grant employees four hours of unpaid leave per year to attend or be involved in their children’s school activities.

An employer is prohibited from inquiring about or requiring an applicant to disclose, in any application, interview, or otherwise, information concerning any arrest, criminal charge, or criminal conviction of the applicant that has been expunged.

North Dakota

The North Dakota Human Rights Act prohibits employment discrimination on the basis of race, color, religion, sex (including pregnancy, childbirth, and disabilities related to pregnancy or childbirth), national origin, age (40 and older), marital status, status with regard to public assistance, physical or mental handicap, or lawful off-premises activities. The act applies to private employers with one or more employees for more than one-quarter of the year, and is administered by the North Dakota Department of Labor.

A private employer in North Dakota may provide a preference to a veteran for employment. Spouses of honorably discharged veterans who have a service-connected permanent and total disability also may be preferred for employment. This preference is not considered a violation of any state or local equal employment opportunity law.

Other statutes prohibit wage discrimination on the basis of sex and make it a misdemeanor to discriminate in employment on the basis of age. The age and equal pay laws apply to all employers within the state regardless of the number of employees they have.

The North Dakota Emergency Responder Job Protection Law prohibits employers from discriminating against an individual who is a volunteer emergency responder. An employer may not terminate or demote an employee who is a volunteer emergency responder based upon the employee’s being absent or tardy from work due to a disaster or emergency unless the period exceeds 20 regular working days in a calendar year.

The North Dakota AIDS Testing Law requires informed written consent for HIV testing and protects the confidentiality of test results. North Dakota law also allows a woman to breast-feed her child in any location, public or private, where the woman and child are otherwise authorized to be present.

Ohio

The Ohio Fair Employment Practice Law prohibits employment discrimination on the basis of race, color, religion, military status, national origin, ancestry, physical or mental handicap, age (40 or older), or sex (including pregnancy, illnesses arising out of and during pregnancy, and childbirth or related medical conditions). Conditions excluded from the definition of disability include homosexuality and bisexuality, sexual behavior disorders, compulsive gambling, kleptomania, pyromania, and disorders resulting from current illegal use of a controlled substance. The law applies to private employers with four or more employees and is administered by the Ohio Civil Rights Commission. All employers covered by the law are required to display a notice of its provisions prepared by the commission.

A separate law proscribes discrimination in any job opening against any applicant age 40 or older and termination of any employee age 40 or older without just cause. The Ohio Equal Pay Law prohibits discrimination in the payment of wages for equal work on the basis of race, color, religion, sex, age, national origin, or ancestry.

The Ohio Civil Rights Commission will accept complaints of discrimination on the basis of AIDS and will analyze such complaints under the standards applied to other disabilities.

Effective July 2, 2010, the Ohio Military Family Leave Act requires Ohio employers with 50 or more employees to provide two weeks of unpaid leave each calendar year to an eligible employee who is the spouse, parent, or person with legal custody of a member of the uniformed services when that member is called for active duty longer than 30 days or is injured while serving on active duty. The act also prohibits employers from discharging, disciplining, or otherwise discriminating against an employee because of the employee’s actual or potential exercise, or support for another employee’s exercise, of any right established under the act.

Oklahoma

The Oklahoma Anti-Discrimination Act prohibits employment discrimination on the basis of race, color, religion, sex (including pregnancy, childbirth, and related medical conditions), age (40 and older), national origin, genetic information, or disability. The act applies to private employers and employment agencies with 15 or more employees. The Anti-Discrimination Act is administered by the Oklahoma Attorney General’s Office of Civil Rights Enforcement.

The Smokers’ Rights Law prohibits employers from discriminating against employees who smoke, do not smoke, or use tobacco products during nonworking hours. The Genetic Nondiscrimination Employment Act prohibits employment discrimination on the basis of genetic information.

Oklahoma also has an Equal Pay Act that prohibits employers from paying women lower wages than men for comparable work on jobs that have comparable requirements relating to skill, effort, and responsibility.

Employers in Oklahoma may not require an employee or prospective employee to disclose a user name and password or other means of authentication for accessing a personal online social media account through an electronic communications device. Employers may not require an employee or prospective employee to access the employee’s or prospective employee’s personal online social media account in the presence of the employer in a manner that enables the employer to observe the contents of such accounts if the account’s contents are not available to the general public. An employer may not refuse to hire a prospective employee solely as a result of the prospective employee’s refusal to give the employer the user name and password to the prospective employee’s personal online social media account.

Oregon

The Oregon Fair Employment Practice Act prohibits employment discrimination on the basis of race, religion, color, sex (including pregnancy, childbirth, and related medical conditions), sexual orientation, national origin, ancestry, marital status, physical or mental disability, family relationship, genetic information, age (18 and older), or because of a juvenile record that has been expunged. Employers are prohibited from discriminating against employees for filing workers’ compensation claims. The act also prohibits deceptive employment advertising and bias based on legislative testimony or the employment of a family member. The act applies to all employers with one or more employees (including interns performing work for educational reasons) and is administered by the Oregon Bureau of Labor and Industries. However, with regard to disability discrimination, the law only covers businesses with six or more employees.

Oregon law provides expanded protection for victims of domestic violence and members of the military. Oregon law prohibits employers from discriminating against victims of domestic violence, sexual assault, and stalking and requires employers to make reasonable safety accommodations. It also prohibits employers from discriminating against individuals due to uniformed service, including service in the Army, Navy, Air Force, Marine Corps, Coast Guard, National Guard, or military reserve forces. Oregon law prohibits employment discrimination based upon credit history. The law provides an exception for certain entities, such as federally insured banks and public law enforcement agencies, and for positions where credit history is “substantially job-related,” that is, where the job requires access to financial information not customarily provided in retail transactions. Oregon employers who obtain credit histories under the “substantially job-related” exception must advise the applicant or employee in writing.

Oregon law prohibits knowingly or purposefully publishing a job advertisement that states that qualifications include current employment, an unemployed applicant will not be considered, or only applications submitted by employed persons will be considered.

The Oregon Equal Pay Law requires equal pay regardless of sex for work of a “comparable character.”

The Family Medical Leave Law requires employers with 25 or more employees to provide up to 12 weeks of unpaid leave for an eligible employee to deal with the death of a family member, to care for a family member with a serious health condition, for the employee’s own serious health condition, for a newborn, for a newly placed child, or for a child who needs home care. To be eligible for leave to care for an infant, newly adopted child, or disabled child of any age, the employee must have worked for the employer for at least 180 days prior to the commencement of the leave and at least an average of 25 hours per week during that period. All employees who worked for the employer for at least 180 days prior to the commencement of the leave are eligible for the other type of leave permitted by this law. An employee may use accrued paid leave for unpaid leave. A female employee may have an additional 12 weeks of leave for a pregnancy or childbirth-related illness. This law also requires employers to post a notice stating employees’ rights under the law.

Employers in Oregon with six or more employees must also provide leave to employees who are victims of harassment, so that they may be able to seek legal assistance or medical treatment, or relocate as a matter of safety.

An employer may not require that employees use vacation leave, sick leave, or annual leave for time spent in responding to summons for jury duty and may not discriminate against an employee due to jury service or scheduled service. Employees also have the right to maintain employer-provided insurance while on jury duty.

The Oregon Military Family Leave Act requires Oregon businesses with 25 or more employees to allow military spouses to take up to 14 days’ leave per deployment during periods of military conflict.

The Oregon AIDS Testing Law requires employers to obtain an employee’s written consent prior to testing and prohibits disclosure.

The Nondiscrimination Against Genetic Disorders Law prohibits employers from subjecting job applicants or employees to genetic testing without their consent.

The Bone Marrow Donor Leave Law provides employees with up to 40 hours of unpaid leave for the purposes of undergoing medical procedures to donate bone marrow.

The Smokers’ Protection Law prohibits bias against employees who smoke during off-duty hours. The BreastFeeding Rights Act permits breast-feeding in a public place.

Oregon law prohibits an employer from requiring or requesting an employee or applicant to provide access to his or her personal social media account, to add the employer to his or her social media contact list, or to allow the employer to view the employee’s or applicant’s personal social media account.

Pennsylvania

The Pennsylvania Human Relations Act prohibits employment discrimination on the basis of race, color, familial status, religious creed, ancestry, age (40 and older), sex, national origin, non-job-related handicap or disability, or the use of a guide or support animal. Current illegal use of or addiction to a controlled substance is not included in the definition of disability. Employers may not favor applicants or employees with high-school diplomas over others possessing general education development certificates. The Equal Pay Law also prohibits discrimination in the payment of wages for equal work on the basis of sex. The Human Relations Act applies to all employers with four or more employees and is administered by the Pennsylvania Human Relations Commission. Employers covered by the Human Relations Act and Equal Pay Act are required to display notices of the acts’ provisions.

Another state law permits employers to consider an applicant’s arrests and convictions that relate to his or her suitability for employment. However, if the conviction and arrest do not relate to employment suitability in the position for which the applicant applied, then they may not be considered.

Under Pennsylvania’s Medical Marijuana Act, employers may not discriminate based on status as a medical marijuana patient. Employers may discipline employees for being under the influence of marijuana at the workplace, or for working while under the influence of medical marijuana, but only when the employee’s conduct falls below the normally accepted standard of care for that job. Employers are not required to accommodate medical marijuana use on company property and may prohibit employees from performing any duty that would pose a health or safety risk. Employers are not required to take any action that would violate federal law.

Rhode Island

The Rhode Island Fair Employment Practices Act prohibits employment discrimination on the basis of race, color, national origin, religion, sex (including pregnancy, childbirth, and related medical conditions), sexual orientation, age (40 and older), gender identity or expression, ancestry, or physical or mental handicap. The Fair Employment Practices Act applies to all private employers with four or more employees and is administered by the Rhode Island Commission for Human Rights. All employers covered by the act are required to display prominently a notice of its provisions.

Rhode Island prohibits employers from discriminating against individuals who have AIDS and prohibits testing for AIDS without the prior informed consent of the individual being tested.

The Domestic Abuse Bias in Employment Law prohibits employment discrimination against victims of domestic violence who have sought or obtained protective orders.

The Rhode Island Parental Leave Law requires employers with 50 or more employees to provide 13 weeks of unpaid leave for the birth or adoption of a child; for the care of a sick spouse, parent, child, or parent-in-law; or for the care of the employee’s own serious ailment. The law also requires all covered employers to post a notice detailing employees’ rights.

A smokers’ rights law prohibits employers from discriminating against employees who smoke or use tobacco outside of the workplace.

The Equal Pay Law requires equal pay for equal work regardless of sex.

Rhode Island’s Sexual Harassment, Education, and Training Law requires employers with 50 or more employees to adopt a sexual harassment policy and provide copies to all employees.

Rhode Island prohibits genetic testing as a condition of employment.

The Rhode Island Civil Rights Act of 1990 guarantees that all persons, regardless of race, color, religion, sex, handicap, age, or country of ancestral origin, have the same rights to make and enforce contracts and to enjoy equal benefits of law. The Civil Rights Act does not specifically refer to contracts of employment.

In Rhode Island, a party to a civil union has the same rights, benefits, protections, and responsibilities as people joined together in marriage.

The Rhode Island Homeless Bill of Rights prohibits employers from discriminating against individuals who, while seeking or maintaining employment, are homeless, lack a permanent mailing address, or have the mailing address of a shelter or social service provider.

In Rhode Island, employers may not ask about an applicant’s arrest record in an employment application. An employer also may not obtain information on conviction records—with certain exceptions: (1) if a federal or state law or regulation creates a mandatory or presumptive disqualification from employment based on a person’s conviction of one or more specified criminal offenses, an employer may include a question or otherwise inquire whether the applicant has ever been convicted of any of those offenses; or (2) if a standard fidelity bond or an equivalent bond is required for the position for which the applicant is seeking employment and his or her conviction of one or more specified criminal offenses would disqualify the applicant from obtaining such a bond, an employer may include a question or otherwise inquire whether the applicant has ever been convicted of any of those offenses; and (3) notwithstanding, any employer may ask an applicant for information about his or her criminal convictions at the first interview or thereafter, in accordance with all applicable state and federal laws.

Rhode Island law prohibits an employer or agent of any employer from either orally or in writing requesting, requiring, or subjecting any employee to any lie detector tests as a condition of employment or continued employment.

South Carolina

The South Carolina Human Affairs Law prohibits employment discrimination on the basis of race, religion, color, sex (including pregnancy, childbirth, or related medical conditions), age (40 and older), disability, or national origin. The Human Affairs Law prohibits discrimination on the basis of physical or mental disability but excludes from coverage any individual whose disability poses a direct threat to the health or safety of other employees that cannot be eliminated with a reasonable accommodation or an individual who engages in the illegal use of drugs. The Human Affairs Law applies to all private employers with 15 or more employees and is administered by the South Carolina Human Affairs Commission.

Effective May 17, 2018, the South Carolina Pregnancy Accommodations Act requires employers to provide reasonable accommodations to employees for medical needs arising from pregnancy, childbirth, or related medical conditions. Employers must provide written notice to new employees, at the start of their employment, about their rights under the reasonable accommodation requirements and post a notice of the law.

Under the Bone Marrow Donor Leave Act, employers with 20 or more employees at one site may provide an employee with up to 40 hours of paid leave to undergo a medical procedure to donate bone marrow.

South Carolina’s Smokers’ Rights Law prohibits taking any action against employees based on their use of tobacco products outside the workplace.

The Genetic Information Privacy Act protects the confidentiality of genetic information and prohibits testing without consent.

Employees in South Carolina are protected from retaliatory discharge or discrimination due to a complaint or proceeding filed by them regarding occupational health or safety concerns or because of testimony by an employee in this regard.

South Dakota

The South Dakota Human Relations Act prohibits discrimination in employment on the basis of race, color, creed, religion, sex (including pregnancy), ancestry, mental or physical disability, blindness, or national origin. The act applies to employers with one or more employees and is administered by the South Dakota Division on Human Rights.

The Smokers’ Rights Law prohibits employers from discriminating against employees who smoke off the employer’s premises during nonworking hours.

The Equal Pay Law prohibits sex bias in the payment of wages for work requiring comparable skills.

Tennessee

The Tennessee Anti-Discrimination Act, also referred to as the Tennessee Fair Employment Practices Law, prohibits employment discrimination on the basis of race, creed, color, religion, sex, age (40 and older), national origin, disability, or voluntary civic service. The act allows employers to require that all employees speak only in English at certain times when the employer has a legitimate business necessity for such a policy, including but not limited to, the safe and efficient operation of the employer’s business. The act applies to private employers with eight or more employees and is administered by the Tennessee Human Rights Commission. All covered employers are required to post a notice of the law.

The Tennessee Disability Act prohibits discrimination on the basis of a physical, mental, or visual disability. Current illegal use of or addiction to a controlled substance is excluded from the definition of a disability. Tennessee’s Equal Pay Act prohibits discrimination in the payment of wages on the basis of sex for work of comparable value.

Tennessee’s Maternity Leave Law requires that all employers with 100 or more full-time employees must provide up to four months’ leave with or without pay to female employees employed by the same employer for at least 12 consecutive months for pregnancy, childbirth, and nursing infants. Employers are required to include the law’s provisions in their employee handbooks. The Tennessee Breast-Feeding Rights Law provides that an employer shall provide a reasonable unpaid break time for an employee to express breast milk for that employee’s child. The law also requires employers to make reasonable efforts to provide a private room, other than a toilet stall.

The Equal Pay Act provides that no employer shall discriminate on the basis of sex in the payment of wages for work requiring comparable skills, effort, and responsibility; it is administered by the Tennessee Department of Labor.

The Smokers’ Rights Law prohibits employers from discriminating against employees who smoke during nonworking hours.

Employees who are members of the Tennessee State Guard and Civil Air Patrol are entitled to an unpaid leave of absence without loss of time, pay, regular leave, or vacation, for all periods of service when engaging in duty or training under orders.

Texas

The Texas Employment Discrimination Law prohibits employment discrimination on the basis of race, color, disability, religion, sex (including pregnancy, childbirth, or related medical conditions), national origin, genetic information, or age (40 and older). The definition of disability excludes any communicable diseases, including HIV status or AIDS, that constitute a threat to the health or safety of that person or others, or a current addiction to the use of alcohol, drugs, an illegal substance, or a federally controlled substance. The law applies to all employers with 15 or more employees and administered by the Texas Commission on Human Rights. All employers subject to the act are required to display a notice prepared by the commission.

Another Texas law prohibits employers from requiring individuals to submit to testing for HIV unless the absence of HIV is a bona fide occupational qualification for employment. The law also requires that test results for the AIDS virus be kept confidential.

The City of Austin has enacted an ordinance prohibiting employers with 16 or more employees from discriminating against an individual because he or she has AIDS or HIV, or the perception of having AIDS or HIV.

The Breast-Feeding Rights and Policies Law allows mothers to breast-feed their babies in public or private places, including work sites. In addition, an employer may use the designation “mother-friendly” in its promotional materials if the business develops a policy supporting the practice of work site breast-feeding.

Utah

The Utah Antidiscrimination Act prohibits job discrimination on the basis of race, color, sex, pregnancy, childbirth, pregnancy-related conditions, religion, national origin, sexual orientation, gender identity, physical or mental handicap, or age (40 and older). The law applies to all private employers with 15 or more employees and is administered by the AntiDiscrimination Division of the Industrial Commission of Utah.

The AIDS Testing for Medical Personnel law provides procedures for AIDS testing and reporting for medical service providers who have been exposed to the virus, and for maintaining the confidentiality of test results.

Under Utah law, with particular exceptions, an employer may not maintain or enforce any policy that has the effect of prohibiting an individual from transporting or storing a securely locked firearm in a motor vehicle on company property.

Vermont

The Vermont Fair Employment Practices Act prohibits employment discrimination on the basis of race, color, religion, ancestry, national origin, sex, place of birth, age (18 and older), sexual orientation, gender identity, or disability. The act also prohibits discrimination against individuals with AIDS and prohibits mandatory testing for AIDS as a condition of employment. The definition of disability excludes alcoholics and drug abusers whose current use prohibits performance on the job. The act applies to employers with one or more employees and is administered by the Civil Rights Division of the Vermont Attorney General’s office.

Vermont’s Fair Employment Practices Act also prohibits sexual harassment and requires employers to adopt a policy to ensure a workplace free of sexual harassment. It further requires employers to post information regarding sexual harassment in the workplace, to adopt a policy on sexual harassment, and to provide a copy of the policy to new employees. For employers with more than five employees, this policy must include an internal complaint procedure and the name of the person to whom complaints should be made. Vermont law recognizes marriages between individuals of the same sex.

The Vermont Parental and Family Leave Law provides that employers of 10 or more employees must provide up to 12 weeks of unpaid parental leave in a 12-month period for the birth or placement of a child for the purpose of adoption. Employers with 15 or more employees must provide up to 12 weeks of unpaid family leave in a 12-month period to care for a child, parent, spouse, or parent-in-law with a serious illness, or because of the employee’s own serious illness. Employers must continue benefits for employees on leave, but they may require the employee to pay for the benefits. To be eligible for leave, employees must have been continuously employed by the same employer for one year for an average of 30 hours per week. Employers covered by this law are also required to post in the workplace a notice of its provisions.

The law also provides for short-term family leave of up to four hours of unpaid leave in any 30-day period, not to exceed 24 hours in any 12-month period, for attending a child’s school activity; for a medical appointment or emergency of a child, parent, spouse, or parent-in-law; or for an appointment related to the care of a parent, spouse, or parent-in-law.

Employers are prohibited from discriminating against an employee for having had a genetic test and from using the results of a genetic test or requiring a genetic test as a condition of employment. Vermont law prohibits employers (with one or more employees) from discriminating against an individual based on his or her credit report or credit history. Compensatory and punitive damages are available to individuals who have been discriminated against in violation of this law. Employers are prohibited from retaliating against those who exercise their rights under this law or cooperate in an investigation by the attorney general or state’s attorney.

Vermont’s law on equal pay prohibits discrimination in wages on the basis of sex. Employers must use bona fide, business-related reasons to defend any difference in pay between men and women doing the same work. Vermont’s equal pay law also guarantees the right to request flexible working arrangements, and requires employers to respond to those requests.

Under Vermont law, an employer may not request or require that an employee or applicant take or submit to a polygraph examination or request or require the employee or applicant to give an express or implied waiver of these prohibited practices. An employer may not discriminate against an individual who refuses a polygraph examination.

Virginia

Virginia’s Human Rights Act prohibits discrimination on the basis of race, color, religion, national origin, sex, age (40 and older), marital status, disability, pregnancy, childbirth, or related medical conditions. Businesses with six to 14 employees are prohibited from termination based on all prohibited bases of discrimination except for marital status. Businesses with 15 or more employees are prohibited from any form of discrimination based on all prohibited bases of discrimination. The act is administered by the Office of the Attorney General, Division of Human Rights.

Virginia has an equal pay law that requires equal pay for equal work. Other laws prohibit employment discrimination on the basis of handicap or arrest records. The Virginia AIDS Testing Law requires informed consent and confidentiality for AIDS testing.

Virginia law establishes a right of reemployment for veterans. Upon honorable release from military duty, a member of the Virginia National Guard, Virginia State Defense Force, or naval militia must be restored to the position he or she held when ordered to duty, or, if the position has been abolished, to a comparable vacant position for which he or she is qualified, unless to do so would be unreasonable. The law does not apply if the cumulative length of absence due to service exceeds five years.

Washington

The Washington Law Against Discrimination prohibits employment discrimination on the basis of race, creed, color, national origin (including ancestry), sex (including pregnancy, childbirth, or related medical conditions), sexual orientation (including gender identity), marital status, age (40 and older), arrest records, any sensory, mental, or physical handicap, including actual or perceived HIV infection, or the use of a trained guide or service dog by a disabled person. Under this law an employer cannot require an individual to take an AIDS test as a condition of hiring, promotion, or continued employment (unless the absence of AIDS is a bona fide occupational qualification for the job). The law applies to any employer with eight or more employees and is administered by the Washington State Human Rights Commission. Another Washington law prohibits wage discrimination on the basis of sex.

In Washington, honorably discharged U.S. veterans and their widows or widowers may be given preference for employment.

The Washington Family Leave Act requires that employers allow employees to use accrued sick leave time to care for a child who has a health condition requiring treatment or supervision. The Family Leave Act also requires employers with a daily average of 100 or more employees during the last calendar quarter to provide up to 12 weeks of unpaid leave for the birth or adoption of a child, or for the care of a child with a terminal health condition. To be eligible for leave, employees must be employed by that employer on a continuous basis for the previous year for at least 35 hours per week. Covered employers must display a poster prepared by the Department of Labor and Industries describing this act.

Effective Oct. 1, 2012, the Washington Paid Family Leave Program allows new parents to receive partial compensation for time they take off to spend with their new child. Eligible employees can receive up to $250 per week for up to five weeks. Under the Washington Military Family Leave Act, during periods of military conflict, employees can take up to up to 15 days of unpaid leave before their spouse is deployed or while their spouse is on leave from deployment.

The Washington Leave Law for Victims of Domestic Violence permits victims of domestic violence, sexual assault, or stalking to take reasonable leave, including intermittent leave, for counseling, medical care, and for legal and law enforcement matters. Eligible employees are permitted to take vacation, sick leave, personal time off, or leave without pay, at the option of the employee. Family members of a victim also may take reasonable leave to assist the victim in obtaining help or treatment.

In Washington, all references to spouses or family must be interpreted as applying equally to state registered domestic partnerships as to marital relationships and married persons.

Washington prohibits employers from requiring any employee or prospective employee to take or be subjected to any lie detector or similar tests as a condition of employment or continued employment. However, the law does not apply to persons applying for employment with any law enforcement agency or the juvenile court services agency of any county, or to persons returning after a break of more than 24 consecutive months in service as a fully commissioned law enforcement officer. The law also does not apply to either the initial application for employment or continued employment of persons who manufacture, distribute, or dispense controlled substances, or to persons in sensitive positions directly involving national security.

Effective June 7, 2018, employers are prohibited from requiring employees to waive their right to file state or federal discrimination claims, and also from requiring employees to agree to resolve discrimination claims through dispute resolution.

Washington law protects employee and prospective employee privacy in social networking. Under the law, an employer may not request, require, or otherwise coerce an employee or applicant to disclose login information for, or access in the employer’s presence, his or her social networking account. An employer may not compel an employee or applicant to add the employer to his/her contacts, may not require third-party access to view the account, and may not take adverse action against an employee or applicant based on his/her refusal to provide employer access to his/her social networking accounts.

West Virginia

The West Virginia Human Rights Act prohibits employment discrimination based on race, religion, color, national origin, ancestry, sex, age (40 and older), blindness, or other disability. Another law requires equal pay for equal work regardless of sex. The definition of disability does not include persons whose current use of or addiction to alcohol or drugs prevents such person from performing the duties of his or her job, or constitutes a threat to property or the safety of others. The Human Rights Act applies to all private employers with 12 or more employees and is administered by the West Virginia Human Rights Commission. Every employer covered by the act is required to post in a conspicuous place a notice of its provisions.

West Virginia’s Pregnant Workers’ Fairness Act requires employers to make reasonable accommodations for employees who have documented limitations related to pregnancy, childbirth, or related conditions, unless the accommodation would present an undue hardship for the employer. The law prohibits employers from discriminating against a pregnant employee based on the need to provide reasonable accommodations. The law also prohibits requiring a pregnant employee to accept an accommodation, or forcing a pregnant employee to take leave if another reasonable accommodation can be provided. The law applies to all employers covered by the Human Rights Act.

Under West Virginia’s medical marijuana law, employers may not discriminate against employees based solely on their status as certified to use medical marijuana. Employers may discipline an employee for falling below normally accepted standard of care while under the influence of medical marijuana. Employers may also prohibit employees from performing any duty that would be life-threatening, or that would pose a public health or safety risk, while under the influence of marijuana. Employers are not required to take any action that would violate federal law.

West Virginia also requires that the identity of an individual who has taken an AIDS test, as well as the test results, be kept confidential.

The Smokers’ Rights Law prohibits employment discrimination based upon an individual’s use of tobacco off the employer’s premises during nonworking hours.

Wisconsin

The Wisconsin Fair Employment Act prohibits employment discrimination on the basis of race, age (40 and older), creed, color, disabilities, sex (including pregnancy or related medical conditions), national origin, ancestry, marital status, sexual orientation (including sexual harassment), arrest or conviction records, service in the armed forces, genetic testing, use or nonuse of lawful products (e.g., tobacco) off the employer’s premises during nonworking hours, refusal or failure to submit to honesty tests (lie detector tests), or declining to attend a meeting or to participate in any communication about religious or political matters. The act applies to all employers regardless of the number of employees they have, and is administered by the Wisconsin Department of Industry, Labor, and Human Relations. All employers are required by the act to display conspicuously a notice of its provisions.

In Madison, the city’s Equal Opportunities Ordinance places additional restrictions on Madison employers. Specifically, restrictions cover how Social Security numbers, citizenship status, credit history, gender identity, and genetic identity are considered in employment decisions.

State law also prohibits the use of tests for the AIDS virus. State law also requires that test results for the AIDS virus be kept confidential.

The Wisconsin Family Leave Act requires that employers with 50 or more employees allow eligible employees up to six weeks of unpaid leave for the birth or adoption of a child, and up to two weeks’ leave to care for the serious illness of a child, parent, spouse, or themselves. Employers are required to display the state’s poster regarding this law. To be eligible for leave, employees must have worked for the employer for at least 52 weeks and at least 1,000 hours during that period.

The Wisconsin Civil Air Patrol Membership Law requires employers to grant a leave of absence without pay to members of the Civil Air Patrol for participation in emergency service operations. An employer must allow eligible employees up to five consecutive workdays and up to 15 days of leave per year and may not discriminate against an individual because of membership or service in the Civil Air Patrol.

Under Wisconsin law, an employer may not discipline, discriminate against, or discharge an eligible employee who is a volunteer fire fighter, emergency medical technician, first responder, or ambulance driver for being late or absent from work due to an emergency that begins before the employee is required to report.

Wisconsin law prohibits an employer from interfering with the right of a mother to breastfeed her child in any public or private location where the mother is otherwise authorized to be present.

Wisconsin law restricts the use of lie detector tests in hiring. Employers may not require a prospective employee to take a lie detector test, rely on test results, or discriminate or take any adverse action against an employee or prospective employee for refusing a test or based on the results of a test.

Wyoming

The Wyoming Fair Employment Practices Act prohibits job discrimination based on handicap, sex, pregnancy, race, color, national origin, creed, age (40–69), ancestry, or the use of tobacco. The act applies to all private employers with two or more employees and is administered by the Wyoming Fair Employment Commission. Every employer covered by the act is required to post a notice of its provisions in the workplace.

The state’s equal pay law prohibits employers from paying men more than women for the same work.

The equal pay statute is administered by the Wyoming Department of Labor.

2

Wrongful Discharge

The law concerning employment at will is one of the most rapidly expanding and changing areas in employment law today. Employment at will means that either the employer or the employee can terminate their employment relationship at any time, with or without cause, and with or without notice.

Historically, the employment-at-will relationship arose when the employee was not employed for a specified period of time. In such circumstances, the employee could be terminated at any time and had no right to sue his or her employer concerning the fairness of the discharge.

The growth of unions in the 1920s marked the first significant departure from the at-will rule as many employers acceded to union demands that their members be terminated only for good cause. When such good-cause provisions are contained in collective bargaining agreements, arbitrators generally decide whether an employee’s termination is valid.

In 1935, Congress imposed a limited restriction on the employer’s traditional right to discharge when it enacted the National Labor Relations Act. Under that statute, employees cannot be terminated because they desire to be represented by a union. Later, beginning primarily in the 1960s, Congress and many states further restricted the employer’s right to terminate for any reason by passing antidiscrimination statutes; these are addressed in Chapter 1 of this book.

As next discussed, these statutory restrictions on the employment-at-will doctrine are dwarfed by the changes in the doctrine being fashioned today, primarily by the courts.

A. Erosion of the Employment-at-Will Rule

Numerous states have curtailed the employer’s traditional right to discharge with or without good cause or notice. Courts and legislatures in these states have decided to permit employees to bring wrongful discharge lawsuits against their employers under a variety of theories. The three most common are discussed below.

1. The Public Policy Exception

This is the most common exception to the rule. Courts applying this exception have declared that the employer’s right to terminate an at-will employee may be outweighed by important public policies. Several courts have instructed that such public policies are found in legislation, judicial decisions, and administrative rules, regulations, and decisions.

There are several distinct types of public policy violations:

a. Termination for Refusing to Perform an Unlawful Act

A public policy violation may occur when an employee refuses to perform an unlawful act and is terminated as a result. For example, if a bookkeeper is discharged because he or she refuses to make improper and inaccurate changes in the company’s books, he or she may sue the employer for wrongful discharge in numerous states.

b. Termination for Exercising a Statutory Right

A second type of public policy violation may arise when an employee is discharged for exercising a statutory right. For example, if an employee is terminated for filing a workers’ compensation claim or an employment discrimination claim, that termination is likely to violate public policy. Similarly, terminations due to the employee’s performance of jury duty or military service may provide other bases for wrongful discharge claims founded upon public policy violations.

c. Termination for Whistle-Blowing

A third type of public policy violation recognized in some states is the termination for whistle-blowing. The term “whistle-blowing” generally encompasses situations where employees protest their employer’s or co-employees’ unlawful or immoral activity. Whistle-blowers are not asked to violate the law, but they are terminated for exposing the alleged violations of others. Examples of whistle-blowing discharges include terminations for disclosing illegal activities of the employer or for reporting a co-employee’s criminal activities to the police. In some jurisdictions, state legislatures have created statutes giving protection to whistle-blowers and providing a statutory cause of action for the termination of a whistle-blower (e.g., New Jersey, Oregon).

d. Termination in Violation of Statute

Some courts have recognized a further limitation on an employer’s right to discharge when an employer attempts to make an activity or requirement a condition of employment in violation of a statute. For example, where a state law makes it unlawful for an employer to require an employee to take a polygraph examination as a condition of employment, an employee discharged for refusing to submit to an examination may state a claim for wrongful discharge in some states.

2. The Express or Implied Promise of Job Security/Breach of Contract Claim

The second common exception to the employment-at-will rule arises where the employer expressly or impliedly agrees that the employee has job security. Such agreements frequently involve an understanding between the employer and the employee that the employment relationship will continue indefinitely unless there is good cause for the employee’s discharge. In many states, if the terminated employee can show that the employer made or implied a promise of job security, then it will be for a jury to decide whether there was good cause for the termination.

a. Express Promises of Job Security

Technically, employees who have been expressly promised, either orally or in writing, that they have job security and/ or that they will not be terminated unless their job performance is unsatisfactory are not at-will employees. Accordingly, in one case in which an employee had been promised job security so long as he did a good job and was loyal to the company, the court required the employer to honor its promise. In another case, where an employee was expressly told that he would be given job security if he declined a competitor’s offer of employment, the court enforced that promise and ordered the reinstatement of the discharged employee because there was no good cause for his termination.

b. Implied Promises of Job Security

Courts are increasingly finding that employers have impliedly promised continued employment to their employees. In such cases, when the employer’s actions or statements impliedly showed that an at-will relationship was not intended, employees have successfully brought lawsuits to enforce the implied promise and/or to obtain the damages resulting from the breach of the implied promise.

Courts have inferred such implied promises from numerous sources, including offer letters, personnel policies set forth in a supervisory manual, commendations and promotions given to the employee, the employee’s longevity of service, and, most frequently, employee handbooks. When an employee handbook states that employees will not be discharged unless they first receive a written warning, several courts have held that the handbook implies that employees cannot be terminated without good cause. In such circumstances, employees have been given the opportunity to prove that the employer breached its implied promise of job security. Tip 28

Tip 28—Handbooks

Because employee handbooks serve important purposes, employers are reluctant to eliminate them. At the same time, however, employers do not want to have their handbooks construed as contracts. One way out of this dilemma suggested by several courts is to include prominent disclaimers in employee handbooks. Disclaimer language is included in Chapter 8, Section C.

3. The Implied Covenant of Good Faith and Fair Dealing

Many courts have observed that every contract contains an implied covenant that each party will act in good faith and will not do anything to interfere with the right of the other party to receive the benefits of the contract. Courts in several states have applied this legal principle, known as the implied covenant of good faith and fair dealing, to the employment relationship.

In these states, the implied covenant may be breached when an employer discharges an employee because of malice or bad faith. For example, a breach of the implied covenant was found when an employer terminated an employee to avoid paying him a large sales commission at the end of the year. Other factors that courts have considered to determine whether an implied covenant has been breached are longevity of service; the employee’s past performance as demonstrated by prior raises, bonuses, and promotions; the employer’s assurances that employment would continue; and the employer’s practice of not terminating an employee except for good cause.

B. Other Claims Commonly Advanced by Terminated Employees in Wrongful Discharge Lawsuits

Although a wrongful discharge lawsuit is generally premised upon one of the above three exceptions to the traditional employment-at-will rule, terminated employees often bring other claims related to their discharge. These claims may include one or more of the following, discussed below.

Not all states recognize each of these claims. However, since there is a developing trend in the direction of their judicial acceptance, managers should be aware of them.

1. Fraud or Misrepresentation

A claim for fraud or misrepresentation may arise when the employee’s termination violates an express promise made by the employer that induced the employee to accept or continue employment and that, at the time of making the promise, the employer had no intention of keeping. For example, if an individual leaves a job in reliance upon another employer’s promise that he would be guaranteed five years’ employment in the new job, and the individual is terminated one year later, a fraud or misrepresentation claim may be asserted.

Generally, to establish a claim for fraud or misrepresentation, the terminated employee must show that there was a material misrepresentation of past or existing fact, that the employer knew that the representation was false or recklessly ignored its falsity, and that the employee relied upon it to his or her detriment.

2. Intentional Infliction of Emotional Distress

This type of claim is difficult to prove in the discharge setting, because courts generally require the terminated employee to establish that the employer’s conduct concerning the discharge was so extreme and outrageous “as to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized community.” A federal appeals court, however, upheld a jury’s finding that an employer was liable for “outrageous conduct” causing emotional distress when the evidence indicated that a supervisor intentionally placed company-endorsed checks in the plaintiff’s possession to make it appear that he was stealing from the company.

Claims of intentional infliction of emotional distress may arise when the employee’s termination has racial or sexual underpinnings.

In some instances, claims for intentional or negligent infliction of emotional distress may be barred by a state’s workers’ compensation law.

3. Defamation

A claim for defamation often involves the employee’s assertion that the employer communicated the reason for the discharge to other persons and the communication was false, thus injuring the employee’s reputation.

Truth is always a defense to a defamation claim. Moreover, an employer may assert that its communication was privileged in that it was made in the course of business to another having a corresponding business interest. This defense is often meritorious when the employer truthfully communicates the reason for the discharge to other employees who have a business reason to know or puts the reason for discharge in the employee’s personnel file.

Courts in a few states—notably New York and Minnesota—have recognized a claim by employees against their former employers for “self-defamation” or “self-published defamation.” For example, an employee who has been dismissed for reasons the employee claims are false will claim that he or she is forced to defame himself or herself to prospective new employers when they ask the employee why he or she left the prior employment and the employee must tell them the supposedly false reason.

4. Invasion of Privacy

When an employee is discharged for a reason involving his or her personal life or for a reason not related to employment, claims of invasion of privacy are sometimes seen. Very few states are willing to entertain this type of claim. New York has enacted a statute that protects certain “off duty” conduct, such as legal political activities, recreational activities, and the legal use of consumable products (e.g., alcohol, tobacco).

5. Negligence

In one federal court case, it was determined that an employer could be negligent for failing to warn an employee during a formal performance evaluation that his poor performance could result in his discharge. Very few states currently recognize this type of negligence claim.

6. Interference With Contractual Relations

In some states, discharged employees may claim that the supervisor who fired them is a third party who interfered with the employee’s employment “contract” with the employer. For example, one court held that a supervisor of even an at-will employee was a third party to the employment contract where the supervisor lacked authority to make employment decisions but could only make recommendations to her superiors regarding personnel matters. The supervisor was held liable for interfering with the relationship between the employer and the discharged employee.

One defense to a claim of interference with contractual relations, recognized by certain states, is the “manager’s privilege.” Under this privilege, supervisors who are acting within the scope of their authority and in good faith on behalf of their employer cannot be liable for their decision to terminate an employee. In such cases, the supervisor is deemed to be an agent of the employer and therefore not a third party to the employment contract. An exception to this privilege exists, however, if the manager acts to misappropriate commissions earned by the employee. In those situations, the employee may be permitted to sue both the manager and employer.

7. Interference With Prospective Economic Advantage

This claim often arises when the employer, in addition to discharging an employee, acts to have a licensing commission revoke the employee’s license. In addition, there have been several cases in which terminated employees have alleged that their discharges have injured their professional reputations and raised questions about their competence, thus preventing them from obtaining similar employment elsewhere.

8. Promissory Estoppel

This doctrine applies to situations in which an employer makes a promise to an employee that the employer can reasonably expect to cause the employee to take some action or refrain from taking some action. It is commonly applied when an employee resigns from a job or moves to a new city in reliance upon a job offer from a new employer, which offer is then withdrawn.

C. State-by-State Analysis of Wrongful Discharge Laws

This section summarizes how each state is dealing with the three major exceptions to the traditional employment-at-will rule: the violation of public policy, which includes an analysis, where applicable, of each state’s whistle-blowing policy; the express or implied promise of job security; and the implied covenant of good faith and fair dealing. This overview is not intended to be a comprehensive review of all court decisions on the subject. Indeed, the law is evolving so rapidly that various states’ laws may change in the coming months. Counsel should be consulted to determine how your state’s wrongful discharge laws affect your staffing firm.

Alabama

Alabama courts have not generally recognized public policy exceptions to the at-will rule. An employee discharged for filing a workers’ compensation claim or for filing a written complaint about a safety issue under the workers’ compensation law, however, would have a valid claim under a 1982 amendment to the workers’ compensation statute. This amendment was adopted by the legislature after the Alabama Supreme Court refused to recognize such a public policy exception. In addition, the state legislature has prohibited the discharge of an employee solely for serving on a jury or solely for filing a written notice of a violation of a safety rule.

In July 1987, the Alabama Supreme Court held that language contained in an employee handbook may constitute a binding contract if the language is specific, the offer is communicated to employees, and the employee accepts the offer by continuing to work after learning of the offer. An employer may avoid having a handbook construed as a contract by inserting a prominent disclaimer in the handbook.

One case held that a promise of permanent employment may be binding where the employee left a position with another employer in reliance on such a promise. Under Alabama law, a contract need not state a definite time period of duration to be binding.

Alabama law recognizes no requirement that an employer must deal fairly and in good faith with an employee in an at-will employment relationship. While the Alabama Supreme Court has held that all contracts contain an implied covenant of good faith and fair dealing, breach of such covenants only gives rise to a cause of action in contract, not tort.

Alaska

The Alaska Supreme Court has recognized a public policy exception to the at-will employment rule. The court held that an employer’s unannounced drug testing of an employee that led to the employee’s termination was contrary to the state’s public policy protecting an employee’s right to privacy.

The Alaska Supreme Court has ruled that policy manuals may modify at-will contracts. Thus, an employee policy manual issued seven years after a nurse began work, which provided that discharge would only be for cause, was incorporated into her employment contract. Additionally, the court held that a single sentence in the manual, stating that it was informational only and not an employment contract, was too ambiguous and inconspicuous to be an effective disclaimer when the manual contained no statement that employment remained at will and was followed by 85 pages of detailed text describing, among other things, a probationary period, acts that would result in discharge for cause, and an internal grievance procedure.

Alaska courts have recognized that every employment-at-will relationship contains an implied covenant of good faith and fair dealing. Accordingly, an employer may not discharge an employee in bad faith for the purpose of preventing the employee from receiving benefits under the agreement. For example, when an employee was discharged summarily after asserting his rights under a profit-sharing plan, he had a claim for wrongful discharge.

An agreement that an employee would be employed “until he reached retirement age” created a contract of definite duration, terminable only for good cause. However, an employee’s subjective understanding that “good cause” is required for termination does not create an implied covenant to discharge for “good cause” only.

The Alaska Supreme Court also used a “promissory estoppel” theory to enforce an oral contract when an employee left her job, moved to Alaska, and lost money in reliance on an employer’s promise of a job. The court found that a promise that the employer should reasonably expect, and that does, induce an employee to take some action or refrain from taking some action is enforceable if injustice can be avoided only by enforcing the promise. A 1993 law protects employers from being sued for disclosing information about a former employee’s job performance at the request of the employee or prospective employer, unless the employer has recklessly or maliciously disclosed false information or disclosed information in violation of the employee’s civil rights.

Additionally, pursuant to various Alaska statutes, employers may not terminate employees for filing a complaint, testifying, or exercising rights pursuant to the minimum wage law and/or occupational safety and health standards. Employers are also prohibited from terminating employees who have filed a claim for or received benefits under the workers’ compensation law, participated in jury duty service, or reported violations of privately-enforced safety policies.

Arizona

The Arizona legislature has recognized a public policy exception to the employment-at-will doctrine in enacting the Employment Protection Act, which became effective in July 1996. The act states that “the employment relationship is contractual in nature” and that “the employment relationship is severable at the pleasure of either the employee or the employer unless both the employee and the employer have signed a written contract to the contrary.” The act also states that an employment contract may be written and signed by both the employer and the employee, or may be “set forth in the employment handbook or manual or any similar document distributed to the employee,” if the document “expresses the intent that it is a contract of employment.” Finally, an employment contract may be set forth in a writing signed by the employer.

In enacting the EPA, the legislature approved the Arizona Supreme Court’s holding that an employee may not be fired for “bad cause,” but it also stated that the court lacked the authority to establish the public policy of the state. Under the EPA, an employee may not be discharged for refusing to commit an act, or refusing to refrain from committing an act, that would violate the Arizona Constitution or state statutes. An employee also cannot be discharged for revealing that he or she has information or a reasonable belief that the employer or another employee has violated or will violate the state constitution or statutes. To have a legal claim, the employee must reveal this information to an employee of a public body or political subdivision or to his or her own employer or to an individual whom the employee reasonably believes is a supervisor or manager with authority to investigate and take action.

Accepting jury duty, exercising rights under the Arizona workers’ compensation act, choosing whether to join a labor union, serving in the armed forces or National Guard, refusing to pay fees or gratuities as a condition of employment, exercising the right to be free from the coercion to purchase goods from a particular person, and exercising crime victim’s leave rights are activities also protected by the act. Additionally, other laws prohibit employers from terminating employees for asserting a right or claim (or assisting someone else in asserting his or her right) to minimum wage or earned sick time for any activity connected with the industry wage board formed to establish minimum fair wage for minors.

Under Arizona law, actions for breach of written employment contracts must be brought within one year. The act applies to both actual terminations and so-called “constructive discharges,” where employment conditions have been made so difficult or unpleasant that a reasonable employee would feel compelled to resign. To be deemed “constructively discharged,” however, the employee must give at least 15 days’ notice of his or her resignation.

Prior to the enactment of the EPA, Arizona courts also held that representations in a personnel manual may limit an employer’s ability to discharge its employees. When an employer encourages employees to rely on a manual and the employees do so, an employer is required to comply with the manual’s provisions governing the dismissal of employees. However, reliance is not essential to a finding that the at-will nature of the employment relationship was altered by a personnel manual or other communication.

In one case, a court found that a personnel manual that adopted a progressive discipline policy limited the employer’s ability to discharge an employee, even though the employer had not given the manual to the employees. The employer relied on its supervisors to explain its policies, the employee was not told about the at-will disclaimer in the manual, and the employee knew of other employees who were progressively disciplined, rather than terminated, for violating company policies.

A disclaimer may prevent a handbook or manual from being construed as a contract, but the disclaimer must be clear. It is insufficient for a disclaimer to merely state that a list of infractions “are not inclusive and are only guidelines.”

The Arizona Supreme Court has held that the implied covenant of good faith and fair dealing does exist in employment-at-will contracts, protecting the rights of parties to receive the benefits of the contract they have entered into. A guarantee of continued employment is not one of the agreed-upon benefits, however. Nor does the covenant create an obligation to terminate employees only for “good cause.” The covenant protects employees from discharges motivated by the employer’s desire to avoid payment of benefits already earned, such as sales commissions, but not tenure required to earn pension and retirement benefits. The implied covenant of good faith and fair dealing creates a contract claim, not a tort claim, and Arizona does not recognize a general claim for tortious breach of the covenant of good faith and fair dealing.

State law protects employers from being sued when they provide a reference “in good faith” that discloses information to prospective employers about the reasons for an employee’s termination or about the employee’s performance. For employers of fewer than 100 employees, the employer’s disclosure is presumed to be in good faith if the employer discloses only the information authorized in the statute. For employers of more than 100 employees, good faith is presumed if the employer has a regular practice in Arizona of providing such information at the request of a prospective employer.

Arkansas

Arkansas recognizes at least four public policy exceptions to the at-will doctrine: refusal to violate a criminal statute, exercise of a statutory right, compliance with a statutory duty, and protest of the employer’s or another’s violation of federal or state law. There is no longer a public policy cause of action for wrongful discharge for filing a workers’ compensation claim, previously recognized by Arkansas courts, because the Arkansas legislature amended its workers’ compensation statute to state that the statute provides an employee’s exclusive remedy.

The Arkansas Supreme Court has held that damages for wrongful discharge in violation of public policy are contractual damages and are therefore limited to lost wages from the date of termination until the date of trial, less wages the employee actually earned or could have earned with reasonable diligence. Future damages are not recoverable.

The Arkansas Supreme Court ruled that when an employee relies on a personnel manual that contains an express provision against termination except for cause, he or she may not be arbitrarily discharged in violation of such provision.

California

California courts were among the first to recognize a public policy exception to the employment-at-will rule, and they have reinstated employees who were discharged for refusing to give false testimony before a legislative committee and for refusing to commit an illegal act. In 1988, the California Supreme Court held that punitive damages could be awarded. To qualify as a public policy, the prohibited conduct must be sufficiently described in a statute or the California Constitution, rather than merely being “derived from” or “based upon” a law or constitutional provision. In 1998, the California Supreme Court ruled that violation of a government agency regulation created a public policy exception when the regulation affected the public at large and not merely the private or personal interests of employees or employers.

California courts have recognized several contract-based exceptions to the employment-at-will doctrine. For instance, an employer’s oral assurances to terminate only for good cause will be enforceable when an employee provides consideration (i.e., something of value) in addition to the services to be performed.

California courts will also enforce implied promises to terminate only “for cause.” Such promises may result from circumstances that give rise to a legitimate expectation that the employee will not be terminated except for cause (e.g., in long-term employment, in assurances given to an employee, and from the employer’s acknowledged personnel policies and the like). An at-will disclaimer contained in a handbook is merely one factor to be considered and is not controlling in determining the existence of an employment contract. When an employee has an implied agreement not to be discharged except for good cause, the employer is required to conduct a reasonable investigation before making a discharge decision.

California recognizes an implied covenant of good faith and fair dealing in all employment relationships. For example, if an employee handbook sets forth a three-step disciplinary procedure that must be adhered to before an employee is discharged, a terminated employee may bring suit if that procedure was not followed. In December 1988, the California Supreme Court held that an employee may only receive contract damages for a breach of the implied covenant, not damages for “pain and suffering” or punitive damages.

However, in 1990, the California Court of Appeals held that a wrongfully discharged employee may recover tort damages—which can include “pain and suffering” and punitive damages—for intentional infliction of emotional distress for those situations in which the employer’s breach of contract is accompanied by conduct that is “outrageous.”

The California Supreme Court has recognized a cause of action for “fraudulent inducement of contract” or promissory fraud based on misrepresentations made to an employee to induce the employee to leave a previous job and relocate to California. The misrepresentations, however, must be about something other than termination. California, by statute, provides whistle-blower protection to private-sector employees.

A California statute prohibits an employer from taking any adverse employment action against an employee because the employee, upon reasonable belief, discloses information to a government agency, law enforcement agency, a person with authority over the employee, or to another employee who has authority to investigate, discover, or correct a potential violation, concerning a violation of a local, state, or federal statute or regulation. The statute permits employers to prohibit employees from disclosing confidential, privileged, or trade secret information.

Employers also may not discharge an employee because the employee engaged in lawful conduct occurring during nonworking hours away from the employer’s premises, participated in political activities or affiliations, disclosed his or her wages or discussed or inquired about the wages of others, disclosed the employer’s working conditions, refused to patronize the employer, or refused to authorize disclosure of medical information. Additionally, the California Fair Pay Act creates a private right of action for employees who allege they have been discharged for engaging in any conduct protected by the statute.

A 1996 California law protects employers that provide information about job qualifications or performance at the request of a former employee or prospective employer, as long as the disclosure is made without malice.

Colorado

The Colorado Supreme Court has recognized a public policy exception to the employment-at-will rule. There are four elements of a public policy wrongful discharge case: (1) the employer directed the employee to perform an illegal act or prohibited the employee from performing a public duty or exercising an important job-related right or privilege; (2) the action directed by the employer would violate a specific statute relating to the public health, safety, or welfare, or would undermine a clearly expressed public policy relating to the employee’s basic responsibility as a citizen or the employee’s rights or privileges as a worker; (3) the employee was terminated as a result of refusing to perform the act directed by the employer; and (4) the employer was aware, or reasonably should have been aware, that the employee’s refusal to comply with the order was based on the employee’s reasonable belief that the action ordered by the employer was illegal, contrary to clearly expressed statutory policy relating to the employee’s duty as a citizen, or violative of the employee’s legal rights or privileges as a worker. However, in one case, an employee who alleged that she was discharged in violation of broad, general statements of policy contained in a state statute had no claim for wrongful discharge. Even if an employee alleges that he or she was terminated in retaliation for exercising a statutory right, there is no claim in Colorado for wrongful discharge if the statute itself provides an adequate remedy.

The Colorado Supreme Court has ruled that termination procedures set forth in an employee manual can be contractually binding on the employer, even if the employment was initially at will. An employee may also use the theory of “promissory estoppel” to enforce a manual’s termination procedures if the employer could reasonably have expected the employee to consider the manual a commitment by the employer to adhere to the procedures, the employee relied upon this belief to his or her detriment, and when injustice can be avoided only by enforcing the procedures.

Colorado does not recognize the implied covenant of good faith and fair dealing in the employment-at-will context.

Employers are prohibited from “black-listing” employees. Employers cannot be sued for providing “fair and unbiased” information about a former employee’s job performance unless the information was knowingly false, deliberately misleading, or in violation of another law. Employers that disclose information in writing must provide a copy of the information to the former employee. A violation of Colorado’s blacklisting and reference immunity laws is a misdemeanor punishable by a fine of $110 to $250, 60 days’ imprisonment, or both.

Employers may also be held liable for wrongful termination when they discharge employees for exercising their right to apply for and receive workers’ compensation. Further, the Colorado Anti-Discrimination Act prohibits terminating an employee for engaging in lawful, off-duty, off-premises activities, and prohibits certain employers from discharging an employee for discussing wages with others. Employees are also protected from adverse employment actions for taking time off work for jury duty or to vote. Employers with 50 or more employees may not discharge an employee who exercise a statutory right to take up to three days of leave to protect himself, herself, or the employee’s children from domestic abuse or other violent crimes.

Connecticut

Connecticut courts recognize certain exceptions to the employment-at-will rule. For example, an employee may not be discharged in violation of an important public policy. When an employee is forced to choose between being discharged or risking criminal sanctions for violating a statute, a discharged employee may maintain that the action was wrongful. The Connecticut Supreme Court has ruled that an employee of a small employer (fewer than three employees) could not bring a wrongful discharge claim because the Connecticut Fair Employment Practices Act on which she based her claim specifically exempted small employers. The court held that the exemption itself was an important public policy that limited the act’s broader public policy against discrimination.

Connecticut, by statute, allows an individual to bring a wrongful discharge claim when he or she is discharged for filing a workers’ compensation claim.

Connecticut courts recognize claims for breach of implied contract. For instance, an employment manual may limit an employer’s right to discharge an at-will employee in Connecticut. If an employer includes provisions in a manual or handbook regarding job security, it may be required to follow those provisions in discharging an employee. The Connecticut Supreme Court recognized that an employee’s continuation of employment after the distribution of an employment manual containing an offer of job security might suffice as consideration to make the offer binding. If, however, the changes to an employment manual diminish employee rights, the employee’s continued employment is not sufficient consideration. Oral statements may also create an implied contract.

Connecticut courts also recognize an implied covenant of good faith and fair dealing in employment relationships. The covenant does not, however, require an employer to discharge an employee only for good or just cause.

Connecticut, by statute, provides whistle-blower protection to private-sector employees. It prohibits an employer from taking any adverse employment actions against an employee because the employee has reported a suspected violation of a state, federal, or municipal law or regulation. Connecticut statutes also prohibit employers from discharging employees because they are members of an organization engaged in civil preparedness or are eligible for induction into the armed forces of the United States, report or assist in the investigation of a violation of the state Occupational Health and Safety Act, exercise any rights guaranteed by the First Amendment or Sections 3, 4, or 14 of Article First of the State Constitution, serve on a jury, or disclose or discuss theirs or others’ wages.

Delaware

Delaware courts appear to follow the traditional rule that an employment agreement without a definite duration is terminable by either party with or without cause. The Delaware Supreme Court has not yet explicitly found a public policy exception to the employment-at-will rule, but it has cited with approval a lower court case recognizing such an exception. Employers are prohibited by statute from terminating an employee for filing a workers’ compensation claim. Employers are also prohibited by statute for terminating employees who engage in whistleblowing activities, including reporting, in good faith, violations to a public body or to an employer or supervisor, participating in an action in connection with a violation, and refusing to commit or assist in the commission of a violation.

Although Delaware courts have determined that statements in an employee handbook can change an employee’s at-will status, those courts have been very firm in their position that in order for this to occur the handbook must contain clear and explicit language providing that the employment relationship is to be for a fixed term. For example, a personnel booklet setting forth the conditions for dismissal does not obligate an employer to discharge employees only for one of the booklet’s listed offenses.

Delaware does recognize an implied covenant of good faith and fair dealing, but to prove a breach of the implied covenant an employee must show that an employer has engaged in some fraud, deceit, or misrepresentation. The covenant may also be breached when an employee relies upon a misrepresentation in accepting a new position (i.e., falsely concealing the temporary nature of a position) or when the employer uses its superior bargaining power to deprive an employee of compensation for past services. Although Delaware has not explicitly recognized a public policy exception to the employment-at-will rule, a discharge in violation of public policy may violate the implied covenant of good faith and fair dealing.

State law protects employers that disclose information about an employee’s job performance to a prospective employer, unless the information disclosed was knowingly false or deliberately misleading, was disclosed in violation of a nondisclosure agreement, or was deemed confidential by federal, state, or local law.

District of Columbia

With a few exceptions discussed below, District of Columbia courts follow the traditional rule that employment for an unspecified duration is terminable at the will of either party. If, however, an employee has given the employer something of value in addition to services rendered, for example, by making an investment in the business, the relationship will not be terminable at the will of the employer.

In 1991, the District of Columbia Court of Appeals first recognized a narrow public policy exception to the employment-at-will doctrine when the sole reason for termination is the employee’s refusal to violate a statute or municipal regulation. In 1997, the Court appeared to open the door for a broader public policy exception, but it then failed to reach agreement on the precise scope of the public policy exception. However, an employee need no longer prove that the discharge was “solely” for a prohibited reason. Whistle-blowing, or reporting the illegal behavior of another employee, generally is not protected by a public policy exception. District of Columbia employees are protected by statute from retaliation for filing for workers’ compensation benefits, discussing wage information with other employees, and serving on a jury. An employee who is dismissed in violation of public policy may recover a full range of remedies, including compensatory damages for lost wages, health insurance, retirement payments, and other financial benefits, plus damages for any emotional distress or mental anguish suffered by the employee.

A personnel manual or handbook describing the terms and conditions of employment may create enforceable rights through an implied contract theory. If an employer makes clear assurances in an employee handbook or policy manual that the employer will not terminate an employee without good cause or without following specific procedures, and the handbook is distributed to all employees, those assurances can create a contract that is binding on the employer.

An oral contract of permanent employment is also enforceable in the District of Columbia if an employee has given additional consideration for assurances of employment until retirement, such as leaving a previous job and relocating, and the promise is clear and unambiguous.

The District of Columbia does not recognize the implied covenant of good faith and fair dealing in employment contracts. Creation of an express covenant of good faith and fair dealing requires that the employee give consideration (i.e., something of value) for the covenant.

Florida

Florida courts adhere to the traditional rule that employment without a specific duration is terminable at the will of either party. However, Florida courts have made an exception to the employment-at-will rule when the employee, in addition to performing services, provides additional consideration (i.e., something of value). Florida does not recognize a public policy exception to this rule.

Florida, by statute, allows an individual to bring an action for wrongful discharge if he or she was terminated in retaliation for filing a workers’ compensation claim. Statutes also prohibit retaliation against employees for voting, jury service, testifying in a judicial proceeding in response to a subpoena, and whistle-blowing, although these activities have been narrowly construed by Florida’s courts.

The Florida courts have declined to imply enforceable contract rights from employer policy statements and manuals, requiring instead the parties’ explicit mutual agreement. An appellate court has stated that the mere fact that the rate of pay is expressed as an annual salary does not give rise to an employment contract for one year.

There is no “good faith” exception to an employer’s right to discharge at-will employees in Florida.

Mere expectations by an employee do not create a binding contract that he or she will be discharged only for just cause. Similarly, benefits under a compensation plan voluntarily established by an employer are gratuities that an employer may refuse to award, or discontinue, as circumstances warrant.

Florida, by statute, provides whistle-blower protection to private-sector employees. It prohibits an employer from taking any adverse employment actions against an employee because the employee has taken one of the following actions:

■   Disclosed, or threatened to disclose, to any appropriate governmental agency, under oath and in writing, an activity, policy, or practice of the employer that is in violation of a law, rule, or regulation as long as the employee has first brought the activity, policy, or practice to the attention of a supervisor or the employer and has afforded the employer a reasonable opportunity to correct the activity, policy, or practice

■   Provided information to, or testified before, any appropriate governmental agency, person, or entity conducting an investigation, hearing, or inquiry into an alleged violation of a law, rule, or regulation by the employer

■   Objected, or refused to participate in, any activity, policy, or practice of the employer that is in violation of a law, rule, or regulation

Florida recognizes the tort of “intentional interference with contract,” including interference with an at-will contract, but it does not recognize “negligent” interference with contract. A state law protects employers from being sued when they provide a job reference that discloses information about a former employee’s performance to a prospective employee, unless the employee can show that the employer acted without good faith.

Georgia

In Georgia, by statute, a contract is terminable at will if it is indefinite in duration, for example, a contract “for life” or for “permanent employment.” Oral or written promises are insufficient to overcome the at-will presumption unless the alleged contract specifies a definite period of employment. A handbook might qualify if it contains language that specifies an employee’s period of employment. Short of that, handbooks generally will not be found to be contracts of employment in Georgia. Employer promises of benefits to an at-will employee are binding in Georgia if the employee accepts the offer by remaining in employment. Thus, an employer is bound by the termination provisions of a policy manual.

Georgia courts, however, do not appear willing to recognize a public policy exception to the employment-at-will rule. Accordingly, an employee who alleged that he was terminated because he was about to uncover criminal activities committed by his employer did not have a claim for wrongful discharge.

The Georgia Court of Appeals has rejected the existence of an implied covenant of good faith and fair dealing in at-will employment contracts.

State law protects employers from being sued for disclosing information about an employee’s job performance to a prospective employer. The employer is presumed to be acting in good faith unless lack of good faith is shown by preponderance of the evidence, or if the information is protected by a nondisclosure agreement or is considered confidential under federal, state, or local law.

By statute, employees are protected from discharge based on jury service.

Hawaii

Hawaii courts recognize the traditional rule that employment for an unspecified duration may be terminated by either party at any time. However, the Hawaii Supreme Court has recognized that the at-will employment relationship may be modified if the employer promulgates personnel rules and creates among its employees a legitimate expectation that such rules will be followed. The court further concluded that an aggrieved employee may enforce such personnel rules even if he or she lacks actual notice of them. Decisions indicate, however, that when an employee manual or handbook contains language affirming the at-will relationship, the handbook does not create a contract of employment. The Hawaii Supreme Court ruled that employers may use disclaimers expressly stating that the handbook or manual is not a contract and does not alter the employment-at-will relationship in order to protect against claims of breach of implied contract based upon employee handbooks. The court cautioned, however, that disclaimers do not per se preclude a claim for breach of an implied contract. The effectiveness of a disclaimer may be vitiated for a number of reasons, including disclaimers that (1) are not clear, conspicuous, and understandable; (2) contradict language in the manual; or (3) contradict subsequent oral or written statements by the employer.

The Hawaii Supreme Court has also stated that an employer may be liable for wrongful discharge if an employee was terminated in violation of a clear mandate of public policy. For example, in one case, an employer dismissed an employee for refusing to certify an aircraft’s repair as conforming to federal safety regulations and for reporting his concerns to the Federal Aviation Administration. This discharge was found to have violated public policy. The court based its decision on the fact that the alleged impropriety involved external health, safety, and welfare regulations of importance to the general public. Recognizing that the term “public policy” has a somewhat vague meaning, the state supreme court has required that an employer’s conduct must violate the letter or purpose of a constitution, statute, regulation or court decision. However, the public policy exception does not apply to claims of discharge in violation of existing statutes if the statute itself provides sufficient relief. For example, an airline reservations sales agent’s claim that public policy was violated when she was supposedly terminated solely because of her arrest and court record was dismissed because the state statute prohibiting dismissals for that reason sufficiently advanced the anti-discriminatory policy of the state. However, the Hawaii Supreme Court has held that the exclusivity provision of the state’s workers’ compensation act does not automatically bar a claim for wrongful discharge in violation of public policy.

Hawaii does not recognize an implied duty to terminate an employment contract in good faith.

Hawaii, by statute, provides whistle-blower protection to private-sector employees. It prohibits an employer from taking any adverse employment actions against an employee because the employee has reported or is about to report a suspected violation of a municipal, state, or federal law or rule; or is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body; or participates in a court action.

Hawaii law also protects employees from retaliatory termination for serving jury duty, having their wages garnished, exercising any right under the State Occupational Health and Safety Act, and suffering an on-the-job injury compensable under the workers’ compensation statute (unless the employee is no longer capable of performing his or her job and the employer has no other work available).

Idaho

Idaho courts have recognized a relatively broad public policy exception to the employment-at-will rule. The public policy exception has been held to protect employees who refuse to commit unlawful acts, who perform important public obligations, or who exercise certain legal rights or privileges. As part of the public policy exception, Idaho recognizes a cause of action for discharge of whistleblowers. However, Idaho’s public policy exception does not protect employees in private employment who have been discharged for exercising constitutionally protected rights of free speech and association.

An employee handbook may create enforceable contract rights. In one case, the Supreme Court of Idaho recognized that a handbook relied on by employees created certain terms of employment, and employee signatures upon receipt of the handbook signified the handbook’s importance as a contract. In another case, an Idaho court found that an employer’s letter to an employee regarding a court-ordered 18-month probationary period could be viewed as evidence of a mutual understanding that the employee would remain employed for at least 18 months. The Idaho Supreme Court has recognized the covenant of good faith and fair dealing in employment contracts. The court held that any action that violates, nullifies, or significantly impairs any right or benefit the employee has in the employment contract, whether express or implied, is a violation of the covenant.

Idaho law also protects employers from being sued for providing job references that disclose information about an employee’s job performance to a prospective employer unless the disclosure is made with actual malice or a deliberate intent to mislead.

By statute, employers may not discharge employees for taking leave for jury service.

Illinois

An employer may be liable for discharging an employee in violation of a “clear mandate of public policy.” For example, an employee who alleges that he or she was fired for providing information to the police against a fellow employee has a claim for wrongful discharge. Employees cannot use the public policy exception to sue over other types of discipline short of discharge (i.e., demotion or suspension) or for a constructive discharge. Additionally, an employee who is terminated for pursuing workers’ compensation benefits may bring an action for retaliatory discharge against his or her former employer. The Illinois Supreme Court has recognized an implied contract exception to at-will employment. The court has held that an employee handbook or other policy statements create enforceable contract rights if the policy is clear and reasonable, the employee is aware of the policy, and the employee has accepted the policy by commencing or continuing to work after becoming aware of the policy.

Illinois recognizes no limitation on the right of an employer to discharge an at-will employee absent restrictions imposed by either statute or contract. Consequently, not even a contract’s implied covenant of good faith and fair dealing can limit the circumstances under which an employer can discharge an at-will employee.

Illinois, by statute, provides whistle-blower protection to private-sector employees. It prohibits an employer from taking any adverse employment action against an employee because the employee has disclosed information of any alleged prohibited activity under investigation or of any related activity, including a violation of any law, rule, or regulation; or of mismanagement, a gross waste of funds, or an abuse of authority; or of a substantial and specific danger to public health or safety, if the disclosure is not prohibited by law. Illinois, also by statute, prohibits employers from discharging employees for jury service.

The Illinois Employment Record Disclosure Act protects employers that disclose information about an employee’s job performance to a prospective employer unless the information was knowingly false or in violation of the employee’s civil rights.

Indiana

Indiana courts recognize a public policy exception to the employment-at-will rule in cases where employees were discharged for exercising a statutory right, complying with a statutory duty, or refusing to commit an illegal act for which the employee could be personally liable. A public policy claim has been stated when an employee was terminated for refusing to accept a work schedule that required him to drive more hours than permitted under federal regulations, and when an employee was terminated for filing a workers’ compensation claim. However, there is no general public policy exception in Indiana for whistleblowing.

In 2009, the Indiana Supreme Court recognized a cause of action for constructive retaliatory discharge. The court ruled that an employee who contends that working conditions are so bad that the employee involuntarily resigns may be able to assert a public policy wrongful discharge claim.

Indiana courts have held that handbooks and other employer expressions of employment terms and conditions are insufficient to establish an implied contract removing an employee from at-will status, absent a definite or fixed duration of employment. An employee handbook may constitute a unilateral contract and bind the employer if the following three criteria are met: (1) the language of the employee handbook must contain “a promise clear enough that an employee would reasonably believe that an offer had been made”; (2) the employee handbook must be disseminated to the employee in such a manner that the employee is aware of its contents and reasonably believes it to be an offer; and (3) the employee must accept the offer by commencing or continuing work after learning of the terms of the employee handbook.

An Indiana court has held that oral assurances of permanent employment are insufficient to alter the employee’s at-will status if there was no consideration given by the employee in return for the alleged promise. The Indiana Supreme Court has recognized an exception to the employment-at-will doctrine if an employee establishes that “adequate independent consideration” supports an employment contract. In such cases, the court will likely find that the parties intended to establish a relationship in which the employer may terminate the employee only for good cause.

Indiana does not recognize a duty of good faith and fair dealing owed by an employer to its at-will employees. Additionally, the Indiana Supreme Court has specifically declined to authorize the use of promissory estoppel as a basis for general wrongful discharge damages.

Indiana, by statute, provides whistle-blower protection to private-sector employees whose employer is under public contract. It prohibits such an employer from taking any adverse employment actions against an employee for reporting the misuse of public resources or the violation of a federal law or regulation, a state law or rule, or an ordinance of a political subdivision. Additionally, state health code makes it unlawful for employers to discharge employees for filing certain complaints with the State Board of Health. Also by statute, Indiana employers are prohibited from discharging employees for jury service, or because the employee receives or responds to a subpoena or serves as a witness in a criminal proceeding, has been absent or late as a result of volunteering for emergency services, lawfully owns, possesses, stores, or transports a firearm or ammunition, or uses tobacco products while off-duty.

Employers are protected from being sued when they disclose information about an ex-employee unless the employee can show that the disclosure was known to be false at the time it was made. Indiana employees have the right to obtain, upon written request, a letter describing the reason for their termination.

Iowa

Iowa courts generally adhere to the traditional rule that an at-will employee may be terminated at any time. The Iowa Supreme Court recognized an exception to the at-will rule where the discharge violated a well-recognized and defined public policy of the state. An employee may not be discharged for filing a claim for workers’ compensation, objecting to an employer’s scheme to defraud the federal government, or testifying or intending to testify truthfully in a legal proceeding. The existence of a statutory remedy apparently bars a common law claim under the public policy exception, so that if an employee has a remedy under Iowa’s civil rights statute, he or she cannot sue using the public policy exception. In addition, the Iowa Supreme Court held that emotional distress damages and punitive damages are recoverable in a violation of public policy action. The emotional distress need not be severe to be compensable.

Personnel policies in an employee handbook can become a part of an employment contract in Iowa if their terms are sufficiently definite to create an offer, if the handbook is communicated to and accepted by the employee, and if the employee provides consideration (i.e., something of value). However, as long as the employee has received the handbook, the employee need not be specifically aware of a policy to create a contract.

A cause of action for breach of an implied covenant of good faith and fair dealing does not exist in Iowa.

An Iowa law protects employers who, upon request, disclose work-related information to a prospective employer, unless the employer is found to have acted unreasonably. An employer is deemed to have acted unreasonably if the released information violates an employee’s civil rights; the information is provided to a person who has no legitimate and common interest in receiving the information; or the information is not relevant to the inquiry being made, is provided with malice, or is provided without a good faith belief that the information is true.

By statute, employers may not discharge employees who file complaints about suspected occupational and safety violations or participate in jury service.

Kansas

As a general rule, employment for an unspecified duration may be terminated by either party at any time. The Kansas Supreme Court has recognized public policy exceptions when an employee alleges that he or she was terminated for filing a workers’ compensation claim or for reporting serious infractions of rules, regulations, or laws pertaining to public health, safety, and general welfare. To prevail on a whistle-blower claim, the employee must show that a reasonably prudent person would have concluded the employee’s co-worker or employer was engaged in activities in violation of rules, regulations, or the law pertaining to public health, safety, and the general welfare, the employer had knowledge of the employee’s reporting of such violation prior to discharge of the employee, that the employee was discharged in retaliation for making the report, and that the reporting was done in good faith to “either company management or law enforcement officials.” The public policy cause of action is not available whenever a statute, such as the Kansas Act Against Discrimination, is sufficient to protect the interests of the employee and society. On the other hand, the Kansas Supreme Court has ruled that a worker who files a retaliatory discharge claim under §11(c) of the Occupational Safety and Health Act and employees terminated for filing a wage claim under the Kansas Wage Payment Act may also pursue a common law wrongful discharge claim under the public policy exception to at-will employment because those statutory schemes do not provide an “adequate remedy” to workers who are retaliated against for reporting violations of the statute.

The Kansas Supreme Court has held that a policy manual stating that termination would only be for good cause after corrective measures had failed could alter the at-will nature of the employment relationship, despite the inclusion of a disclaimer in the policy manual. In terms of the effectiveness of a disclaimer, the court looked for evidence that the disclaimer was brought to the personal attention of the employees, or evidence that the employer intended that the disclaimer create an unqualified employment-at-will relationship.

The Kansas Supreme Court also ruled that the covenant of good faith and fair dealing is overly broad and should not be applicable to employment-at-will contracts.

Kansas protects employers from being sued for disclosing information about an employee’s date of employment, pay level, job description and duties, and wage history to a prospective employer. An employer is also protected for disclosing information to which an employee may have access, including written evaluations conducted prior to the employee’s termination, whether the employee was voluntarily or involuntarily released from employment, and the reasons for the employee’s separation.

Upon written request, employers must provide a “service letter” showing the dates of employment, job classification, and wage rate of a terminated employee.

By statute, permanent employees are protected from discharge motived by the employee’s attendance or scheduled attendance in connection with jury duty service.

Kentucky

Kentucky courts adhere to the traditional rule that employment for an indefinite term may be terminated at will by either party. Kentucky recognizes public policy exceptions to the at-will doctrine whenever an employer’s conduct is contrary to fundamental and well-defined public policy as evidenced by constitutional or statutory law. For example, employees are protected by state statute from discrimination or discharge for pursuing a workers’ compensation claim. An employee may not be discharged for reporting irregularities or improper conduct of fellow employees. Additionally, in 2012, the Kentucky Supreme Court held that a university’s discharge of an employee who kept a gun in his car while parked on the university’s property violated a fundamental and well-defined public policy: the right to bear arms. When a statute creates a remedy, an employee cannot sue for retaliatory discharge under the public policy exception. For example, the remedies provided by the Occupational Safety and Health Act are the exclusive remedies for an employee discharged for refusing to withhold safety reports.

The Kentucky Supreme Court has ruled that individual employees and employers are free to contract against discharge without cause. Such a contract must clearly state, for example, that termination will be “for cause” only. No consideration (i.e., anything of value) other than the services performed by the employee is required.

One Kentucky case found that a discharged employee could state a claim for breach of contract based upon a letter agreement that stated that the “project position would last a minimum of 13 months.” Another case recognized a breach of contract claim where posted rules of conduct stated that the employer’s labor agreements “have always explicitly recognize[d] the company’s right to discharge, suspend, or otherwise discipline for ‘just cause.’…our rules of conduct apply to all…employees.” A clear disclaimer may defeat a breach of contract claim based upon a personnel manual.

Kentucky does not recognize a cause of action in tort for breach of the implied duty of good faith and fair dealing in the employment context.

Louisiana

Louisiana courts adhere to the traditional rule that, absent a fixed term of employment, an employee may be terminated at any time with or without cause. The courts have not recognized a general public policy exception to the at-will rule. The only public policy protections are those provided by specific federal or state statutes or by the Louisiana Constitution. For example, a state statute prohibits the discharge of an employee in retaliation for filing a workers’ compensation claim.

Louisiana, by statute, also provides whistle-blower protection to its private employees. The statutes prohibit an employer from taking adverse employment action against an employee who, in good faith, reports or complains of possible environmental violations, discloses or threatens to disclose a workplace act or practice that is in violation of state law, provides information or testifies before any public body conducting an investigation, hearing, or inquiry into a violation of law, or objects or refuses to participate in an employment act or practice that is in violation of law.

Louisiana courts have not been receptive to claims that an employee handbook creates an implied contract. An employee had no claim for wrongful discharge when the employer allegedly failed to comply with its own personnel policy in dismissing him. Similarly, even if an employee moves to Louisiana in reliance upon an oral promise of permanent employment, the employment is still terminable at will. A Louisiana law protects employers from being sued when they respond to a prospective employer’s request for a reference by disclosing information about an employee’s job performance, unless it can be shown that the information was knowingly false and deliberately misleading.

Maine

Maine courts do not recognize an action for wrongful discharge unless an employment agreement sets forth a definite duration of employment, or the parties agree that discharge will be “for cause” only. Such a contract must expressly restrict the employer’s common law right to discharge the employee at will and clearly limit the employer to the enumerated method or methods of terminating the employment. Implied language, whether written or oral, will not be sufficient to abrogate or limit the employer’s common law right. An employee handbook can, under certain circumstances, constitute such an employment contract if the terms explicitly provide that removal or termination must be grounded in good cause, or otherwise clearly state an intent to impose restrictions on the employer’s right to discharge the employee.

An oral representation that an employee “was secure in her job for ‘the rest of [her] life’” was sufficient to support a finding that she was wrongfully discharged. The court concluded that an employment contract for a definite term could be implied in fact based on the circumstances and conduct surrounding the oral promises made to the employee. In another case, however, alleged representations that an employee would have long-term employment if he did a good job did not create an agreement that the employee could be discharged only for “good cause.”

A Maine law provides whistle-blower protection to private employees who

■   Report what the employee has a reasonable cause to believe is a violation of a state or federal law or rule

■   Report what the employee has a reasonable cause to believe is a condition or practice that would put the health or safety of anyone at risk

■   Are requested to participate in a hearing or inquiry by a public body or in a court action

■   Refuse, in good faith, to do something that would expose anyone to serious injury or death, after having sought and been unable to obtain a correction of the condition from the employer

An employee must report the problem to the employer and allow a reasonable time for the employer to correct it, and the employee must also have good reason to believe that the employer will not correct the problem. All employers must post a notice notifying employees of their rights under the statute. Maine also provides statutory protection against retaliatory discharge for filing a workers’ compensation claim. Employees in Maine cannot bring a common law tort action for wrongful discharge in violation of public policy.

Maine courts do not recognize an implied covenant of good faith and fair dealing in employment contracts.

Maine law protects employers from being sued when they disclose information about an employee’s job performance to a prospective employer unless the employer has knowingly disclosed false or misleading information with malicious intent.

Maryland

Maryland’s highest court has recognized a cause of action for abusive discharge in those instances when an employee is terminated in violation of some “clear mandate of public policy.” There was no violation of public policy, however, when an employee was discharged for reporting to his supervisors allegedly illegal acts committed by the company. State statutes also restrict an employer’s right to terminate an at-will employee who has filed a workers’ compensation claim, exercised voting rights, or reported for jury service.

Further, an employee may not bring a wrongful discharge suit if there is a statutory remedy available to redress the alleged wrong. Although the Maryland statutes regarding discrimination provide the exclusive remedy for discrimination claims, the Maryland Court of Appeals has held that an employee employed by a small business with fewer than 15 employees, and therefore not subject to the discrimination laws, could still sue for wrongful discharge based upon sex discrimination because the Maryland Fair Employment Practices Act expressed a clear mandate of public policy against sex discrimination. In addition, the Maryland workers’ compensation statute does not prevent employees from suing for retaliatory discharge because the statute does not provide a remedy.

Maryland courts do not recognize claims for wrongful discharge based on breach of the implied covenant of good faith and fair dealing.

The intermediate appellate court of Maryland has held that policy statements that limit the employer’s discretion to terminate an employee may, if clearly expressed and communicated to the employee, become contractually binding on the employer. However, the court cautioned that not every statement made in a handbook or other publication will rise to the level of an enforceable covenant.

Maryland recognizes a limited exception to at-will employment for employer policy statements, such as those found in handbooks and on applications, “when, with knowledge of their existence, employees start or continue to work for the employer.” However, courts have refused to find employment contracts where an express disclaimer was included.

Under Maryland’s Equal Pay for Equal Work Act, employers may not discharge an employee for, among other things, inquiring about another employee’s wages, disclosing the employee’s own wages, and discussing another employee’s wages. The Act also grants employees a private right of action against employers who violate the Act. Employers are also prohibited by statute from discharging employees for jury duty service.

Maryland law protects employers from being sued when they disclose information about an employee’s job performance or the reasons for a termination to a prospective employer, unless the employee can show that the employer acted with actual malice or intentionally or recklessly disclosed false information.

Massachusetts

Massachusetts recognizes a public policy exception to the employment-at-will doctrine and permits employees to sue for wrongful discharge if they are fired under these circumstances: for asserting a legally guaranteed right (e.g., filing a workers’ compensation claim), for doing what is legally required (e.g., serving on a jury), for refusing to do what the law prohibits (e.g., falsifying records to support a fraudulent tax return), or for reporting wrongful conduct to company officials.

Additionally, employers have been found liable for wrongful discharge for dismissing employees who refused to answer questions that represented a “serious interference” with their right to privacy or who complained to other employees that the company was acting wrongfully, but not for terminating employees who refused to answer questions relating to their job qualifications.

The common law claim is not available if a statute provides a remedy (e.g., remedies provided in antidiscrimination laws or under workers’ compensation laws). Employees are not entitled to punitive damages on a retaliatory discharge claim because Massachusetts prohibits punitive damages unless expressly authorized by statute.

Massachusetts courts have recognized claims based upon an implied duty of good faith and fair dealing. An employer may not discharge an employee to deprive him or her of commissions already earned. The mere fact that an employer lacked good cause to discharge an employee, however, does not by itself support a finding that the termination was in bad faith. Moreover, the Massachusetts courts will not consider a claim for breach of the good faith covenant if the state legislature has provided statutory relief, or if the employee has greater contractual remedies available.

In deciding whether a manual or handbook constitutes an implied contract, a court in Massachusetts will look at whether:

■   the employee negotiated over the terms of the handbook;

■   the employer has retained the right to unilaterally modify the manual’s terms, states that it only provides guidance, or includes another disclaimer;

■   the employee signed the manual, manifests assent to the handbook, or acknowledged understanding of its terms; and

■   the employer called special attention to the handbook.

This list of factors is not exhaustive, and the factors are not essential preconditions of an enforceable contract. The Massachusetts Supreme Court has opined that the if an employee reasonably believes that the employer is offering to continue the employee’s employment on the terms stated in the manual, and the employee continues to work after receiving the manual, the employee has accepted an offer of a unilateral contract.

An agreement on a yearly salary can indicate the parties’ intent that employment should continue for at least a year if that intent is supported by other evidence. For example, a letter confirming a $60,000 “annual” salary, or acknowledging an interest-free loan to be forgiven after two years of employment, may indicate the parties’ intent that employment will continue for a specific term.

Massachusetts recognizes that the covenant of good faith and fair dealing is implicit in all contracts. The mere absence of good cause for a discharge does not mean that an employee can sue for a violation of the covenant of good faith and fair dealing. Rather, the employee must show that the discharge involved an intent by the employer to benefit financially at the employee’s expense (i.e., to retain commissions), or that the discharge was in violation of public policy.

Michigan

Michigan’s courts have been among the most aggressive in the nation in creating exceptions to the employment-at-will rule. However, several cases from the Michigan Supreme Court have taken a more cautious approach that is more favorable to employers. Nevertheless, staffing firms in Michigan should be particularly careful when disciplining or terminating employees. It is a good idea to consult counsel before taking any action. In Michigan, a contract for a definite period of time is presumptively terminable only for just cause. A contract for “permanent” or “lifetime” employment is considered to be a contract for an indefinite duration and is presumptively terminable at will.

Michigan courts have recognized three public policy exceptions to the employment-at-will rule: dismissal in violation of a statute, dismissal for failing or refusing to participate in a violation of law, and dismissal for exercising a right conferred by statute, such as filing a claim for workers’ compensation benefits. There must be a clear legislative expression of public policy (i.e., a federal or state statute), but an employee need not prove an actual violation of the underlying statute to be protected by the public policy exception.

A split exists among the different panels as to whether a retaliatory discharge is considered a tort or a contract cause of action. In a case before the Michigan Supreme Court, a majority of the judges found that an arbitration agreement in a personnel handbook was not binding because the employer had reserved the right to change the handbook, and also included an at-will disclaimer, so that the manual was not a binding contract. A minority of three judges went a step further and found that the public policy against discrimination prevented employees from waiving in advance their right to bring discrimination claims in court, so that no agreement to arbitrate claims before a claim arises can be enforced. All of the judges agreed that parties could agree to arbitrate a claim that has already accrued.

An employee can sue for common law wrongful termination in violation of public policy if there is no statutory relief available. Employees must also exhaust any administrative remedies available to them before seeking redress in court. Michigan has a Whistle-Blowers’ Protection Act that prohibits an employer from discharging an employee because he or she reports, or is about to report, a violation of law, or is about to participate in an investigation or hearing. Employers must post a notice regarding this statute. Michigan has also enacted a statute prohibiting retaliatory discharge for filing a workers’ compensation claim.

A “for cause” discharge standard may become part of an employment contract by either express written or oral agreement, or from the employee’s legitimate expectations grounded in manuals or an employer’s policy statements. Therefore, a personnel manual or oral statements about job security made during an interview may create a contract of employment that can be terminated only for cause. If a manual sets forth a disciplinary procedure prior to termination, that procedure must be followed. Similarly, if an employee is told that he or she will not be terminated so long as job performance remains adequate, then the employee cannot be discharged without good cause. However, an employee may not reasonably rely on expectations of permanent employment if an employer issues a handbook stating that employment is at will.

In one case, the Michigan Supreme Court held that an employee could sue for breach of contract under the legitimate expectations theory where the management-rights section of a handbook stated that the employer retained the right to discharge employees, but that this right was “subject…to the regulations and restrictions outlined in th[e] employee handbook.”

In 1991, the Michigan Supreme Court held that an employer’s statement promising termination only for cause had to be “clear and unequivocal” to be binding in contract. The court found that this test was not satisfied when a sales representative was given a pre-hire promise that she would be employed as long as she met her sales quota; she had not negotiated for job security and had been given a list of rules that included causes sufficient to justify termination other than failure to meet her quota.

In one case, a discharged employee was awarded damages, even though the court found that his discharge neither violated public policy nor breached any contract, when the employer negligently failed to inform him of performance deficiencies in evaluations required by written personnel policies.

The Michigan Supreme Court has also held that an employer that does not expressly reserve its right to unilaterally change a written policy from for-cause discharge to at-will termination may make a unilateral change, provided the employer uniformly gives affected employees reasonable notice of the policy change and affected employees do not have an individual contract of employment terminable only for just cause.

Effective disclaimers have included language stating that employment may be terminated at any time with or without cause or notice; that a handbook was not a contract and that the employer could change its employment terms unilaterally; and that the employer’s at-will policy could be changed only in writing by an authorized representative of the company. The Michigan Court of Appeals has found that implying a covenant of good faith and fair dealing is inconsistent with the general rule that an employer can discharge employees at will.

Several courts in Michigan have held that if an employer provides an internal hearing procedure for resolving disputes with its employees over discipline or discharge, then employees must follow those procedures and are bound by any resulting decision, provided that the procedures are fair and the decision makers are sufficiently neutral.

Michigan law protects employers from being sued when they disclose, upon the request of a prospective employer, information about an employee’s job performance that is documented in the employee’s personnel file. Good faith is presumed unless the information is knowingly false or misleading or unless disclosure is specifically prohibited by federal or state law.

Minnesota

Minnesota courts have recognized an exception to the employment-at-will rule in those instances when an employee provides something in addition to his or her services or detrimentally relies upon the promise of employment. In one case, when an employee had agreed to give up part of his stock to his employer in exchange for employment, the relationship was no longer at will. Furthermore, if an employee resigns from a position to accept an employer’s offer of employment, an employer may not rescind the offer before the employee begins, or the employee will have a claim under the theory of promissory estoppel.

The Minnesota Supreme Court has concluded that an employer’s disciplinary policy, published and distributed to employees in an employee handbook, created enforceable contract rights. The employer was required to follow the procedure contained in the handbook for dismissing employees, even though the employee furnished no additional consideration other than continuing to work after receiving the handbook. A handbook may be deemed an employment contract even if the employer has expressly retained the right to amend and change the handbook. A prominent disclaimer on the first page of a handbook stating that the handbook is not to be considered a part of any employment agreement will be sufficient to prevent the handbook from being construed as a contract.

The Minnesota Supreme Court also recognizes a public policy exception to the at-will rule if an employee is discharged for refusing to violate the law. An employee who alleged that he was discharged for refusing to violate the Federal Clean Air Act stated a claim for wrongful discharge. Although Minnesota does not recognize an implied covenant of good faith and fair dealing in the absence of an employment contract, the circumstances and actions of the parties may create an implied contract (e.g., from a handbook, or a job offer where the employee relocates), and a covenant of good faith and fair dealing may be included in the implied contract.

Minnesota, by statute, provides whistle-blower protection to private-sector employees. The statute prohibits an employer from taking adverse employment action against an employee under these circumstances:

■   An employee, in good faith, reports violations or suspected violations of any federal or state law, or governmental rule.

■   An employee refuses to participate in an activity with a good faith belief that the activity is illegal.

■   The employee is requested to participate in an investigation, hearing, or inquiry.

In addition, Minnesota protects employees by statute from retaliation for seeking workers’ compensation benefits and for jury duty service.

Minnesota employees can also sue for defamation by self-publication if an employee who has been dismissed for reasons the employee believes are false is forced to defame himself or herself by replying to questions from prospective employers as to why he or she left prior employment. Such a claim has a two-year statute of limitations, which runs from the first time an employee is “forced” to state the reason for the discharge and does not begin to run anew each time the employee conveys the information to a prospective employer.

Minnesota employees can request a written explanation of the reasons for their termination, which the employer must provide within five working days. Employers cannot be sued for libel, slander, or defamation for providing this written explanation.

Mississippi

Mississippi courts follow the traditional rule that without an employment contract with a definite duration, an employee may be terminated with or without cause at any time. An implied contract for a definite term may be created from promises to pay an annual salary and benefits for one year. An employee who was enticed to move 1,000 miles stated a claim for a one-year contract where he was promised an annual salary, free housing for one year, and a job measured by the amount of sales he could produce in one year.

Statements in an employee manual or other representations can create contractual obligations. A handbook distributed to all employees that describes benefits and compensation may be construed as a part of an employment contract, despite disclaimers. In one case, a court held that an employee stated a breach of contract claim for failure to pay workers’ compensation benefits when a handbook stated that the employer would cover workers’ compensation benefits for all compensable injuries, even though the handbook included a disclaimer stating that its provisions did not guarantee continued benefits or employment. Absent a disclaimer, an employer is obligated to follow any procedures it sets forth in an employment manual regarding discipline for violations of rules specifically covered by the manual, and in one case an employee who was terminated not in accord with stated procedures was found to have stated a claim for breach of contract. Punitive damages and damages for mental anguish may be available for breach of an implied contract.

The Mississippi Supreme Court has specifically refused to find that there is an implied covenant of good faith and fair dealing in the employment relationship.

The Mississippi Supreme Court has adopted a narrow public policy exception to the at-will employment doctrine. An employee who is discharged for refusing to participate in an illegal act, or for reporting an employer’s illegal act to the employer or to anyone else, can bring an action in tort for damages against the employer. Additionally, in 2016, the Mississippi Supreme Court recognized a statutory exception to the employment-at-will doctrine. The Court held that, because Mississippi Code § 45-9-55 prohibits an employer from establishing, maintaining, or enforcing any policy that prohibits a person from transporting or storing a firearm in a locked vehicle in a designated parking area, an employer who terminates an employee for having a firearm inside his or her locked vehicle on company property may be liable for wrongful discharge.

Missouri

Generally, Missouri courts take the position that employment for an indefinite term may be terminated by either party at any time. Missouri courts recognize a public policy exception. An at-will employee in Missouri may not be terminated for: refusing to violate the law or any well-established and clear mandate of public policy as expressed in the constitution, statutes, regulations promulgated pursuant to statute, or rules created by a government body; or reporting wrongdoing or violations of law to superiors or public authorities. For example, an employee may maintain an action for wrongful discharge after being terminated for informing an employer of his intention to report its illegal practices to a regulatory agency. Missouri also provides statutory protections from retaliation for employees who file for workers’ compensation benefits and participate in jury duty.

The Missouri Supreme Court has declined to adopt a “handbook exception” to the employment-at-will doctrine. An employer’s handbook was held not to be a contractual offer to its employees, because the handbook was merely an informational statement of the employer’s self-imposed policies. Several of the guidelines in the handbook were subject to broad discretion and interpretation, and the rules were subject to change at any time. Missouri also does not recognize oral promises of at-will employment, so that a job applicant who is orally promised an at-will position (i.e., one for an indefinite duration) will not be able to sue for wrongful discharge if the offer is withdrawn or the employee is terminated. Giving up a previous position to accept an offer is not sufficient consideration to change an employee’s at-will status.

A discharged at-will employee may not sue for breach of the implied covenant of good faith and fair dealing in Missouri.

Missouri has enacted a “service letter” statute that requires a corporate employer to provide, upon request, a letter setting forth the nature and duration of a former employee’s employment, as well as the reason, if any, for such employee’s voluntary or involuntary termination. Only employees who were employed by the corporation for at least 90 days are statutorily entitled to a service letter.

Montana

Montana enacted the first—and, so far, only—wrongful discharge statute in the nation. The statute provides the exclusive remedy for a wrongful discharge claim. Under the statute, a discharge is wrongful if it is in retaliation for the employee’s refusal to violate public policy or for reporting a violation of public policy; the discharge was not for good cause and the employee had completed the employer’s probationary period; or the employer violated the express provisions of its own written personnel policy.

Public policy is defined as “a policy in effect at the time of the discharge concerning the public health, safety, or welfare established by constitutional provision, statute, or administrative rule.”

“Good cause” is defined as reasonable, job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer’s operation, or other legitimate business reason. In examining whether good cause exists, a court will only look at the reason given to the employee (i.e., the reason included in the discharge letter). Employees have a statutory right to a written explanation of the reasons for a discharge.

The statute also provides protection from wrongful “constructive discharge,” which is defined as “the voluntary termination of employment by an employee because of a situation created by an act or omission of the employer that an objective, reasonable person would find so intolerable that voluntary termination is the only reasonable alternative.” It does not include a refusal to promote or increase wages or benefits. One court held that an employee was constructively discharged even though he had signed an acknowledgment that his resignation was voluntary, when he was given the choice of termination or an early retirement benefits package. Another court found that a managerial employee who was demoted to a lower position with completely different duties and substantially lower salary and responsibilities had been discharged within the meaning of the statute.

The statute allows for the recovery of four years’ lost wages but does not allow recovery for emotional distress. Punitive damages are available only if an employee can show that the employer “engaged in actual fraud or actual malice.” This statute does not apply to discharges that are subject to other laws (e.g., antidiscrimination laws), or to employees who are covered by a collective bargaining agreement or written contract of employment for a specified time. Employees must first exhaust any internal employer procedures before filing suit in court. Employers and employees may also agree to arbitrate disputes covered by the statute, and each party has 60 days to make a written offer to arbitrate, which must be responded to within 30 days.

The Montana Supreme Court upheld the constitutionality of its state wrongful discharge statute. The statute had been challenged because it prevented claimants from bringing certain types of private actions against employers.

In 1999, the Montana Supreme Court held that the Wrongful Discharge From Employment Act (“WDEA”) supersedes and impliedly repeals the state employment-at-will act, even though the legislature characterized the operation of the wrongful discharge act as a limitation on the at-will act. “The plain meaning of the wrongful discharge act is that outside the probationary period of employment, an employer may not discharge an employee without good cause.… The employer must define the probationary period at the outset of the employment relationship and has the burden of showing that the probationary period was in effect at the time of the discharge.”

The WDEA preempts other tort claims related to a discharge, but the Montana Supreme Court has allowed an employee to proceed with a bad faith claim against a former employer based on alleged breaches of the employer’s obligations concerning compensation that occurred before he was discharged. Montana courts have, however, recognized an implied covenant of good faith and fair dealing in written employment contracts. The implied covenant of good faith and fair dealing precludes an employer from discharging a long-term employee without a legitimate reason, because a long-term employee has an expectation of continued employment, provided he or she performs satisfactorily. Further, an employer owes a duty of good faith and fair dealing to all of its employees, including those who are in a probationary employment relationship. An employer may terminate a probationary employee at will, provided the discharge is not in bad faith. In one case a Montana court held that an employee with a written annual contract had no claim for breach of the implied covenant of good faith and fair dealing when her one-year contract was not renewed, despite the fact that she had been orally promised permanent employment and told that the written contract was just a formality. The oral promise did not modify the written one-year contract.

Montana employees have a right to obtain a “service letter” describing the reason for their discharge. A nonpublic employer who discloses information about a former or current employee’s employment-related performance to a prospective employer, at the request of the prospective employer or the employee, is not liable for civil damages unless the employer knowingly, purposely, or negligently disclosed information that was false.

Nebraska

Nebraska courts adhere to the traditional rule that employment for an unspecified duration is terminable at the will of either party. In such cases, an employer lawfully may discharge an employee for whatever reason, provided there are no statutory restrictions. The Nebraska Supreme Court has recognized only a very narrow public policy exception to the employment-at-will doctrine.

The Nebraska Supreme Court has held that an employer’s right to terminate at-will employees is restricted only by: a constitutionally protected interest of the employee; a statute that prohibits an employer from discharging an employee for a particular reason; or instances where a very clear mandate of public policy has been violated. The state Supreme Court has also held that, even though the Nebraska Workers’ Compensation Act does not specifically prohibit an employer from discharging an employee for filing a claim, or specifically make it a crime for an employer to do so, there is a public policy exception to the at-will doctrine when an employee is fired for filing a workers’ compensation claim. For example, an employee terminated for failing a private-sector employer’s drug test may not state a claim under the public policy exception to the employment-at-will doctrine. However, an employee may not be discharged for refusing to submit to a polygraph examination, which is prohibited by statute.

When an employment agreement provides for a bonus, and an employee is terminated through no fault of his or her own, the employee is entitled to a proportionate share of the bonus.

An employee handbook will limit the at-will rule only when it specifically restricts an employer’s right to discharge. A handbook that merely sets forth examples of conduct that will lead to discharge is not a contract if there is no language limiting discharge only to those circumstances. A disclaimer can prevent a handbook from being construed as a contract.

Nebraska recognizes implied oral contracts if the offer is communicated to an employee and is accepted by an employee who has provided consideration.

For example, an employee had a claim for breach of an implied contract when he was promised that he would not be fired for investigating a manager’s conduct but was terminated after he continued his investigation.

An employee may sue for breach of the implied covenant of good faith and fair dealing when he or she is deprived of constitutional or statutory rights or when contractual agreements guarantee that employees may not be terminated without just cause. The Nebraska Supreme Court has also recognized a cause of action for promissory estoppel.

Nebraska employees may request a written explanation of the reasons for their termination, which an employer must provide.

Nevada

Although Nevada courts adhere to the traditional rule that employment for an unspecified duration may be terminated by either party at any time, they do recognize public policy exceptions to the at-will rule. In order for the employee to successfully sue the employer, the employee must prove that he was dismissed because he refused to engage in conduct that violated public policy or because he engaged in conduct that public policy favored. For example, an employee may not be discharged for filing a claim for workers’ compensation benefits. Further, in such cases an employer may be liable for punitive damages if an employee can prove that the employer acted maliciously or fraudulently in discharging him or her. The Nevada Supreme Court has held that a public policy claim should not be recognized when a comprehensive statutory remedy already exists for the employer’s alleged violation. For example, an employee may not bring a wrongful termination claim if he or she is terminated for serving as a witness in a proceeding because state law prohibits such conduct. An employee may bring a wrongful discharge claim for sex or age discrimination despite the availability of statutory remedies. However, the Nevada Supreme Court held that the public policy against age discrimination is not sufficiently strong and compelling to warrant an exception to the at-will doctrine.

A handbook can be construed as an employment contract in Nevada, so that an employer may be required to follow termination procedures set out in the handbook.

Nevada recognizes an implied covenant of good faith and fair dealing only if bad faith and a “special relationship” (i.e., one of reliance, trust, and dependency) are shown. In one case, an employee who alleged that his termination was fraudulent and malicious stated a claim when he was the company’s founder and had given the company to his sons. In another case, an employee who had worked for less than two years had no claim when he was discharged for refusing to accept unsafe work, because no “special relationship” had developed.

Employers in Nevada cannot be sued for disclosing, at the request of an employee, information about the employee’s job performance unless the employer has disclosed information with malice or disclosed information it believed to be inaccurate or that it had no reasonable grounds for believing was accurate.

New Hampshire

In New Hampshire, a contract for an indefinite period of time is presumed to be at will and is terminable by either party. New Hampshire courts recognize public policy exceptions to the at-will rule. An employee can sue his or her employer for wrongful discharge if the employee meets a two-part test. First, the employee must show that the employer was motivated by bad faith, malice, or retaliation in terminating the employee’s employment. Second, the employee must show that he or she was discharged for performing an act that public policy would encourage or for refusing to do something that public policy would condemn. The public policy exception is not limited to written statutes. For example, an employee may not be discharged for refusing to socialize with his or her foreman.

An employee’s longevity of service, coupled with his or her moving in reliance upon an offer of employment, may be sufficient to establish an enforceable employment contract. An existing contract can be modified if an employee accepts an employer’s unilateral offer by continuing to work. In one New Hampshire Supreme Court case, an employer was bound by its promise to continue benefits for three months after a layoff that would occur in three weeks when the employee continued to work for the three weeks prior to the layoff.

An employer may be bound by the disciplinary procedures set forth in a handbook even if the handbook states that it is not an express or implied contract, because the disclaimer is read as referring to the duration of employment but not to the benefits outlined in the handbook.

New Hampshire, by statute, provides whistle-blower protection to its private-sector employees. The statute prohibits an employer from taking adverse employment action against an employee because the employee, in good faith, reports a violation of federal or state law; or the employee, in good faith, participates in an investigation, hearing, or inquiry conducted by any governmental entity. However, in order to take advantage of the New Hampshire statute, an employee must first notify his or her supervisor of the alleged violation and give the employer a reasonable opportunity to correct the problem unless the employee believes that such notice would be futile. Another statute protects employees from retaliation for serving jury duty.

New Jersey

New Jersey’s courts have been very active in creating exceptions to the employment-at-will rule, although some decisions have been somewhat more favorable to employers.

New Jersey courts recognize public policy exceptions to the employment-at-will rule, and an employee can sue his or her employer when the discharge is “contrary to a clear mandate of public policy.” Such public policies may be found in the constitution, federal and state legislation, administrative regulations, and judicial decisions. For example, an employee may not be discharged for filing for workers’ compensation benefits, for refusing to take a polygraph test, for refusing to violate state safety laws, or for refusing to violate certain professional codes of ethics. A common law public policy claim may be a breach of contract action or a tort claim.

On the other hand, a public policy violation was not found when at-will employees were allegedly terminated in retaliation for not covering up a corporate president’s dereliction of duty or when an employer discharged an employee in retaliation for instituting a civil action against the employer in a wage dispute.

Without a clear and prominent disclaimer, an implied promise in an employment manual that an employee will be fired only for cause may be enforceable against an employer, even if employment is for an indefinite term and would otherwise be terminable at will. Lack of definiteness in the manual about particular terms of employment will not prevent enforcement of the job security provision. The New Jersey Supreme Court has held that an oral promise to terminate an employee only for cause will be enforceable if it is sufficiently clear and definite and is supported by consideration (i.e., something of value). For example, an employee’s relinquishment of a new position is sufficient consideration to support an employer’s promise to discharge only for cause.

Also, a New Jersey court held that a maternity leave policy became an implied employment contract, notwithstanding the fact that the employer annually distributed an employment-at-will disclaimer.

A federal court in New Jersey has held that if an employer provides employees with an internal means of resolving disputes over discipline or discharge, the employee must utilize those procedures before he or she can sue in court for wrongful discharge.

New Jersey, by statute, provides whistle-blower protection to private-sector employees under the New Jersey Conscientious Employee Protection Act (“CEPA”). The statute prohibits an employer from taking adverse employment action against an employee because he or she discloses or threatens to disclose violations or suspected violations of a law, rule, or regulation; provides information to or testifies before a public body conducting an investigation, hearing, or inquiry; or refuses to participate in an activity the employee believes is illegal or incompatible with a clear mandate of public policy concerning the public health, safety, or welfare, or protection of the environment. State laws also protect employees from retaliation for filing workers’ compensation claims and for serving on a jury. Employees cannot bring both a wrongful discharge claim and a CEPA claim.

New Jersey does not recognize the theory of an implied covenant of good faith and fair dealing in employment-at-will relationships. Actual written employment contracts, however, may be deemed to include an implied covenant of good faith and fair dealing.

New Mexico

Although New Mexico courts recognize public policy exceptions to the at-will rule, an employee must prove that he or she was discharged for performing an act encouraged by public policy or for refusing to do something that public policy prohibits. For example, the New Mexico Supreme Court has declared that an employer cannot terminate an employee in retaliation for filing a workers’ compensation claim. On the other hand, an employee allegedly terminated for reporting an employer’s failure to deduct state, federal, and Social Security taxes from paychecks had no claim for wrongful discharge, because tax withholdings inure to the benefit of the individual employees rather than the public at large. Furthermore, absent evidence of malice, the New Mexico Supreme Court has held that a retaliatory discharge claim against a manager does not exist.

A personnel policy guide may constitute an implied employment contract if it contains specific contractual terms; in contrast, statements of general policy do not create a binding agreement. For example, a contract was implied when a handbook characterized disciplinary procedure as “established procedure” and contained no language alerting employees not to rely on it; and the employer distributed the handbook to all employees, asked each to acknowledge receipt and agree to conform to stated policies, and placed acknowledgments signed by employees in their personnel files. In contrast, oral assurances by an employer to all employees that they would be treated fairly concerning promotions and pay increases were not binding on the employer. Oral statements, however, may be deemed sufficient to constitute a contract. In one state Supreme Court case, an employee could not be terminated without good cause when he accepted a position offered with the assurance that his employment would be long term and was then employed for 16 years. If the promise is sufficient to constitute a contract, adequate consideration is implied as a matter of law.

New Mexico does not recognize a separate cause of action for tortious breach of the covenant of good faith and fair dealing in at-will relationships. However, the New Mexico Supreme Court recognizes the existence of an implied covenant of good faith and fair dealing in employment contracts that are not at will.

Employers in New Mexico cannot be sued for providing comments about an employee’s job performance when requested for a reference, unless the comments are knowingly false, deliberately misleading, rendered with malicious purpose, or in violation of any civil rights.

New York

New York courts follow the general rule that a hiring for an unspecified duration may be terminated at the will of either party. An employer’s right to terminate at will may be modified by an express agreement between the parties.

New York courts do not generally recognize claims for abusive or wrongful discharge based on a public policy violation. There are statutes that provide specific protection for employees who engage in conduct that courts in other states have found to be protected by public policy (e.g., laws prohibiting discharge of an employee for serving on a jury; for opposing unlawful discriminatory practices; for reporting a violation of the labor laws; or for disclosing to a public body an activity, policy, or practice of the employer that creates a substantial danger to the public health or safety). New York also has a statute, often referred to as the “Legal Activities Law,” that prohibits an employer from terminating an individual based on his or her political activities, legal use of consumable products, legal recreational activities, or membership in a union.

A New York penal law prohibits retaliation against an employee who testifies as a witness in a criminal proceeding and protects victims of criminal offenses who notify an employer of his or her intention to appear as a witness or consult with counsel, but the employee need not be paid for the time he or she misses work.

In determining whether oral assurances and company handbooks limit an employer’s ability to terminate an employee at will, New York courts look to the totality of the circumstances. For example, where the employee was induced to leave his former employment in reliance on the employer’s assurances, or where the company handbook encouraged employees to report misconduct and promised protection against retaliation, New York courts have allowed claims for breach of contract. An employer may defend against such claims by including a clear and unambiguous disclaimer in its handbook stating that the handbook is not to be considered a contract.

New York courts do not impose on the employment relationship the requirement that the parties act fairly and in good faith toward each other. However, New York courts do protect an employee under a commission contract from being discharged solely to avoid being paid a bonus or commission earned before the discharge. A commission contract can exist apart from the employment contract and carries with it rights of its own.

New York, by statute, provides whistle-blower protection to private-sector employees. The statute prohibits an employer from taking adverse employment action against an employee because he or she discloses or threatens to disclose any activity, policy, or practice that is in violation of a law, regulation, or rule that creates and presents a substantial and specific danger to the public health or safety; provides information to or testifies before a public body conducting an investigation, hearing, or inquiry concerning any such activity; or objects to or refuses to participate in any such activity, policy, or practice. The statute’s protection only applies if the unlawful conduct or policy is brought to the attention of the employer by the employee and the employer has a reasonable opportunity to remedy the problem. In order to sustain an unlawful retaliation claim, an employee must show an actual violation; the employee’s reasonable belief that the law was violated is insufficient.

North Carolina

North Carolina courts have recognized public policy exceptions to the at-will rule. While an employer can terminate an at-will employee for no reason, or for an arbitrary or irrational reason, it cannot do so for an unlawful reason or for a purpose that contravenes public policy. For example, no employer may discharge an employee for refusing to testify untruthfully or incompletely in a court proceeding. Several state statutes proscribe the discharge of an at-will employee in retaliation for engaging in certain protected activities, including filing workers’ compensation claims and filing claims under the North Carolina Occupational Safety and Health Act. The availability of statutory remedies does not prevent employees from bringing wrongful discharge claims under the common law public policy exception.

An employee manual will not be construed as a contract if it does not contain a definite term of employment or an express promise to discharge only for good cause, or if there is insufficient additional consideration. Relocating to accept a job offer may be sufficient consideration if it is induced by an employer’s promise that the employee would be terminated only for incompetence.

North Carolina does not recognize a separate exception to employment at will for a bad faith discharge or a violation of the implied covenant of good faith and fair dealing.

In North Carolina, employers who disclose information about a current or former employee’s job performance to a prospective employer, upon the request of the prospective employer or the employee, are immune from civil liability, unless the information disclosed was false and the employer knew or should have known that the information was false.

North Dakota

North Dakota has a statute that codifies the traditional rule that employment for an indefinite duration is terminable at the will of either party. In the absence of a contrary statute, an employer may discharge an employee with or without cause. The North Dakota Supreme Court has recognized a public policy exception to the at-will rule. However, the court has stated that the public policy alleged must be evidenced by a constitutional or statutory provision.

A North Dakota statute protects private employees from retaliation for whistle-blowing. The statute covers reporting violations or suspected violations of law to an employer or a government entity, participating in an investigation or hearing, or refusing to perform an illegal act (when the employee informs the employer of his or her objective basis for believing the act is illegal). Also by statute, an employee also cannot be discharged for intending to file a workers’ compensation claim, testifying against an employer in response to a subpoena, or serving as a juror.

An employee manual may create a contract of employment in certain circumstances. An employee must show the existence of a contract for a specified term or one promising that he or she would be terminated only for cause. However, a clear and prominent contract disclaimer in an employee handbook preserves the presumption that employment is at will. North Dakota does not recognize an implied covenant of good faith and fair dealing if a contract has no express term of duration.

An employer who discloses information about an employee’s job performance to a prospective employer is presumed to be acting in good faith and cannot be sued for providing the reference, unless the employee can show the information was knowingly false, disclosed with reckless disregard for the truth, deliberately misleading, or rendered with a malicious purpose.

Ohio

In Ohio, an employee hired for an indefinite term may be discharged at any time, with or without cause. Ohio, by statute, provides whistle-blower protection to private-sector employees. The statute prohibits an employer from making adverse employment decisions against an employee because the employee discloses violations of any federal, state, or local law. However, in order to take advantage of the statute’s protection, the employee must first notify his or her supervisor orally of the suspected violation and then provide a detailed written notice of the suspected violation. The employer must then either correct the violation or make a reasonable, good faith effort to correct the violation within 24 hours of the receipt of the oral or written notice.

Ohio courts have recognized that the existence of a clear public policy sufficient to justify an exception to the employment-at-will doctrine may be based on sources such as federal and state constitutions, legislation, administrative regulations and rules, and common law. For example, an employee who was discharged solely because of a court order that child support payments be withheld from his wages could bring a claim for damages under an Ohio statute prohibiting such retaliation. An employee has also been held to state a claim under the public policy exception where the discharge was for reporting to police that she believed her manager was about to drive his car while intoxicated.

The Ohio Supreme Court has also recognized a public policy exception to the employment-at-will doctrine for an employee who suffers a retaliatory termination after an on-the-job injury, but before filing a workers’ compensation claim. Such an employee may now file a common-law tort for wrongful discharge in violation of Ohio public policy.

Employment manuals or handbooks, or other written personnel policies or practices, can create binding contractual rights in Ohio. A disclaimer that states that a handbook is not intended to create a contract is effective. In one case, the court rejected an employee’s breach of contract claim when the evidence showed that the employee signed an acknowledgement form with a disclaimer stating that the handbook was not intended to create the basis of an express or implied contract and the parties could terminate the employment relationship at any time. Oral promises can also create implied contracts if the employer reasonably should have expected the employee to rely upon its promise and the employee took action or refrained from taking action to his or her detriment. For example, an implied contract was created when an employee stopped her job search after being told that she should not leave because she had a future with the company; continued employment was sufficient consideration for an implied contract.

Ohio does not recognize either an implied-in-fact or an implied-in-law covenant of good faith and fair dealing in employment-at-will contracts. However, the Ohio Supreme Court has recognized another limitation to the employment-at-will doctrine in the theory of promissory estoppel.

Employers cannot be sued for providing references, such as information about a former employee’s job performance, in response to a request from an employee or a prospective employer, unless the information is false, was disclosed with an intent to mislead, was disclosed in bad faith or with malicious purpose, or the disclosure constitutes an unlawful or discriminatory practice.

Oklahoma

Although an employment contract that does not have a fixed period is usually considered to be terminable at will, Oklahoma courts will look at the intent of the parties, as expressed in written or oral negotiations, to determine whether the parties intended that a contract be for a specified term. In the absence of facts that indicate an agreement is for a specific term or duration, an agreement specifying a rate of compensation, such as an annual salary, is considered terminable at the will of either party.

The Oklahoma Supreme Court has recognized a public policy exception to the employment-at-will doctrine. Until recently, an at-will employee who is discharged for refusing to violate an established and well-defined public policy only as articulated by constitution, statutory, or decisional law, has a claim for wrongful discharge. In 2016, however, the Supreme Court seemingly expanded the public policy exception to include policies articulated in administrative rules and regulations. Maintaining that the public policy cited by plaintiffs must have its basis in Oklahoma law rather than federal law, state and federal courts in Oklahoma have rejected wrongful discharge claims grounded solely on the public policy articulated by the whistle-blower protections of the federal Fair Labor Standards Act, Family and Medical Leave Act, Occupational Safety and Health Act, and False Claims Act. The employee must prove that the action was significantly motivated by his or her refusal to violate public policy, not merely that this was one of several reasons. An employee who was discharged for refusing to withdraw a third-party negligence claim against a client of his employer for an on-the-job injury he sustained while working with the client stated a claim for wrongful discharge. An employee who was fired after complaining to hospital administrators about fraudulent billing practices and incompetent medical care that resulted in patient deaths stated a claim for wrongful discharge.

An employee’s public policy wrongful discharge claims may be barred if a state or federal statute provides an adequate remedy. Oklahoma laws also protect employees from retaliatory discharge for filing workers’ compensation claims, serving jury duty, serving in the military, and filing a wage or safety complaint.

An employee handbook may create enforceable contract rights if the employee provides some consideration for the benefits contained in the handbook. The consideration may consist of the employee’s continuing to work and forgoing the option of quitting. An employee must also know of a handbook policy and have reason to rely on it in order for it to be enforceable. The courts have upheld disclaimers that were captioned in large, bold type, that expressly denied any intention to form a contractual agreement, and that stated that employment could be terminated at any time, with or without cause.

If an express written employment contract exists, the employee cannot also have an implied contract on the same subject. For example, an employee cannot have a claim based upon informal verbal tenure practices when there is a written tenure policy.

No implied covenant of good faith and fair dealing governs an employer’s decision to terminate an at-will employee in Oklahoma, but the state Supreme Court has recognized an implied covenant of good faith and fair dealing in agency contracts in a case involving an insurance company’s discharge of an agent for the purpose of depriving him of future income from renewal premiums.

Employers will not be liable for providing a job reference to a prospective employer if the employee or prospective employer requests the information and the employee consents to the release of the information, unless the employee can show that the employer knowingly provided false information or acted with malice or reckless disregard of the truth.

Oregon

Although an employer may generally terminate at-will employment, the Oregon Supreme Court has recognized common law actions for wrongful discharge when an employer discharges an employee for performing a public duty or fulfilling a societal obligation. The public policy can be expressed in a constitution, statute, or case law from Oregon or other jurisdictions. For example, an employee cannot be disciplined or discharged for refusing to disclose a client’s confidential financial information to the firm that owned the bank for which the employee worked.

However, no common law action exists if a statutory remedy adequately protects the societal interest.

State laws provide that employees cannot be retaliated against for filing workers’ compensation claims, reporting criminal activity, testifying in an unemployment compensation hearing, and serving on a jury. Effective Jan. 1, 2010, Oregon expanded its whistle-blower protection for employees, making it unlawful for an employer to discriminate or retaliate against an employee who in good faith reports information that the employee believes is evidence of a violation of a state or federal law, rule, or regulation.

Personnel policies contained in employee handbooks or administrative bulletins may form the basis for an employment contract. Disclaimers can help an employer prevent a handbook from being construed as a contract.

In Oregon, the implied covenant of good faith and fair dealing does not protect an at-will employee from being discharged. However, in 2013, the Oregon Supreme Court recognized claims for promissory estoppel and fraudulent misrepresentation and held that employers that make promises to employees or prospective employees regarding at-will employment may be liable if they withdraw the offer of employment and the employee or prospective employee has relied on that promise to his or her detriment.

State law also protects employers from being sued for providing information about an employee’s performance at the request of a prospective employer or the employee, unless the employee can show that in making the reference the employer knowingly released false or misleading information, acted with malice, or violated the employee’s civil rights.

Pennsylvania

Pennsylvania courts recognize a limited exception to the at-will rule when an employee is terminated in violation of a significant and recognized public policy, but only if no statutory remedies are available. For example, employees who claim they were fired due to race, age, sex, or other protected category must pursue their rights under the discrimination laws and may not sue for violation of public policy. The sources of public policy include legislation; administrative rules, regulations, or decisions; and judicial decisions. An employer may defend against an action by showing a separate, legitimate business reason for the discharge. The Pennsylvania Supreme Court has recognized a public policy cause of action when an employee is discharged for seeking workers’ compensation. Wrongful discharge claims based on public policy may also exist where an employee is discharged for refusing to submit to a polygraph test and where an employee refused to submit false information in a federal investigation.

Pennsylvania by statute protects employees from retaliation for serving on a jury or testifying as a witness.

The Pennsylvania Supreme Court has not ruled on whether policy statements or employee handbooks create enforceable contract rights in Pennsylvania. Some courts have found that such manuals are merely unilateral acts of the employer, lacking the necessary “meeting of the minds” required for enforceable contracts. Another court has found that an employee manual may confer certain guarantees to employees. However, one lower court has held that a handbook must contain a clear statement of the intent to modify the at-will nature of employment in order to become contractually binding.

Promises of “permanent” or lifetime employment, however, do not create enforceable contracts. Pennsylvania courts have stated that an employer’s statement, oral or written, that employees would not be terminated as long as they performed satisfactorily is insufficient to create a contract. However, an employee was found to have an employment contract when he left a secure position and transferred to a new position on the condition that he would be reassigned if his transfer did not work out. The court found that the employee was entitled to reassignment.

Pennsylvania courts have not recognized the implied covenant of good faith and fair dealing in employment-at-will contracts.

Rhode Island

Rhode Island courts follow the traditional rule that employment for an indefinite duration is terminable at the will of either party at any time.

No common law exception to the employment-at-will doctrine exists for retaliation against whistle-blowers. According to a 1993 decision of the Rhode Island Supreme Court, it is not the role of the courts to create rights for persons whom the legislature has not chosen to protect. A statute protects employees from retaliation when the employee reports or is about to report to a public body a violation of a law or regulation that the employee knows or reasonably believes has occurred or is about to occur, and when the employee is requested to participate in a hearing or investigation. Employers are also prohibited by statute from discharging employees who file complaints, testify, or exercise rights under the occupational health and safety laws. State law also protects employees from retaliation for serving jury duty.

The Rhode Island Supreme Court has not determined whether a handbook can create implied contractual rights.

Employers in Rhode Island cannot be sued for providing information about an employee’s performance when a prospective employer or a former employee asks for a reference, unless the employee can show that the employer knowingly released false or misleading information, acted with malice, or violated the employee’s civil rights.

South Carolina

South Carolina courts recognize public policy exceptions to the at-will rule. An employee may not be discharged for refusing to violate the law. For example, an employee may not be discharged for responding to a subpoena to appear before the state employment security commission. An employee also may not be discharged for reporting unsafe working conditions. A South Carolina law protects employees from retaliation for serving on a jury, complying with a subpoena, or filing a workers’ compensation claim. An employee cannot sue for wrongful discharge in violation of public policy if there is already a statutorily provided remedy for the wrongful termination.

In some instances, when the employee has given something in addition to performing services for the employer, South Carolina courts will modify the at-will rule. Nevertheless, simply moving one’s family and quitting a job to accept an employer’s job offer will not alter an employee’s at-will status.

A handbook may constitute an employment contract. South Carolina employers can negate the contractual effect of an existing handbook by issuing conspicuous and prominently displayed disclaimers. However, a disclaimer was found to be ineffective when it was located on the second page of an employee handbook in the “welcome” section and there was nothing discernible in the location of the disclaimer that would call attention to its contents. Another case found a disclaimer located on the last page of an employee handbook in the “conclusion” section, not capitalized, not set in bold type, nor set apart with a distinctive border, contrasting type, or color, to be ineffective. An employer cannot unilaterally change handbook provisions without first notifying employees of the change. An employee’s return to work after receiving the notice is deemed an acceptance of the change.

Oral promises may also create an implied contract. For example, an employer’s assurance during an interview that an employee’s position was secure and that the employer no longer terminated good salespeople to deprive them of their accounts or to avoid paying commissions created an implied contract. A written memo affirming that the employee would not have accepted the employment without the assurances also supported the existence of the implied contract. In 2015, a jury returned an $868,000 verdict for an employee’s wrongful termination based on breach of an oral promise made by the board of directors. The verdict is believed to be the largest in the state involving breach of an oral promise. Also in 2015, the South Carolina Supreme Court ruled that only employees at-will may bring a claim for wrongful discharge, and that an employee subject to a term employment contract may not sustain such a claim.

South Carolina does not recognize a claim for breach of the implied covenant of good faith and fair dealing in employment-at-will contracts.

South Carolina employers cannot be sued for releasing information about an employee’s dates of employment and wage history to a prospective employer. Employers also cannot be sued for responding to a prospective employer’s written request for information that an employee may have access to, such as written evaluations, notices regarding the reason for a termination, job performance, or the reasons for a voluntary or involuntary separation from employment, unless the employer knowingly or recklessly releases false information.

South Dakota

South Dakota, by statute, has codified the employment-at-will rule.

Disciplinary procedures outlined in an employer’s handbook, including a provision that an employer would not discharge an employee except for “just cause,” can, in limited circumstances, create enforceable contract rights. In order for a handbook to amount to an agreement to discharge employees for cause only, there must be: (1) explicit language in the handbook binding the employer; or (2) specific language from which a contract can be implied. Further, an employee cannot be discharged for “disloyalty” if none of the rules in the employer’s handbook specify disloyalty as a basis for discipline.

South Dakota courts recognize the public policy exception to at-will employment. The exception is limited to cases in which an employee is discharged in retaliation for refusing to commit a criminal or unlawful act, filing a workers’ compensation claim, and reporting unlawful or criminal conduct to a supervisor or outside agency and reporting health and safety violations.

South Dakota does not recognize the implied covenant of good faith and fair dealing in the employment-at-will context.

A South Dakota law protects employers from being sued for providing job references and releasing information about an employee’s job performance in response to a written request from the employee or a prospective employer, unless the employer has acted recklessly, knowingly, or with a malicious purpose revealed information that is false, misleading, or subject to confidentiality under a nondisclosure agreement or federal or state law.

Tennessee

Tennessee courts recognize narrow public policy exceptions to the at-will rule. If an employee has been discharged as a result of an employer’s violation of a clearly expressed statutory policy and the employer’s violation was a substantial factor in the employee’s discharge, the employee can sue for retaliatory discharge. For example, an employee may not be discharged in retaliation for seeking workers’ compensation benefits. Further, an employee may not be terminated for refusing to violate state speed limits, refusing to falsify employer records, or participating in jury service. Additionally, pursuant to a 2015 statute, employers may not discharge employees solely for transporting or storing a firearm or firearm ammunition in an employer parking area.

Until 2015, employees could bring both a retaliatory discharge claim and a statutory claim for whistleblowing under the Tennessee Public Protection Act. However, in 2015, a new law was enacted that eliminated the separate common law cause of action for retaliatory discharge based on whistleblowing activity.

However, a corporate finance officer’s complaint that he was discharged for insisting his employer comply with unspecified portions of the Internal Revenue Code was too general to state a claim for retaliatory discharge. There was no allegation that the employee was terminated because he did not participate in or suppress alleged violations, or was requested or required to remain silent concerning them.

Employee handbooks or manuals may create enforceable contracts, as long as the language clearly expresses the employer’s intent to be contractually bound or the handbook or policy language guarantees that its procedures will be followed. In one case, specific language in an employee handbook showed the employer’s intent to be bound by the contract where it stated it was the parties’ “entire agreement of employment” and both parties promised to “abide by all its terms and conditions.” On the other hand, a supervisor’s manual providing for annual performance appraisals did not require an employer to increase salary or benefits as a result of a good performance evaluation. Tennessee does not recognize the covenant of good faith and fair dealing with respect to the termination of employment contracts.

A Tennessee law protects employers from being sued for releasing information about an employee’s performance at the request of the employee or a prospective employer unless the information was knowingly false or deliberately misleading, disclosed for a malicious purpose or with reckless disregard for the truth, or violated the employee’s civil rights.

Texas

Texas courts recognize public policy exceptions to the at-will rule. However, the U.S. Supreme Court reversed a Texas Supreme Court decision that held that a termination based on an employer’s desire to avoid paying pension benefits to an employee constitutes grounds for a wrongful discharge suit under Texas law. The U.S. Supreme Court held that the employee’s state law action was pre-empted by the Employment Retirement Income Security Act, and therefore he could sue only under that statute.

If an employee is discharged for refusing to perform an illegal act, he or she has a claim for wrongful discharge. However, the Texas Supreme Court held that an at-will employee, who was discharged after reporting suspected illegal activities of his co-workers to upper-level management but not to law enforcement authorities, failed to state a claim for wrongful discharge because the claim did not fit within the narrow exception recognized for refusing to perform an illegal act. Further, pursuant to state statutes, an employee may not be terminated for filing a workers’ compensation claim, serving as a juror, or lawfully possessing a firearm or ammunition in a locked, private vehicle.

Absent an express reciprocal agreement dealing with procedures for discharge, employee handbooks do not create enforceable contract rights under Texas law.

The covenant of good faith and fair dealing does not extend to employment relationships in Texas. Employees in Texas can sue for “tortious interference with contract,” such as where a company ordered an independent contractor to discharge an employee of the independent contractor, despite the employee’s satisfactory performance.

In 2017, the Texas Supreme Court, in a matter of first impression, held that Texas does not recognize the tort of compelled self-defamation. Thus, a former employee who had been discharged could not maintain such a cause of action against his former employer.

An employer cannot be sued for providing a truthful written statement of the reasons for an employee’s discharge upon the request of the employee or a prospective employer.

Utah

Generally, employment for an indefinite term is terminable at the will of either party. To modify the at-will relationship, there must be some express or implied agreement regarding the duration of employment.

Without such an agreement or consideration by the employee in addition to services rendered, an employment contract is no more than an indefinite hiring at will. One Utah court has held that, even though an employee took a new job at a reduced salary and incurred expenses in moving to the new job, these facts did not convert the employment relationship to one for a specified period of time.

Even an at-will employee may sue for breach of contract for violation of written policies such as sick leave policies.

Utah recognizes the public policy exception to at-will employment, but actions for wrongful discharge must involve substantial and important public policies. The Utah Supreme Court has identified the following categories of public policies that it will consider under the public policy exception: refusing to commit an illegal or wrongful act; performing a public obligation such as accepting jury duty; exercising a legal right or privilege such as filing a workers’ compensation claim; and reporting the criminal activity of the employer to public authority.

The Utah Supreme Court held that public policies would be construed narrowly and that it would generally utilize those based on the constitution, prior legislative pronouncements or judicial decisions, applying only those principles that are so substantial and fundamental that there can be virtually no question as to their importance for promotion of the public good. In order to prevail on a claim of wrongful discharge, an employee must prove that engaging in protected conduct was a “substantial factor” in the employer’s motivation to discharge the employee.

In 2015, the Utah Supreme Court expanded the public policy exception, and held the policy favoring the right of self-defense is an exception to the at-will employment doctrine, but only “where an employee reasonably believes that force is necessary to defend against an imminent threat of serious bodily harm and the employee has no opportunity to withdraw.” The Court concluded, “where an at-will employee is unable to withdraw from an imminent threat of death or serious bodily harm, the employer may not terminate the employee for exercising the right of self-defense.”

The conduct of the parties, announced personnel policies, and industry practice may create an implied contract. No independent consideration is required. Therefore, written provisions for oral and written warnings prior to discharge may create a contract. A clear and conspicuous disclaimer in a handbook will preserve the employee’s at-will status. The Utah Supreme Court has held that, absent express contract terms, the covenant of good faith and fair dealing may not be construed to change an employment-at-will contract to one requiring just cause for discharge.

A Utah law protects employers from being sued for providing references that disclose information about an employee’s job performance at the request of the employee or a prospective employer, unless the employee can show that the employer acted with actual malice and an intent to mislead.

Vermont

The Vermont Supreme Court has found that termination provisions in a policy manual are binding against an employer where they were an important factor in the employee’s decision to accept the job and the employer relied upon the employee’s belief that the employer was governed by the manual’s provisions. The court did not conclude that the manual itself created enforceable contractual rights; it simply found that the parties had agreed to be bound by its provisions.

Employers may not be able to rely on disclaimers in handbooks, because the courts have ruled that “the mere inclusion of boilerplate language providing that the employee relationship is at will cannot negate any implied contract and procedural protections created by an employee handbook.” Disclaimers are evaluated in the context of other provisions indicating that employees can be discharged only after disciplinary steps are followed.

Vermont recognizes the public policy exception to the at-will rule, although its exact outlines are rather hazy. A bad faith discharge, by itself, does not necessarily result in a finding that a clear public policy of the state has been violated. Nevertheless, public policy exceptions to at-will employment contracts are not limited to those set forth in statutes. According to the Vermont Supreme Court, public policy “may be said to be the community common sense and common conscience, extended and applied throughout the state to matters of public morals, public health, public safety, public welfare, and the like.”

By statute, employers in Vermont may not discharge employees for filing workers’ compensation claims, complaining about workplace safety issues, or serving on a jury.

At-will employees in Vermont cannot sue for violation of the implied covenant of good faith and fair dealing.

Virginia

Virginia courts follow the general rule that employment for an indefinite duration is terminable at any time by any party. The Virginia Supreme Court has recognized limited public policy exceptions to the at-will rule: (1) where an employer violates a policy enabling the exercise of an employee’s statutorily protected right; (2) where the employer violates a public policy that is explicitly expressed in a statute and the employee was clearly a member of that class of persons directly entitled to the protection enunciated by the public policy; and (3) where an employee is fired for refusing to engage in a criminal act. In Virginia, public policy can be found in laws containing explicit statements of public policy and laws designed to protect the rights and personal freedoms, health, safety, or welfare of the people in general.

The Virginia General Assembly amended the state Human Rights Act, abrogating “the common law with respect to causes of action for unlawful termination of employment based upon the public policies reflected in the Act.” A cause of action for wrongful discharge in violation of the public policies reflected in the act is limited to the remedies available in applicable state or federal civil rights statutes. A Virginia statute protects employees from retaliation for filing workers’ compensation claims.

In a 2012 decision, in response to a reference from the Fourth Circuit, the Virginia Supreme Court expanded wrongful discharge liability, and held that supervisors and managers can be held individually liable for public policy wrongful discharge.

The Virginia Supreme Court has not yet resolved the issue of whether an employee manual distributed by an employer creates enforceable contractual rights, but a lower court in Virginia has ruled that an employee handbook can be contractually binding if the language is unambiguous and can reasonably be construed as an offer of permanent employment terminable only for cause. This was the case when an employer promised in its handbook not to discharge without three warnings or just cause. However, disclaimers in employee manuals have been held to be effective by Virginia courts.

Washington

Washington courts recognize public policy exceptions to the at-will rule. To come within one of the exceptions, an employee must prove that he or she was discharged in violation of a “clear mandate of public policy,” as reflected in statutes or judicial decisions. Employees in Washington are also protected by statute from retaliation for filing workers’ compensation claims, but the statute is not an exclusive remedy and an employee may also file a common law tort claim for wrongful discharge.

In some instances, courts have found an implied employment agreement limiting the at-will rule, usually derived from a personnel manual or handbook. Such an agreement may be found by looking at the intent of the parties, business customs, the nature of the employment relationship, and the circumstances of the case. An employee’s mere belief that a contract was created does not by itself establish an implied contract.

While a particular personnel manual or handbook with the necessary specificity and language of obligation may create an enforceable contract, not every provision in every handbook will be construed as a mandatory obligation by the employer enforceable through the courts. For example, the Washington Supreme Court held that an employer was not bound by a policy manual statement that “consideration should be given to performance, experience, and length of service” in economic layoffs, because the provision was not a promise of specific treatment in a specific situation and the employee neither was aware of, nor relied upon, the layoff policy during his employment.

Additionally, the Washington Court of Appeals held that an employee’s specific agreement in her job application to terminable at-will employment pre-empted arguably inconsistent provisions of the policy manual suggesting that employment was terminable for cause only.

Disclaimers have been held to preserve the at-will relationship when, for example, at-will language is sufficiently conspicuous and it is in the introduction of a handbook and at the end of a list of conduct constituting cause for discharge. In 1991, the Washington Supreme Court held that an employer may modify or issue a completely new handbook and the new handbook’s provisions will apply, provided employees are given notice of the changes (e.g., by being given a copy of the new manual).

Washington courts do not recognize an implied covenant of good faith and fair dealing in employment contracts.

A Washington law gives employees the right to receive a written explanation for their discharge, including the effective date of the discharge, within 10 working days of the employee’s request for the explanation.

West Virginia

Employment for an indefinite duration is terminable at the will of either party unless supported by additional consideration other than the obligation of the employee to provide services and the employer to provide wages. A contract of employment setting forth the manner in which salary will be paid does not create an implied contract for a definite term.

West Virginia courts recognize public policy exceptions to the at-will rule when the discharge contravenes a “substantial public policy” as found in statutes, regulations, and judicial opinions. For example, an employee may not be discharged for filing a workers’ compensation claim or testifying truthfully in a legal action. Similarly, an employee may not be discharged in retaliation for requesting that his or her employer comply with consumer credit laws. Additionally, an at-will employee in West Virginia can sue his or her employer for retaliatory discharge based on sex discrimination or sexual harassment at work. The anti-discrimination policy in West Virginia’s Human Rights Act establishes a substantial public policy against sex discrimination in employment and provides specific guidance to employers. Thus, even employees of employers who are not covered under the terms of the Act can bring a common law wrongful discharge action against their employers.

By statute, employers may not discharge employees because they receive workers’ compensation benefits or participate in jury duty.

West Virginia does recognize an implied contract exception to at-will employment. The West Virginia Supreme Court of Appeals found that the promise of job security contained in an employee handbook constitutes an offer of a unilateral contract and that an employee’s continuing to work, while under no obligation to do so, constitutes acceptance and sufficient consideration to make the employer’s promise binding and enforceable. A prominent at-will disclaimer may negate any implied contract.

West Virginia does not recognize an implied covenant of good faith and fair dealing in at-will contracts.

Wisconsin

In Wisconsin, a contract for “permanent employment” is a contract for an indefinite duration, terminable at the will of either party, unless the employee furnishes consideration in addition to performing services.

Wisconsin courts recognize public policy exceptions to the employment-at-will rule. Administrative rules, statutory provisions, and constitutional provisions may contain a clear expression of public policy. An employee did not have a claim for wrongful discharge, however, when he allegedly was terminated by his employer to avoid the payment of certain commissions owed to him. If a statute contains a remedy for wrongful discharge, that remedy will be exclusive and the statute cannot serve as a source for public policy. For example, an employee has no cause of action for wrongful discharge based on allegations of sex or age discrimination because of the existence of available statutory remedies.

While a handbook may, in some instances, become a contract of employment, an employer’s general statement of policy does not give rise to an enforceable employment contract if the parties did not agree to be contractually bound. In addition, an employee must provide additional consideration, such as agreeing to provide two weeks’ notice before resigning or forgoing an opportunity to leave for other employment. An employee failed to state a claim for breach of contract when no evidence existed that she relied on certain handbook policies or was aware of such policies during her employment.

Finally, Wisconsin courts will not allow a claim for tortious breach of an employment contract’s implied covenant of good faith and fair dealing. However, if an employee can prove a covenant of good faith and fair dealing between the employee and his or her employer, the court would enforce this private agreement as it would not be imposing a general duty on an employer to discharge employees in good faith.

A Wisconsin statute protects employers from being sued for providing job references to prospective employers, unless there is evidence that the employer knowingly provided false information or provided the reference maliciously or in violation of Wisconsin’s discrimination law.

Wyoming

Wyoming courts adhere to the traditional rule that employment for an indefinite duration may be terminated by either party at any time.

The Wyoming Supreme Court first recognized a public policy exception to the at-will doctrine in 1989, ruling that two dockworkers injured in accidents, whose names were removed from a list of available workers after they filed workers’ compensation claims, had claims for discharge in violation of public policy when no other remedy was available.

An employee’s decision to leave a job to accept an offer of “permanent” employment, however, is insufficient to abrogate the at-will rule. Moreover, in these circumstances, an employer does not violate the implied covenant of good faith and fair dealing when it discharges an employee for legitimate business reasons.

By statute, employers in Wyoming may not discharge employees for participating in jury duty, responding to a subpoena in a criminal case, or being nominated or elected to political office.

The Wyoming Supreme Court has recognized that an employee handbook may create contractual obligations. For example, the court has held that, if the specific terms of misconduct or specific grounds for termination are listed in an employee handbook, an employee has an enforceable right to be discharged only “for cause.” The Wyoming Supreme Court held that an employer cannot unilaterally revoke or change a handbook to restore employees’ at-will status. In order for the change to be legally effective, the employer must provide separate consideration other than continued employment, such as a promotion or pay raise, or some detriment to the employer, or a bargained-for exchange. One case held that an employment application, stating that an employee may be discharged without cause and that any modification must be in writing and signed by the company’s president, created an at-will relationship that could not be orally changed by a supervisor. A disclaimer in the welcoming section of a handbook, stating that the book was only a guide and not a contract, was insufficient to prevent the handbook from being construed as a contract where the employer told employees that it intended to continue the policies and urged employees to read them and ask questions. Disclaimers may be effective in defending against a contract claim. One court found effective a disclaimer signed by the employee and stating that the handbook did not constitute a contract of employment. The handbook contained language regarding the employer’s right to modify policies and a notice at the beginning of the handbook that the employee “had been hired as an at-will employee” and could be terminated “with or without cause, and with or without notice, at any time.”

Employees may also be able to sue for breach of an implied contract based upon oral promises, such as an employer’s promise to employ an employee for as long as he or she did the work that was required.

In 1996, the Wyoming Supreme Court recognized a limited claim for breach of the implied covenant of good faith and fair dealing if an employee and an employer have a special long-term relationship and the employee is discharged so that the employer can avoid some responsibility. The implied covenant is also recognized if duties implied by law arise independently of the express terms of a contract. The covenant is not an implied part of all employment contracts.

A 1996 law protects employers from being sued for providing a reference that discloses information about an employee’s job performance, unless the employee can show that the employer knowingly disclosed false or misleading information, or disclosed the information maliciously.

3

Wage and Hour Laws

As an employer, a staffing firm is subject to both federal and state laws governing wages and hours. At the federal level, the Fair Labor Standards Act (“FLSA” or “the Act”) is the most important statute. The FLSA primarily concerns payment of minimum wages and overtime, but its scope also extends to child labor protection. One section of the FLSA contains the Equal Pay Act, which, as discussed in Chapter 1 of this guide, prohibits wage differentials based on sex. Other federal laws regulate wages and hours of employees performing work under government contracts.

In addition to these federal statutes, many states have adopted wage-hour laws that often differ in material respects from the federal laws. Staffing firms should be aware of their obligations under the laws in the states, cities, and counties where they do business. Many states provide information regarding basic wage and hour requirements on state department of labor websites.

A staffing firm shares the problems encountered by all employers with respect to wage-hour matters. However, the nature of the employment relationship in the staffing industry gives rise to certain problems that are peculiar to our industry. This chapter summarizes the scope and coverage of the various federal and state wage-hour laws, with emphasis on the special ways in which they affect staffing firms.

The U.S. Department of Labor’s function in administering and enforcing the various laws and an employer’s record-keeping responsibilities are also briefly described. This chapter discusses appropriate responses in the event that the U.S. Department of Labor or a state department of labor comes unannounced to your company and asks to see your company’s wage-hour records.

This book does not attempt to answer every question that may arise, but rather to simply try to help you understand what the laws generally require of you and to suggest areas in which further inquiry may be warranted. If a wage-hour problem arises at your company, the advice of counsel may be warranted.

A. The Fair Labor Standards Act

The Fair Labor Standards Act was enacted in 1938. At that time, the minimum wage was 25 cents per hour, and overtime pay was only required for work in excess of 44 hours per week. Today, the FLSA establishes a minimum hourly rate of $7.25, and overtime must be paid for work in excess of 40 hours per workweek. The law also allows employers to pay a subminimum, or “youth minimum,” wage to employees under age 20 for up to 90 calendar days immediately after initial employment (unless prohibited by state or local law). The subminimum wage must be above $4.25 per hour.

1. Who Is Covered by the FLSA?

The FLSA provides for two types of coverage: individual and enterprise.

a. Individual Employee Coverage

An employee is covered by the FLSA as an individual if at any time during the workweek that employee is engaged in interstate or foreign commerce, or in the production or handling of goods for transportation in interstate or foreign commerce. An employee of a staffing firm who performs work in interstate or foreign commerce is covered by the FLSA.

b. Enterprise Coverage

The act also applies to all employees in an enterprise, such as a staffing firm, with an annual gross business revenue of $500,000, if the enterprise has two or more employees engaged in interstate or foreign commerce or the production or handling of goods for such commerce. On the other hand, a minimum gross revenue amount is not required at all to be covered by the FLSA for certain other enterprises, including hospitals, nursing homes, schools, and government agencies.

c. Joint Employment Relationship

While a staffing firm is the employer of its temporary employees, on most temporary assignments the client also exercises day-to-day control and direction over the employee. Under the FLSA, who should be considered the employer for purposes of meeting the various statutory and regulatory obligations of an employer under federal and state law?

The Wage and Hour Division of the U.S. Department of Labor, which is responsible for administering and enforcing the FLSA, has long adopted a policy of recognizing the staffing firm and the client as “joint employers” for FLSA purposes. Thus, the staffing firm and the client are responsible, individually and jointly, for compliance with all of the applicable provisions of the FLSA.

Being a joint employer has a number of other consequences for the staffing firm. One of these consequences is that an employee’s entitlements under the FLSA may, in some circumstances, be determined by the client’s status. For example, even if the staffing firm is too small to be considered a covered enterprise under the FLSA (i.e., its gross annual receipts are less than $500,000), the employee may still be covered by the FLSA for the entire workweek if a client for whom that employee performs work during any part of the workweek is a covered enterprise. A situation may arise in which an employee is subject to the act in some workweeks and not in others, depending upon the covered status of the client.

d. Summary of Coverage

In sum, an employee of a staffing firm is entitled to the FLSA’s benefits for the entire workweek—unless some exemption applies (as addressed in the next section)—in any of the following three situations:

■   The employee performs in any portion of the workweek an activity for which he or she may be covered as an individual.

■   The staffing firm has an annual gross revenue of $500,000 or more and has two or more employees engaged in interstate commerce.

■   Any client for whom the employee performs services during any part of the workweek is a covered enterprise.

2. Who Is Exempt From FLSA Coverage?

Certain enterprises and occupations are exempt from some or all of the provisions of the FLSA. Exemptions also may be determined by the individual employee’s activities or by the status of the employer. Certain exemptions are industrywide. Other exemptions provide complete relief from the minimum wage and overtime requirements, whereas some provide only partial relief.

Generally speaking, exemptions are determined on a workweek basis, and an employee must be exempt during the entire workweek or else be paid the FLSA-required wages for all of the hours worked, including those devoted to exempt work. This means that an employee assigned in any one workweek to both exempt and nonexempt employment must be paid for that week as if all of the work were nonexempt, including overtime compensation based on total hours worked. Note, however, that there are some exemptions, such as the “white-collar” exemptions discussed below that permit exempt employees to engage in a certain amount of nonexempt work without incurring FLSA overtime liability.

A number of specific exemptions will probably be of greater significance than others to a staffing firm. These are described in the following paragraphs. In addition, staffing firms should keep in mind that they may be subject to state or local wage-hour laws whose exemption structures may be different from that of the FLSA.

a. Executive, Administrative, and Professional Employees

The executive, administrative, and professional exemptions are often referred to as the “white-collar” FLSA exemptions. To qualify as exempt from the overtime pay requirements of the FLSA under these exemptions, an employee must be paid at least $455 per week, or $23,660 per year (with the exception of outside salespeople for whom there is no minimum salary, as discussed below); be paid that amount on a salary basis; and perform certain exempt duties.

When an employee does work under two or more of the “white collar” exemptions in any workweek, the Wage and Hour Division may permit “tacking” of exempt work performed under one exemption category to exempt work performed under another exemption category when determining if an employee’s primary duty is to perform exempt work. Thus, according to the Wage and Hour Division, employees who perform a combination of exempt “white-collar” duties may still qualify for exemption so long as they meet the primary duty test and also satisfy the other exemption requirements (i.e., the salary level and salary basis tests described below).

The duties and salary basis tests are discussed below.

i. Executive Exemption. In addition to satisfying the salary basis test, to qualify as an exempt executive, an employee must meet the following requirements:

■   Employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

■   Employee must customarily and regularly direct the work of two or more full-time employees (or their equivalent); and

■   Employee must have the authority to hire or fire employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees are given particular weight.

Under the FLSA, the determination of what constitutes an employee’s primary duty is not limited to the duty he or she spends the most time performing. Instead, the primary duty is the “principal, main, major, or most important duty that the employee performs.” Further, “concurrent performance of exempt and nonexempt work does not disqualify an employee from the executive exemption” if the employee otherwise meets the executive exemption. Tip 29

Tip 29—Executive

If a staffing firm places an assistant manager in a retail establishment and the assistant manager spends part of his or her working time performing work such as serving clients, stocking shelves, and cleaning the establishment, the assistant manager is still exempt if he or she has a “primary duty” of management, directs the work of at least two other employees, and has the authority in which to change the status of other employees.

To maintain exempt status, the primary duty of the employee must be “management.” “Management” includes, but is not limited to, activities such as

■   Interviewing, selecting, and training employees

■   Setting and adjusting their rates of pay and hours of work

■   Directing the work of employees

■   Maintaining production or sales records for use in supervision or control

■   Appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status

■   Handling employee complaints and grievances

■   Disciplining employees

■   Planning the work

■   Determining the techniques to be used

■   Apportioning the work among the employees

■   Determining the types of materials, supplies, machinery, equipment, or tools to be used or merchandise to be purchased

■   Providing for the safety and security of the employees or the property

■   Planning and controlling the budget

■   Monitoring or implementing legal compliance measures

With respect to the requirement that an exempt executive have authority to make hiring and firing decisions, merely because a higher-level manager’s recommendation has more importance or the employee does not have authority to make an ultimate decision does not mean that an employee’s suggestions and recommendations do not have “particular weight.” To the contrary, according to the U.S. Department of Labor, whether an employee’s suggestions and recommendations have particular weight depends on “whether it is part of the employee’s job duties to make such suggestions and recommendations; the frequency with which such suggestions and recommendations are made or requested; and the frequency with which the employee’s suggestions and recommendations are relied upon.” This requirement will not be met, however, by the mere authority to reprimand, suspend, or create a performance review—authority over a “change in status” is required.

ii. Administrative Exemption. To qualify for the administrative exemption, an employee must meet the salary basis test as well as the following requirements:

■   The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers (sometimes this is called the “administrative-production dichotomy”); and

■   The employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

iii. What Is Work Directly Related to the Management or General Business Operations? While the administrative exemption can apply to many different types of jobs in a variety of different contexts, in general terms, this exemption covers employees who are responsible, at a high level, for making decisions and performing activities directly related to the running, or servicing, of the business (e.g., the chief financial officer, the credit manager, or the human resources manager may be exempt administrative personnel). Administrative employees are not usually involved with the direct provision of services or production of goods (e.g., monitoring the production line where the product is made, or selling the product on the showroom floor).

The DOL provides specific examples of the type of functional areas in which exempt administrative employees may work, such as:

■   Tax

■   Finance

■   Accounting

■   Budgeting

■   Auditing

■   Insurance

■   Quality control

■   Purchasing

■   Procurement

■   Advertising

■   Marketing

■   Research

■   Safety and health

■   Personnel management

■   Human resources

■   Employee benefits

■   Labor relations

■   Public relations

■   Government relations

■   Computer network, Internet, and database administration

■   Legal and regulatory compliance

■   Similar activities

The administrative exemption is often the most difficult to apply. The exemption’s “type of work” requirement can be particularly problematic for employers in the service industry, such as staffing firms. Some case law and opinion letters under prior regulations held that employees of staffing firms who recruited temporary employees for placement with clients would generally meet this first element if they performed office or non-manual work locating and evaluating employees to place with a client, matched the employee to the client, and oversaw and responded to concerns regarding the employee’s performance for the client. However, at least one federal appeals court in California has suggested that administrative employees such as, perhaps, recruiters in staffing firms, might not meet this element and thereby not be administratively exempt, on the grounds that recruiters might be “producing” the product the staffing firm sells (i.e., temporary labor). Although state courts in California and the DOL regulations attempt to downplay this “production” issue in the service industry, some courts, particularly federal courts in California, may be reluctant to fully embrace that view. In addition, some state laws may adhere to this stricter “administrative/production dichotomy” view. Thus, staffing firms should obtain legal advice regarding the law in the jurisdictions in which they operate before classifying their recruiter personnel as administratively exempt.

iv. What Constitutes Discretion and Independent Judgment Regarding Matters of Significance? To qualify for the administrative exemption, an employee’s primary duty must include the exercise of “discretion and independent judgment” with respect to matters of significance. This generally involves comparing and evaluating possible courses of action and making a decision after consideration of the various possibilities. In addition, this decision-making process must relate to issues that are significant, substantial, important, or of consequence. This does not necessarily mean that the employee has the authority to make an independent decision that is unreviewable by others. The employee may, in fact, still exercise discretion and independent judgment even if he or she only makes recommendations for action.

The DOL has provided a list of specific inquiries to assist employers in making a determination about whether an employee’s primary duty involves the exercise of discretion and independent judgment, including:

■   Whether the employee has authority to commit the employer in matters that have significant financial impact

■   Whether the employee has authority to waive or deviate from established policies and procedures without prior approval

■   Whether the employee has authority to negotiate and bind the company on significant matters

■   Whether the employee is involved in planning long- or short-term business objectives

■   Whether the employee investigates and resolves matters of significance on behalf of management

■   Whether the employee represents the company in handling complaints, arbitrating disputes, or resolving grievances

With respect to employees who may consult a manual or other technical materials for guidance, the DOL regulations provide that an employee may still be exempt even when he or she consults a manual. The regulations emphasize, however, that exempt employees may only consult manuals to assist them in using their discretion and independent judgment to decide on an appropriate course of action in response to a novel or unique circumstance. When an employee consults manuals or established procedures and guidelines, and those manuals limit the employee’s discretion by essentially telling him or her what to do or how to solve a problem within closely prescribed limits, the employee is not performing exempt work.

The DOL has issued opinion letters regarding the discretion and independent judgment element as applied to recruiters and account managers in the staffing industry. Additionally, there have been some court decisions addressing these issues. In most of these cases, the individuals in question have been responsible for recruiting, screening, testing, and interviewing applicants, making personnel recommendations, and other related tasks. Job titles offer little value in making exempt status determinations. Therefore, it is important to remember that, whether a person has the title of recruiter, account manager, technical consultant, personnel manager, or assistant branch manager, the duties that person performs—not the title—are the key factors in exempt status determinations. Individuals generally performing these types of duties will generally need to do the following as their primary duty in order to be considered as exercising sufficient discretion and independent judgment to come within the exemption:

■   Exercise a high level of independence in performing these tasks (as opposed to simply responding to instructions or standard operating procedures and manuals developed by others)

■   Selectively exercise their judgment in approving, hiring, or recommending a candidate to be hired and participating in the hiring decision-making process (as opposed to simply reviewing résumés to ascertain whether requirements are met or administering pre-developed tests and approving a candidate based on his or her numerical score on the test)

■   Use their judgment to match a candidate’s qualifications to the needs of a particular client (as opposed to simply “filling an order” for a generic position)

■   Oversee the placement of the candidate with the client (as opposed to simply referring the candidate’s name to someone else for placement)

■   Evaluate the candidate’s and client’s needs in an effort to provide the best possible candidate to the client (as opposed to simply referring several candidates to the client and leaving it to the client to evaluate them and make the decisions)

■   Have the authority to approve higher rates of pay for candidates when, in their judgment, this is required to meet the client’s goals

■   Counsel and discipline placements when they fail to perform adequately for the client and participate in the termination of placements who do not perform adequately

■   Serve as the primary liaison and/or account manager between the client and the staffing firm

■   Evaluate client and market needs and develop comprehensive strategies for obtaining the best possible candidates

■   Have the ability to make significant changes to policy without obtaining prior approval

■   Have the ability to bind the staffing company

■   Have relative freedom from direct supervision

■   Have the ability to resolve client complaints on his or her own

Of course, each and every one of these elements might not exist in a particular case, and many employees will be exempt even though they may perform the majority, but not all, of these duties. However, the more of the foregoing factors a recruiter or account manager has and exercises, the stronger the case the staffing firm will be able to make that the employee is exempt under the administrative exemption.

Based on the numerous court cases involving supposed administrative workers, the regulations also contain a detailed list of examples of exempt and nonexempt administrative work. For example:

■   Insurance claims adjusters generally perform exempt duties if, among other factors, they evaluate and make recommendations regarding coverage of claims, negotiate settlements, and make recommendations regarding litigation.

■   Employees in the financial services industry generally perform exempt duties when they are responsible for collecting and analyzing information regarding a client’s income, assets, and debt; advise customers regarding the advantages and disadvantages of different financial products; determine which financial products best meet the client’s needs and financial circumstances generally; and market, service, or promote the employer’s financial products. Conversely, an employee whose primary duty is to routinely sell financial products to clients without exercising discretion or judgment or tailoring the products and services to the particular client’s needs and circumstances, would not qualify for the exemption.

■   Executive assistants to a business owner or senior executive of a large business generally perform exempt duties when they are delegated authority regarding matters of significance and exercise that authority without specific instructions or prescribed procedures.

■   Team leaders who work with other employees to complete major projects (e.g., designing and implementing productivity improvements, purchasing, selling, or closing all or part of a business, negotiating a real estate transaction) for the employer, even if the employee does not have direct supervisory responsibility over the other employees on the team, generally perform administratively exempt work. On the other hand, if the team leader was not directly involved with work relating to the management or general business operations of the employer, but instead was a team leader in some other capacity (such as the production line, or a shift supervisor for clerical employees, or with respect to a minor project of the employer), he or she would not be exempt.

■   Human resource managers who formulate, interpret, or implement employment policies perform exempt work, but personnel clerks who simply collect and tabulate data (e.g., screen applicant résumés to see whether minimum requirements are met, but otherwise are not involved in the hiring process) do not.

■   Purchasing agents with authority to bind the company on significant purchases are generally exempt.

■   Ordinary and public inspectors who, although they may have skill and experiences, follow standardized techniques and procedures are normally not exempt—they do not exercise discretion and independent judgment, and their work is performed within closely prescribed limits.

In the educational environment, the administrative exemption applies when the employee is working in a capacity “performing administrative functions directly related to academic instruction or training” such as superintendents, principals, department heads, and academic counselors.

v. Professional Employees. The professional exemption actually encompasses three exemptions: (1) the learned professional; (2) the creative professional; and (3) the computer professional exemptions.

vi. Learned Professionals. To qualify for the learned professional exemption, an employee must satisfy each of the following requirements:

■   Have a primary duty that is the performance of work requiring advanced knowledge, which is work that is predominantly intellectual in character and that includes the consistent exercise of discretion and judgment;

■   The advanced knowledge must be in a field of science or learning;

■   The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction; and

■   Be paid on a salary basis of at least $455 per week.

“Work requiring advanced knowledge” means work that is predominantly intellectual in character. It usually involves analyzing, interpreting, or making deductions from various facts. The knowledge it takes to perform these tasks cannot be attained at the high-school level, and work that involves routine mental, manual, mechanical, or physical labor is excluded. This type of work requires the “consistent exercise of discretion and judgment,” a standard different from that used under the administrative exemption. As with the administrative worker, reliance by a learned professional, like a physicist or engineer, on a manual outlining certain procedures should not transform the employee into a nonexempt technician.

The regulations distinguish the fields of science or learning from the mechanical arts and skilled trades (where, though the knowledge may be advanced, is not in a traditional field of science or learning). Traditional fields of science or learning include law, medicine, theology, and teaching. The regulations specifically identify these fields as examples of learned professions: lawyers, chemists, doctors, physicists, scientists, registered nurses, teachers, engineers, accredited physician assistants, executive and sous chefs (with a four-year specialized academic degree), athletic trainers certified by the Board of Certification of the National Athletic Trainers Association, and licensed funeral directors and embalmers who are licensed by and working in a state with a four-year academic study requirement.

While the best evidence that a job is a learned profession is the requirement of an appropriate academic degree, the DOL has recognized that an employee may be in a learned profession after obtaining substantially the same knowledge level through a combination of work experience and intellectual instruction (such as the very occasional lawyer who did not attend law school). On the other hand, the exemption will not apply if most employees acquire the skill through experience rather than through an advanced specialized intellectual instruction. For example, no amount of military training can turn a technical field into a learned professional field.

In addition, the learned professional exemption is not applicable to the following categories of jobs: jobs that only require completion of an apprenticeship program (or other short course of specialized training), and jobs requiring a four-year college degree in any field or a two-year degree as a standard prerequisite for entrance into the field. These jobs generally are not within the learned professional exemption: licensed practical nurses, licensed vocational nurses, skilled tradespersons, technicians, beauticians, paralegals, journalists, and various engineering and repair technicians (such as journeyman electricians).

vii. Creative Professionals. To meet the creative professional exemption, an employee must be compensated on a salary basis of at least $455 per week and have as a primary duty “the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor,” as opposed to routine mental, manual, mechanical, or physical work.

General examples of fields of artistic or creative endeavor include music, writing, acting, and the graphic arts. Creative professionals include actors, musicians, composers, conductors, soloists, painters and cartoonists (who are only given broad outlines of their subject matter), essayists, novelists, short-story writers and screenplay writers (who choose their subjects and submit finished work to their employers), as well as certain positions in advertising agencies. Generally, the exemption is not available to workers whose duties are dependent on intelligence, diligence, and accuracy, as opposed to invention, imagination, originality, or talent. For example, copyists, animators of motion-picture cartoons, or retouchers of photographs are not usually creative professionals because their work is not considered to be “creative” in nature.

viii. Computer Professional Exemption. To qualify for the computer professional exemption, an employee must meet the following requirements:

■   The employee’s primary duty must consist of the application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications; or the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs; or the design, documentation, testing, creation, or modification of computer programs related to machine operating systems; or a combination of these duties; and

■   The employee must be paid on a salary basis of not less than $455 per week, or, alternatively, if paid on an hourly basis, not less than $27.63 per hour.

Again, it is important to be aware that some states, such as California, may require higher hourly rates of pay to qualify for the computer professional exemption. In California, the hourly rate of pay required for the exemption is $45.51 as of January 1, 2019 (or an annual salary of at least $94,603.25).

In considering the option to pay an exempt computer professional on an hourly basis, a federal court in Pennsylvania has held that the computer professional exemption requires that the employee be paid not less than $27.63 an hour for every hour worked, rather than an average of $27.63 for hours worked in a workweek.

The computer professional exemption does not require that the employee consistently exercise discretion and judgment, nor must the employee’s job be limited to software functions. However, this exemption is not available to an employee engaged in the manufacture or repair of computer hardware, or engineers or drafters who use computer-aided design software, but are not otherwise engaged in computer systems analysis and programming. Help desk, network support, and other IT support employees are commonly misclassified as being exempt pursuant to the computer professional exemption. In addition, employees who perform maintenance or install computer systems will not satisfy the exemption.

Although the computer professional exemption may not apply, federal regulations provide that an employee who works in the computer field but does not meet the requirements of the computer professional exemption may meet the administrative exemption if the employee’s primary duty includes planning, scheduling, and coordinating activities required to develop systems to solve complex business, scientific, or engineering problems at their employer or its customers. Also, according to the DOL, “computer network, Internet, and database administration” is considered work that directly relates to management or general business administration for purposes of the administrative exemption.

Once again, state laws regarding the computer professional exemption may differ from the FLSA’s definition. Employers must comply with the most stringent (and highest-paying) legal requirements to benefit from both federal and state overtime exemptions.

ix. Highly Compensated Employees. In an effort to create a “bright line” test for employees who do not perform manual labor, do perform duties of an executive, administrative, or professional nature, but whose salary level is so high that they were not intended to be afforded the protections of the overtime pay provisions of the FLSA, the DOL regulations exempt certain “highly compensated employees” from overtime requirements. To qualify for the highly compensated employee exemption, the following requirements must be met:

■   The employee’s primary duty must include performing office or non-manual work;

■   The employee must “customarily and regularly” perform at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee; and

■   The employee’s annual total compensation must equal $100,000 or more, which includes at least $455 per week paid on a salary basis.

Thus, an employee who customarily and regularly directs the work of two or more other employees (but does not have the authority to change another employee’s status or provide recommendations that are given particular weight) may qualify as a highly compensated employee, although the employee does not qualify as an executive employee.

Employees performing manual work (including non-management production line workers, and non-management employees in maintenance, construction, and similar occupations such as carpenters, electricians, mechanics, plumbers, ironworkers, craftsmen, operating engineers, longshoremen, construction workers, laborers, and other employees who perform work involving repetitive operations with their hands, physical skill, and energy), however, are not within the exemption no matter how highly they might be paid. Further, duties performed by outside salespersons or computer employees are not included within the definition of “highly compensated employee.”

Concerning the $100,000 minimum compensation, an employer cannot count board or lodging, payments for medical or life insurance, or contributions to retirement plans or other fringe benefits. Commissions, nondiscretionary bonuses, and other nondiscretionary compensation may be included in determining whether the employee meets the $100,000 annual threshold, but employers still must be careful to pay a weekly salary (or fee) of at least $455 to qualify for the highly compensated exemption. In the case of an employee who works only part of the year, employers must prorate the $100,000. The prorating formula must be used for employees who terminate before a year ends as well as those who begin work during a 52-week year period that has already begun.

To reach the $100,000 threshold, the DOL also allows payment of a single lump-sum, make-up amount at the end of the year. This make-up payment must be made to the employee within one month after the end of the year. Tip 30

Tip 30—Payment Documentation

Employers who make up the payment at the end of the year should provide adequate documentation of the purpose of the payment to the employee and apprise the employee as to the purpose of the payment.

x. Outside Sales Employees. To qualify for the outside sales exemption, (i) the employee’s primary duty must be making sales or obtaining orders for contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (ii) the employee must be customarily and regularly engaged away from the employer’s place or places of business. Unlike most of the other so-called white-collar exemptions, the employee need not meet the $455 per week salary level or be paid on a salary basis.

Under the outside sales exemption, work performed “incidental to and in conjunction with” the employee’s own outside sales or solicitations (such as deliveries and collections, writing sales reports, planning itineraries, attending sales conferences, etc.) is regarded as exempt outside sales work. In addition, to be engaged “away from an employer’s business or places of business,” the outside sales employee must make the sales physically at the client’s place of business. Sales by phone, email, or the Internet can be activities adjunct to physically visiting the client, but such activities are not considered outside sales work if they are the principal vehicle for the sale. Concerning promotional work, such activities must relate to the employee’s own sales. Promotional activities related to the sales of others are not exempt outside sales work, but, in some instances, may qualify as administrative exempt work. For example, working at a trade-show booth to promote one’s own sales is exempt work, but working there to promote the company’s sales in general may not be exempt work.

xi. The Salary Basis Test. With the exception of hourly paid computer professional employees who make at least $27.63 per hour, doctors, lawyers, teachers, and outside sales employees, an exempt white-collar employee must be paid on a “salary basis.” The employee must “regularly receive” “a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” Exempt employees “must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.” However, an employer need not pay an employee his or her salary in any week in which the employee performed no work; therefore, full-week deductions from salary do not violate the salary basis test. Even when no work is available, but the employee is willing and able to work, deductions may not be made in anything other than full-week increments because the employee’s absence from work is not within his or her control. Nor may an employer deduct pay for absences occasioned by jury duty, attendance in a litigation proceeding as a witness, or temporary military leave, although salary off-sets for jury fees, witness fees, and military pay received by the employee for the relevant week are permitted. Again, the absence from work is not within the employee’s control. Employers may make deductions from salary for “unpaid disciplinary suspensions of one or more full days imposed in good faith for infractions of workplace conduct rules” without undermining the salary basis test. “Such suspensions must be imposed pursuant to a written policy applicable to all employees.” This exception should not be read broadly, however, as the DOL takes the position that the term “workplace conduct” refers only to “serious” workplace misconduct, such as sexual harassment, workplace violence, drug or alcohol violations, or violations of state or federal laws. Thus, deductions in increments of less than a week for insubordination or attendance infractions, for example, would violate the salary basis test.

To satisfy the rules under the salary basis test, the disciplinary suspension must be imposed pursuant to a “written policy.” “Such policy,” according to the DOL, “need not include an exhaustive list of specific violations that could result in a suspension, or a definitive declaration of when a suspension will be imposed. The written policy should be sufficient to put employees on notice that they could be subject to an unpaid disciplinary suspension.” Tip 31

Tip 31—Written Policy

The “written policy” requirement for this exception would be satisfied by, for instance, a sexual harassment policy, distributed generally to employees, that warns employees that violations of the policy will result in disciplinary action “up to and including unpaid suspension or termination.”

Deductions for personal absences within the exempt employee’s control may occasion deductions from salary proportional to the time actually missed by the employee in full-day increments only, and deductions may not be made based upon the hours worked on a given day. An employer also may make full-day deductions from an exempt employee’s pay for full-day absences occasioned by sickness or disability if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary occasioned by such sickness or disability. Deductions may be made for such absences before the employee has qualified under the plan, policy, or practice, and after the employee has exhausted his or her leave allowance.

With respect to partial-day deductions, only three circumstances exist under which employers may make partial-day deductions from an exempt employee’s salary without violating the salary basis rule:

■   In the initial or terminal weeks of employment, the payment of an hourly or daily equivalent of the employee’s salary for the time actually worked is permissible.

■   For violations of “safety rules of major significance” (which are defined narrowly and for which employers usually would discharge an employee or suspend him or her for one or more full days).

■   For intermittent leave taken under the Family and Medical Leave Act. Tip 32

Tip 32—Family Leave

If the employee has not yet qualified for FMLA leave, but the employer’s policies are more generous than the FMLA and provide leave for the employee anyway, partial-day deductions for intermittent leave do not qualify under this exception. Similarly, if the employee has already taken all of his or her 12 weeks of leave under the FMLA, but the employer’s policies provide for more leave than the FMLA provides, or additional leave is granted as an accommodation under the Americans With Disabilities Act, partial-day deductions cannot be made.

xii. Public Employers. Government employees who otherwise meet the salary basis requirements are not disqualified from exemption merely because the employees are paid according to a pay system under a statute, ordinance, policy, or practice “under which the employee accrues personal leave and sick leave and which requires the public agency employee’s pay to be reduced or such employee to be placed on leave without pay for absences for personal reasons or because of illness or injury of less than one workday when accrued leave is not used by an employee because: (1) Permission for its use has not been sought or has been sought and denied; (2) Accrued leave has been exhausted; or (3) The employee chooses to use leave without pay. Deductions from the pay of an employee of a public agency for absences due to a budget-required furlough shall not disqualify the employee from being paid on a salary basis except in the workweek in which the furlough occurs and for which the employee’s pay is accordingly reduced.”

xiii. ‘Safe Harbor’ Regulation. Under the DOL’s “safe harbor” regulation, isolated or inadvertent deductions from an exempt employee’s salary will not result in the loss of the exemption for employees subject to them if the employer reimburses the employees for such improper deductions. If the employer has a clearly communicated policy that prohibits improper pay deductions and includes a complaint mechanism, reimburses employees for any improper deductions, and makes a good-faith commitment to comply in the future, the employer will not lose the exemption “unless the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints.” If, however, the employer fails to reimburse employees for any improper deductions or continues to make improper deductions after receiving employee complaints, the safe harbor provision is inapplicable.

An employer who makes improper deductions from salary loses the exemption if it has an “actual practice” of making improper deductions. An “actual practice” of making improper deductions will be determined based on

■   The number of improper deductions, particularly as compared with the number of employee infractions warranting discipline

■   The time period during which the employer made improper deductions

■   The number and geographic location of managers responsible for taking the improper deductions and

■   Whether the employer has a clearly communicated policy permitting or prohibiting improper deductions

When an employer has an actual practice of making improper deductions, the exemption is lost during the time period in which the improper deductions were made for employees in the same job classification working for the same managers responsible for the actual improper deductions. Tip 33

Tip 33—Handbooks

To support a safe harbor argument, the wage payment policy in an employer handbook might include a statement that the employer intends to pay its exempt employees on a salary basis and will not make deductions from salary that are prohibited under the FLSA. Publishing the policy in an employee handbook or on the company intranet would satisfy the “clearly communicated” prong of this element according to the DOL. The “good-faith commitment” prong of the safe harbor test could include adopting or republishing the employer’s policy prohibiting improper deductions, posting a notice including its commitment on an employee bulletin board or intranet, training managers and supervisors, reprimanding or training any manager who made improper deductions, or establishing a telephone number for employee complaints.

xiv. Loss of Exempt Status. To be exempt from overtime, a bona fide executive employee must be paid on a salary basis, and administrative or professional employees must be paid on either a salary or fee basis. Employees paid on an hourly basis are generally not exempt from overtime. Court decisions have determined that employer practices such as docking salaried employees for partial days worked or for attendance at court proceedings, or providing compensatory time (“comp time”) in lieu of time and one-half payments or payment for work in excess of regularly scheduled work hours, may result in the loss of an employee’s exemption from overtime status. The outcomes have been significant awards against employers, including back pay for overtime, interest, and liquidated (doubled) damages. To avoid the loss of a salaried employee’s exempt status

■   Do not dock employees who work less than a full day.

■   Do not dock employees for attendance at court proceedings.

■   Do not provide overtime payments or compensatory time to exempt employees.

■   Do not dock employees for temporary military leave.

■   Do not dock employees for working less than a 40-hour workweek or require employees to make up the time or charge the time to sick or vacation leave.

■   Do not dock employees for minor disciplinary reasons.

Certain employer deductions will not result in the loss of an employee’s exempt status. Here are some examples:

■   Deductions of a day or more when the employee is absent from work for personal reasons other than sickness or accident will not result in a loss of exempt status.

■   Deductions for absences of a day or more occasioned by sickness or disability (including industrial accidents) will not result in a loss of exempt status if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary occasioned by sickness or disability. An employee need not be paid any portion of his or her salary for such day or days for which he or she receives compensation for leave under such plan, policy, or practice. If the employer operates under a state sickness and disability insurance law, or a private sickness and disability insurance plan, deductions may be made for absences of a working day or longer if benefits are provided in accordance with the particular law or plan.

■   Penalties imposed in good faith for infractions of safety rules of major significance will not affect the employee’s exempt status. Safety rules of major significance include only those relating to the prevention of serious danger to the facility or other employees, such as rules prohibiting smoking in explosive plants, oil refineries, and coal mines.

b. Learners, Apprentices, Disabled Workers, Messengers, and Certain Students

Learners, apprentices, disabled workers, messengers primarily engaged in delivering letters or messages, and certain students may under certain circumstances be paid less than the minimum wage. Only the minimum wage requirements of the FLSA are relaxed as to such employees, however, and the application of the overtime, equal pay, and child labor provisions of the act are not in any way affected. Before employing any person at a wage rate below the statutory minimum, an employer must first procure a special certificate from the Wage and Hour Division authorizing the lower wage rate; such certificates are issued only to prevent curtailment of employment opportunities for such persons. The applicable subminimum wage rate is set by the U.S. Department of Labor.

In the case of disabled workers, exemption certificates for payment of a “special minimum wage” are granted by the Wage and Hour Division on a case-by-case basis, and only if the particular individual’s productive and earning capacity is impaired because of age or physical or mental disability for the work being performed. In addition, if the disabled employee is able to perform the particular job in question as well as a non-disabled person, no exemption will be allowed. The “special minimum wage” for disabled workers must be proportionally commensurate, based on productivity, with the prevailing wage paid to experienced, non-disabled workers in the vicinity for the same type of work. In addition, a 2014 Executive Order requires federal contractors to pay disabled workers at least the same hourly wage as paid to nondisabled workers under the contract. If the “commensurate wage” calculated based on the prevailing wage for experienced, nondisabled workers in the vicinity is higher, however, that wage must be paid. State and local laws may ban paying disabled workers less than the minimum wage. Furthermore, covered employers must comply with the Americans With Disabilities Act and Rehabilitation Act. In light of these complexities, staffing firms should proceed with caution and consider obtaining advice from experienced counsel before employing disabled workers at less than the applicable minimum wage.

c. Hospitals and Nursing Homes

While employees of private hospitals and nursing homes are entitled to be paid minimum wage, the special needs of these institutions with respect to scheduling/hours worked are recognized. Hours worked by hospital and nursing home employees may be calculated for overtime purposes on an 80-hour, 14-day basis rather than on the normal seven-day, 40-hour workweek basis if two conditions are met: the employer and employee agree prior to the performance of work that such a basis will be used; and the employer pays overtime after eight hours of work in any given day, even if the employee does not exceed 80 hours of work for the entire 14-day period. Tip 34

Tip 34—Jobs, Duties, and Responsibilities

It would be prudent to have a written job description for those positions that the staffing firm believes qualify for this overtime exemption, and to monitor the employee’s duties and responsibilities to ensure that the employee is actually performing work that would qualify for the exemption. One appellate court has emphasized that it needed to rely upon the parties to provide evidence and technical explanations in order to assess whether this exemption should apply.

d. Motor Carrier Exemption

The U.S. Secretary of Transportation has established the qualifications and maximum hours of service to regulate motor carrier safety. Employees who fall within the Secretary of Transportation’s regulatory authority generally are exempt from the overtime pay provisions of the FLSA. To qualify for this exemption, employees must be employed in positions that directly affect the safety of the operation of motor vehicles engaged in interstate or foreign commerce (employees of local delivery companies that operate only in one state would not be covered by this exemption). Specific employee titles that generally fall within this exemption include driver, driver/helper, loader, and mechanic. Other employees who regularly travel interstate and use their own vehicles to transport tool kits, replacement parts, and equipment to perform work at client sites may, under certain limited circumstances, qualify for this exemption. A federal court of appeals held that temporary employees assigned to a private motor carrier are also exempt from the overtime provisions of the FLSA. However, employees whose duties do not directly affect motor vehicle safety, such as office workers and dispatchers, are not covered by the exemption.

In addition, there is a statutory “exception to the exemption” for motor carrier employees whose duties affect the safe operation of vehicles weighing 10,000 pounds or less (commonly referred to as the “small vehicle exception”). Subject to specified “exceptions to the exception to the exemption,” such employees generally are covered by the FLSA’s overtime requirements. The Motor Carrier Act exemption thus is complicated and case law regarding it is evolving, so counsel familiar with the wage and hour laws should be consulted before a staffing firm concludes that this exemption applies to any given employee.

e. Home Health Aide and Personal Care Attendants Exemption

Home health aides may be exempt from the overtime requirements of the FLSA if they perform “companionship services” for the aged or infirm by providing “fellowship” and “protection” to them. “Fellowship” means to engage the person in social, physical, and mental activities, such as conversation, reading, games, crafts, or accompanying the person on walks, on errands, to appointments, or to social events. “Protection” means to be present with the person in his or her home or to accompany the person when outside of the home to monitor the person’s safety and well-being. Companionship services can also include the provision of “care” if the care is provided attendant to and in conjunction with the provision of fellowship and protection and if it does not exceed 20 percent of the total hours worked per person and per workweek. “Care” is defined as “assistance with activities of daily living (such as dressing, grooming, feeding, bathing, toileting, and transferring) and instrumental activities of daily living, which are tasks that enable a person to live independently at home (such as meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care).” However, home health aides who perform services requiring significant training or expertise may not be exempt because their services will be deemed to be more than mere “companionship.” In addition, third-party employers of direct care workers (such as home health care staffing agencies) are not permitted to claim the exemption for companionship services.

f. Placement Counselors and Recruiters

In 1999, a federal court of appeals held that a recruiter for a staffing firm that places nurses qualified for the FLSA administrative exemption. The court confirmed that the recruiter qualified for the exemption because the recruiter’s primary duty involved the performance of non-manual work in an office setting and the recruiter exercised independent discretion and judgment in carrying out tasks such as recruiting and placing nurses, approving higher rates of pay, counseling and disciplining nurses, and terminating nurses’ assignments. Another federal court ruled in 2017 that a staffing company’s account managers and senior account managers were exempt from federal overtime requirements for similar reasons. As noted above, however, some courts may take a more narrow view and reason that recruiters’ work is more akin to “producing” the product offered by staffing agencies, and therefore conclude that the administrative exemption does not apply. Whether placement counselors or recruiters can qualify as exempt depends on whether they are salaried and their duties closely adhere to the exemption’s requirements, including particularly the exercise of discretion and independent judgment as described above. These determinations are highly fact-sensitive, so advice of experienced counsel should be sought before classifying recruiters as exempt.

g. Other Exemptions

There are a variety of other specific, often industry-based exemptions to the overtime pay provisions of the FLSA, but they are too numerous to list in detail here. For example, exemptions include seasonal employees of amusement parks; certain agricultural employees; employees of small local newspapers; baby sitters and domestic employees; newspaper delivery persons; certain employees of television stations in small communities; taxicab drivers; motion picture theatre employees, etc. Staffing firms with specific questions about particular industries or particular positions within specific industries should consult with counsel familiar with the wage and hour laws.

h. The Effect of IRCA on the FLSA

Illegal aliens are “employees” under the FLSA, even though the Immigration Reform and Control Act of 1986 (see generally Chapter 5) prohibits the employment of such undocumented aliens and provides sanctions against employers who do so. This entitles an illegal alien to bring an action to enforce the minimum wage and overtime provisions of the FLSA. Courts have repeatedly construed the FLSA to protect illegal aliens who bring wage and hour claims.

3. Child Labor Provisions

In addition to the provisions regulating the wages and hours of employees, the FLSA contains provisions that restrict the employment of children. The act prohibits the employment of any “oppressive child labor” in commerce or in the production of goods for commerce, or in any activities that are conducted by a covered enterprise. Employers not covered as enterprises are prohibited from employing children in interstate activities but are not subject to any FLSA restrictions insofar as purely local activities are concerned (but state or local laws may apply to such activities).

Generally speaking, it is unlawful to employ a child below the age of 14 in any occupation other than for work in agriculture or for the delivery of newspapers. For most occupations, a minimum age of 16 is prescribed, and for certain hazardous occupations, a minimum age of 18 is required. For those occupations for which no 16- or 18-year minimum age is prescribed, 14- and 15-year-olds may be employed only outside of school hours and within certain prescribed limits. These jobs include office and clerical work, certain food service jobs, errand and delivery work, clean-up work, and certain types of maintenance work. Once a child reaches the age of 18, the FLSA no longer concerns itself with the particular occupation in which he or she is employed, though state laws may be more restrictive. Most state child labor laws require that an employer obtain a state employment or age certificate for minor employees showing them to be the legal age for the occupation in which they will work. As employers of their temporary employees, staffing companies should obtain any certificate required by state law for any minors whom they employ. These same certificates are accepted as proof of age under the FLSA. Whenever state and federal child labor standards apply to the same situation, the higher standard prevails. Tip 35

Tip 35—Child Labor

Many states have enacted detailed laws and regulations pertaining to the employment of minors. Also, the federal government periodically focuses its attention on the enforcement of federal law regarding the employment of minors.

The penalties for violating these laws and regulations are often severe, even when the violations are inadvertent or relate only to procedures or record keeping. Experience dictates that special care should be taken to ensure that the provisions of these laws and regulations are understood and applied by all personnel involved in hiring employees.

4. Who Is Liable for Paying Overtime That Is Owed to Temporary Employees?

If the temporary employee performs work exclusively for one client during the workweek, that client will be jointly responsible with the staffing company for the payment of overtime. But when an employee works for more than one client in a given workweek, and the temporary employee does not work for more than 40 hours for any given client but works for more than 40 hours in the aggregate for all clients, the staffing company will be held solely responsible for paying any overtime. In addition, the Wage and Hour Division views the staffing company to be in the best position to know the total hours worked during the workweek.

a. Minimum Wage

All covered nonexempt employees must be paid the minimum wage. The federal minimum wage is currently $7.25 per hour. The Wage and Hour regulations describe in detail how commissions, bonuses, piece rates, and other forms of compensation are converted into an hourly rate. A growing number of state and local governments have adopted higher—sometimes, considerably higher—minimum wages, and nonexempt employees must be paid the highest applicable rate. For instance, the minimum wage in California (for employees of businesses employing 26 or more individuals) increased to $12.00 per hour effective in 2019, and that rate will automatically increase to $15.00 per hour by 2022.

The reasonable cost or fair value of meals, lodging, or other facilities customarily furnished by the employer that are primarily for the benefit of the employee may be considered part of the employee’s wages, unless excluded from wages by the terms of a collective bargaining agreement. Tip 36

Tip 36—Minimum Wage

In most states, it is unlawful to reduce an employee’s hourly rate of pay retroactively. To encourage temporary employees to complete their assignments, a staffing firm may enter into an agreement before the assignment begins stating that the employee will be paid minimum wages unless he or she continues working on the assignment for each pay period until the assignment is completed, in which case he or she will be paid at a specified higher rate of pay.

b. Overtime

The FLSA provides that all nonexempt employees must be paid at not less than 1½ times their “regular rate” of pay for all hours worked over 40 in a workweek. Determining the correct “regular rate” of pay for temporary employees must be done carefully, because temporary employees may be compensated at varying rates within one workweek. Cases have upheld the U.S. Department of Labor’s regulations providing that an employee’s regular rate is calculated by dividing the employee’s total number of hours worked by the total compensation the employee earned that week. Premium rates paid for less desirable shifts (“shift differentials”) increase the employee’s regular rate. Shift differentials will not be credited against the employer’s overtime liability. See also Section 4j later in this chapter, “What Is the Regular Rate of Pay?” Tip 37

Tip 37—Overtime

Federal court of appeals decisions have shown that failure to pay correct overtime can be a costly mistake for any staffing firm. For example, courts of appeals have ordered two staffing firms to pay several hundred thousand dollars for unpaid overtime compensation and liquidated damages in two separate lawsuits brought by the U.S. Department of Labor. In addition to the judgment, the staffing firms had to incur the inconvenience, administrative costs, and substantial attorneys’ fees in their defense. As the staffing industry has become more visible, the DOL has increased its scrutiny of pay practices within the industry.

The court decisions mentioned above have approved the following method of calculating overtime:

■   First, determine the employee’s “regular rate” for the week. This is done by dividing the total non-overtime compensation the employee earned in a week by the number of hours he or she worked, taking into account any shift differentials to which the employee may be entitled.

■   Second, multiply the employee’s “regular rate” by 40. This is the employee’s base compensation for the week, without overtime.

■   Third, multiply the remaining hours the employee worked in that week by 1½ times the “regular rate.” Add this amount to the employee’s base compensation. This is the total compensation the employee should receive for that week.

For example, an employee is sent to assignment A for 20 hours at a rate of $10 per hour and to assignment B for 25 hours at a rate of $20 per hour. The employee’s overtime is calculated as follows:

■   Employee’s “regular rate” for the week = (20 hours × $10 per hour) + (25 hours × $20 per hour) ÷ (45 hours) = $15.55.

■   Employee’s base compensation for the week, without overtime = $15.55 × 40 hours = $622.

■   Employee’s overtime compensation for the week = ($15.55 × 1.5) × 5 hours = $116.63.

■   Total compensation the employee should receive for that week ($622 + $116.63) = $738.63.

The act does not require overtime pay for hours in excess of eight per day or for hours worked on holidays or weekends, although many employers do pay overtime for such work and some state laws require such payments. Nor does the act require that an employee be paid each week; an employer may make wage and salary payments at other regular intervals, such as every two weeks. The act does require, however, that overtime pay be computed on the basis of hours worked during each workweek, and that all compensation earned in a particular workweek be paid on the regular payday for the period in which such workweek ends. An employer cannot average the hours of work over two or more workweeks. Here again, state laws might be different from the FLSA with regard to how frequently employees, or certain types of employees, must be paid.

c. Are Compensatory Time Arrangements Permissible?

An employer cannot delay full payment of all compensation due in a given pay period until some later time. This means that many “compensatory time” or “comp time” arrangements, through which an employee accumulates paid leave time to be taken at some later point rather than being paid promptly for overtime, are impermissible under the FLSA. However, the act permits “comp time” to be granted by public employers to nonexempt employees pursuant to a collective bargaining agreement or individual agreement with the employee. Such “comp time” must be calculated at the rate of 1½ hours of comp time for each hour of overtime worked. Public employees must be permitted to use accrued comp time within a reasonable period after making the request unless doing so would “unduly disrupt” the operations of the agency.

d. Must Temporary Employees Get Meal Breaks?

The FLSA does not specifically mandate employers to grant their employees a meal period during which employees are completely relieved of duties. Where employers grant meal periods (typically 30 minutes or more), such time need not be compensable, provided that the employee is not expected to perform any work duties during that period. Many states, however, have laws addressing when meal breaks are required. Requiring employees to perform any work during meal periods or cutting meal periods short without correcting time records has spawned many minimum wage and/or overtime lawsuits, often class actions, under both federal and state wage-hour laws. Tip 38

Tip 38—Meal Periods

While the FLSA does not require meal periods, many state laws do. California, in particular, has seen extensive litigation over meal and rest breaks. Depending on the requirements of state law, temporary employees must be permitted the minimum meal period, and you may wish to remind clients of any requirement. In some states, it may be possible for employees to waive their rights to a meal break if the circumstances of the job make it impracticable to comply with certain meal period requirements. Counsel should be consulted to see if such arrangements are permissible in the state(s) where you provide staffing services.

e. What Is the Workweek?

The basic measure of working time under the FLSA is the workweek. The FLSA requires that a workweek be established consisting of a fixed and regularly recurring period of 168 hours in the form of seven consecutive 24-hour periods. The workweek need not coincide with the calendar week or with the payroll period—though most employers find it administratively more convenient to make certain that it does. Once a workweek has been established for a given employee, it may not be changed unless the change is intended to be permanent.

The FLSA does not specify a particular beginning or end to the workweek, nor does it limit the total working time in any workweek. Furthermore, the FLSA does not preclude employers and employees from agreeing to a contractual workweek shorter than the statutory straight-time workweek or to the payment of overtime rates for hours worked in excess of the contractual number. Agreements for the payment of overtime for hours worked in excess of a stipulated daily number are also permissible. But no agreement can waive an employee’s right to statutory overtime, nor extend the straight-time workweek beyond the maximum fixed by the FLSA.

f. What Hours Are Compensable?

All hours worked in a given workweek that are compensable under the FLSA must be taken into account in determining when overtime pay is due. “Hours worked” includes all time in which the employee is required to be on duty or on the employer’s premises or at a prescribed workplace, including all hours during which the employee is “suffered or permitted” to work, even though not requested to do so. Hours worked may include hours spent in idleness, in incidental or preparatory activities, or in working at home; they may also include time spent in activities that have been neither sanctioned nor expressly condoned by the employer, if the employer knows or has reason to believe the work is being performed. Some courts have been reluctant to refuse overtime compensation to an employee for work that the employer alleges was not authorized, even when the work was performed without the employer’s knowledge.

Time spent performing certain activities prior to and at the completion of the employee’s principal activities that are not an integral part of such primary activities need not be compensated for under the act (e.g., completing timesheets or walking from the plant gate to the employee’s workstation). However, when an employer voluntarily obligates itself to compensate for such activities by adhering to contract, industry custom, or employer practice, the time expended must be counted as hours worked for purposes of calculating overtime. Furthermore, time spent performing pre- or post-work activities that are integral and indispensable to primary duties (such as starting and signing off from computers or other machinery, or donning and doffing required safety or protection gear at the job site) must be counted as hours worked. In addition, time spent by non-exempt employees reading or writing work-related communications on cell phones or computers constitutes compensable work time (and should be addressed in appropriate employer policies and reporting procedures). On the other hand, the act specifically excludes from overtime paid absences for vacation or illness.

As noted above, meal periods can be excluded when determining hours worked, but only if the employee is completely relieved of all duties during those times. The Wage and Hour Division takes the position that, ordinarily, 30 minutes is long enough for a meal period. On the other hand, rest periods of short duration must be counted as hours worked and may not be offset against other compensable time, such as waiting time or on-call time. The Wage and Hour Division’s regulations expressly take the position that employees must be paid for all short break time (typically 5-20 minutes), and one federal court accordingly has adopted a “bright-line” test that all breaks of less than 20 minutes count as hours worked, even if the employee was completely relieved of all duties during them. Importantly, some states’ laws also regulate break times, so state and local law should be reviewed with experienced counsel for any applicable requirements.

g. Must Temporary Employees Be Paid Holiday Pay or Vacation Pay?

The FLSA does not mandate that employers pay their employees for holidays not worked or vacation pay. An employer may at its own discretion provide such a benefit. State and local law should be reviewed for any applicable requirements.

h. When Is Travel Time and Waiting Time Compensable?

Travel between an employee’s home and place of employment is not compensable under the FLSA. The Portal-to-Portal Act of 1947, which amended the FLSA, makes travel by an employee to the job site and certain other activities “incidental” to regular work (“portal activities”) noncompensable in the absence of a contrary contract, custom, or practice.

In contrast, travel during the workday and travel connected with the employee’s regular duties is usually compensable under the FLSA. While travel to the job site at the beginning of the workday is generally not compensable, even when transportation is furnished by the employer, travel from job site to job site during the workday will be considered compensable work. If compensable under the act, it must be counted in determining hours worked for overtime purposes. If not compensable, hours spent in traveling need not be counted, though this result may be different if travel time is in fact compensated by contract, custom, or practice.

Similarly, time spent waiting before or after an employee performs his or her principal duties is expressly made non-compensable by the Portal-to-Portal Act. But if the waiting takes place during the workday, or when the employee is on duty or on call by the employer, guidelines laid down by the FLSA govern. The applicability of these guidelines may depend upon the employment contract and the facts of each case. In general, however, all time spent by employees waiting while on duty must be counted as hours worked for purposes of paying minimum wages and calculating overtime. This sort of time is often referred to as time spent by employees who have been “engaged to wait,” and it counts as compensable hours worked (as opposed to noncompensable time spent “waiting to be engaged”).

Travel time and waiting time present special problems for the staffing industry. In recognition of these problems, the Wage and Hour Division has issued the following administrative guidance on travel time for temporary help firms:

“The typical temporary help firm … is engaged in supplying workers employed by the firm on an as needed basis to various establishments. … For certain types of jobs, [a] registrant usually voluntarily shows up at some central location where he or she awaits employment opportunity. If work is available or becomes available, her or she is sent or taken to the customer’s establishment. … At the end of the day, the worker is free to go home and collect his or her pay later or to return to the central location to be paid for his or her work … If the employment understanding clearly is that the pay or the [working] time of the employee begins and ends at the customer’s establishment, waiting for assignments at the central location or in travel from there to the customer’s establishment and return would not be compensable worktime. In other words, his or her working time is computed in the same manner as if he or she had gone directly from his or her home to the customer’s establishment and returned home from there at the end of the day. This would be true even though he or she may be assigned to work at the same customer’s establishment for more than one day.” (Emphasis supplied.) Tip 39

Tip 39—Travel and Waiting Time

Given the importance the U.S. Department of Labor attaches to “the employment understanding” in its enforcement guidelines on travel and waiting time for temporary employees, it may be advisable to inform employees in writing that travel and waiting time are not included in hours worked. Similarly, employees may be informed that they are not required to wait for jobs, nor are they required to wait for employer-furnished transportation, provided they can secure other means of transportation to the job site and arrive on time.

To reinforce the fact that compensable hours are limited to those during which the employee performs work for the client, employees should not be required to report back to the office of the staffing firm when substantial time elapses between initial assignment and the commencement of a job, and they should not be required to return to the office of the staffing firm at the end of the day.

i. Must Temporary Employees Be Paid for Jury Duty?

All of the states have passed laws against discharging an employee because the employee has received a summons or served as a juror. Some states, including Alabama, Colorado, Connecticut, Louisiana, Massachusetts, Nebraska, New York, and Tennessee, have passed laws requiring employers to compensate an employee for time taken off for jury duty. For example, in New York, an employer with more than 10 employees shall not withhold the first $40 of the employee’s daily wages during the first three days of jury service. Staffing firms should be familiar with the requirements of the laws of the states in which they do business. As noted above, deducting from salary for exempt employees’ time spent on jury duty may destroy the exemption.

j. What Is the Regular Rate of Pay?

Employees entitled to overtime pay under the FLSA must be paid 1½ times their “regular rate” for all hours worked in excess of the maximum straight-time number in the maximum workweek applicable to them. The term “regular rate” has been interpreted to mean an hourly rate, but it may not be exactly the same as the employee’s straight-time rate (straight-time earnings divided by hours worked). For example, certain payments are excludable in determining the regular rate. These include holiday pay, gifts, discretionary bonuses, premium pay, welfare and other benefit plan contributions by employers, and reimbursement for expenses. Commissions and nondiscretionary bonuses must be included, however, as must the cost of any employer-furnished facilities that are credited to wages. Neither bonuses nor gifts may be applied against overtime due.

The wage and hour regulations describe how the regular hourly rate is determined for a number of different types of compensation plans. Ordinarily, the regular rate is determined by dividing an employee’s total pay in any workweek by the total number of hours worked. This is known as the “weighted average” rate. If an employee is paid a salary for a specified number of hours a week, the regular rate is obtained by dividing the weekly salary by the specified hours. If salary is paid on other than a weekly basis, the weekly pay must be determined in order to compute the regular rate. For example, a monthly salary must be multiplied by 12 (months) then divided by 52 (weeks) to determine a workweek pay equivalent on which the regular rate of pay may be determined for overtime calculation purposes.

Special rules govern the conversion of piece rates, job rates, and commissions into hourly rates. There are also special rules for pay plans involving a guaranteed weekly wage without regard to fluctuations in hours actually worked. If any employee earns two or more hourly rates during a given workweek, the overtime due may be computed either on the basis of the average weekly rate (the “weighted average”) or on the basis of the hourly or piece rate in effect during the overtime hours worked. The second method must be agreed to by both the employer and the employee in advance.

The regular hourly rate is determined on the basis of earnings before any deductions are made, including deductions required by law and for the convenience or benefit of either the employer or employee. Each workweek stands alone for overtime purposes, so that rates paid in one workweek cannot be averaged with a lesser rate earned in another workweek, even if both workweeks are within the same pay period.

There are numerous other permissible compensation plans with less widespread application. Many of these are dealt with in the extensive regulations and interpretative bulletins of the Wage and Hour Division. In most cases, however, peculiarities in a pay plan applicable to a client’s permanent employees will not affect the method of compensation for an employee of a staffing company.

5. Record-Keeping Requirements

Every employer subject to the FLSA is required to keep and preserve records on all of its employees, their wages and hours, and other conditions and practices of employment. The single exception from the act’s record-keeping requirements is for overseas employees in certain areas. Special records are required with respect to employees who are exempt or partially exempt from the act, or who are subject to particular rules (e.g., tipped employees). Even employers who are entirely exempt from the act must keep records as prescribed in the regulations, or face an injunction to do so. In the words of the Wage and Hour Division, “In cases where two or more employers are joint employers of an employee, the employer who actually pays the employee the monies intended as compensation for hours of employment is considered responsible for the keeping of [required records], and is treated as the one who has the primary duty of compliance as to such hours of employment.” If both employers make direct payment, however, both may be held responsible for keeping required records as to hours worked and amounts paid.

Although both the staffing company and the client are responsible for complying with the act’s minimum wage and overtime provisions, only the staffing company must comply with the record-keeping requirements.

Among the specific items of information that must be kept for every employee are those that follow:

■   Full name and Social Security/identifying number, if any

■   Home address, date of birth, and sex

■   Occupation

■   Time and day the workweek begins

■   Regular rate of pay

■   Daily and weekly hours of work

■   Date of payment and pay period covered, basis of wages (hourly rate, piece rate, commission, salary), and the regular hourly rate if the workweek includes overtime

■   Total wages paid each pay period, including a separate statement of total straight-time wages, total overtime, and total additions to and deductions from wages, and the amount and nature of each such addition or deduction

Generally speaking, the more important records disclosing wage-hour information must be kept for three years, including payroll records, pertinent union agreements and any other employment agreements, government contracts, and general sales and purchase data. The act does not prescribe a particular format for recording time, but the method chosen must be complete and accurate. Supplemental records, such as timecards and piecework tickets, wage-rate tables, work schedules, billing and shipping records, and records of pay deductions or additions, need only be kept for two years. Records must be kept readily available to wage and hour inspectors at each place of employment or at a centrally located record-keeping office.

Under the wage and hour regulations, each covered establishment must display a prescribed poster that describes the basic requirements of the FLSA in a place where employees may readily see it. Copies of this poster can be obtained from any local Wage and Hour Division office. Tip 40

Tip 40—Time Sheets

In the staffing industry, temporary employee time sheets are often the basis for calculating weekly pay. Staffing firms can lawfully require the timely submission of time sheets as a condition of continued employment, and can lawfully impose discipline on employees who fail to comply. However, in most situations (e.g., the supervisor is out, or forgot to sign the sheet, or was dissatisfied with the temporary employee’s performance), a client’s failure to sign a time sheet would not be a basis for the staffing firm to lawfully refuse to pay the temporary employee for that workweek, unless the staffing firm is sure the employee did not work that week.

6. Enforcement

There are several methods of enforcing the provisions of the FLSA:

■   Investigation and audit of employer records by the Wage and Hour Administrator, with voluntary negotiation and settlement of amounts due to employees, is the most common procedure. The administrator has full subpoena power and the power to take depositions of witnesses. In addition, the Secretary of Labor may bring suit to enjoin employers from violating the provisions of the FLSA.

■   An employee may bring an individual civil suit for back wages and liquidated damages equal to the amount of wages due, plus litigation costs and attorneys’ fees. Collective action suits may also be brought.

■   The Secretary of Labor may seek back pay and, in the case of willful violations, liquidated damages in a wage-collection suit, and may initiate an action without any prior employee request for intervention.

■   Willful violations of the FLSA may be prosecuted criminally, and the violator may be fined up to $10,000. A second conviction for such a violation may result in imprisonment.

■   The standard for determining “willfulness” under the FLSA has been clarified by the Supreme Court, which held that an employer willfully violates the FLSA only if it actually knew or showed reckless disregard for the matter of whether its conduct was prohibited by the FLSA.

Filing of suit by the Secretary of Labor terminates private enforcement rights. The secretary’s authority to file suit is discretionary and need not be exercised in all cases. The statute of limitations for all civil suits under the FLSA is two years for nonwillful violations and three years for willful violations. The limitations period begins to run from the time a violation occurs. Back wages may not be collected for periods prior to two (or three in the case of a willful violation) years before suit was filed. If suit is brought under state law, the federal statutes of limitations do not apply and states may provide longer limitations periods for wage-hour claims based on state law. Damages available under state law may also be different (and greater than) those available under federal law. Tip 41

Tip 41—Discrimination

Employees may also sue their employers if they are discriminated or retaliated against for filing a complaint or instituting a proceeding under the FLSA, or for testifying in such an action. An employee who makes an informal (oral, unwritten) internal complaint also will be afforded protection from retaliation under the FLSA. Discriminatees are entitled to all appropriate legal and equitable relief, which may include employment, reinstatement, back wages, and an additional equal amount as liquidated damages, costs of suit, and attorneys’ fees. Care should be taken to avoid even the appearance of retaliation against an employee who exercises his or her rights under the FLSA.

Staffing firms should also be aware that unlike other types of employment claims, wage and hour claims cannot be settled privately through a negotiated release. In other words, an employee’s release of a wage and hour claim is only effective if it is approved by a court or by the U.S. Department of Labor.

B. Government Contract Laws

Wages and hours may be subject to regulation under a number of government contract laws that impose wage and hour obligations on employers who enter into contracts with the United States government. These laws are generally applicable only to employees actually performing work in connection with the contract but without regard to whether the employees may also be entitled to the protection of the FLSA. These laws often set higher standards for employees performing work under such a contract than those set by the FLSA itself. A government contractor is not excused from complying with applicable provisions of the FLSA or state law, however, if those standards are stricter.

These are the principal government contract laws:

■   The Walsh-Healey Public Contracts Act fixes wage and hour standards for work on all government supply and manufacturing contracts in excess of $15,000.

■   The Service Contract Act serves a similar function for the furnishing of services valued in excess of $2,500.

■   The Davis-Bacon Act establishes minimum (“prevailing”) wage standards for laborers and mechanics employed on public works contracts in excess of $2,000. Employees protected by the Davis-Bacon Act may also be covered by the Contract Work Hours and Safety Standards Act of 1962, as amended, which set standards for the payment of overtime for workers on federal construction project contracts in excess of $100,000. The Copeland Act protects the wage structure established by the Davis-Bacon Act by making it punishable for anyone to require any “kickback” of the employees’ wages.

There are a number of other laws of more limited application that regulate wages and hours for work performed under particular kinds of government contracts.

A staffing company that enters into a contract with the federal government may be subject to one or more of these government contract laws in addition to the FLSA with respect to those of its employees who perform work in connection with the contract. The same result may follow when a staffing company assigns its employees to work for a client who is a government contractor. The client’s obligations under the government contract laws generally extend to all employees performing work under the contract, including temporary and casual employees; this would likely include employees of a staffing company. If the FLSA’s joint employer doctrine, discussed in Section A.1.c of this chapter, were applied literally in the context of the government contract laws, it is possible that a staffing company might also be held to have some obligations under these laws to those of its employees performing work under a government contractor for a client.

The penalties for violating applicable government contract laws generally involve loss of contracts, and may also include payment of liquidated damages and debarment from further contracts. Under certain circumstances, the government may file suit to collect any wages due employees as a consequence of a violation. It is unclear whether a staffing company furnishing employees to perform work under a contract may be exposed to back pay or other liability due to violations by a government contractor client.

Because this is a complex area of law, staffing companies that assign their employees to perform work under government contracts may desire to consult counsel with respect to which laws may be applicable to any particular contract on which their employees are working and whether the staffing company may have some obligations in connection with them.

C. Wage and Hour Investigations: What Should You Do?

All staffing firms are subject to wage-hour investigations by both the U.S. Department of Labor and state labor departments. Investigations usually occur as a result of an employee complaint or as part of a routine spot-check program by labor departments. Tip 42

Tip 42—Investigations

It is particularly important that staffing firms with more than one office recognize that an investigation of one office often leads to an investigation of other offices as well.

Wage-hour investigators have the right to examine all company records that concern the wages and hours of employees. Investigators also frequently ask to speak to certain employees about the wage-hour matters that are being investigated.

As a general rule, it is a mistake to refuse to cooperate with the investigator. In the typical situation, the labor department is entitled to subpoena wage-hour records, so a refusal to produce them voluntarily serves little purpose and may well antagonize the investigator. In addition, a refusal to produce the records voluntarily may lead the labor department to interview employees at their homes or by telephone. The investigator may think the staffing company refusing to cooperate has something to hide, and may broaden or more vigorously pursue the investigation. Tip 43

Tip 43—Notice of Investigation

Frequently, a staffing firm will not have any advance notice of the investigation. The investigator will simply show up at your office one day and ask to inspect your books. If this occurs, the following approach may be prudent:

1. Politely attempt to ascertain from the investigator why the investigation is being conducted. Although many investigators will not so advise, some will.

2. Politely, but firmly, decline to permit the investigator to examine wage-hour records immediately. Instead, make an appointment that provides sufficient time to review the company’s records first.

3. Consult an attorney who is experienced in wage-hour matters before allowing the investigator access to the company’s records.

The nature and scope of the investigation itself often provide good clues with respect to what areas are of concern to the investigator. Employers should ascertain, for example, what records the investigator copies and which employees are interviewed. If the investigator requests to interview employees, it is often advisable to try to have an employer representative present during the interview. If the investigator does not permit that, try to take the initiative in selecting the employees to be interviewed (some investigators conduct “random interviews”). Also, there is no prohibition against speaking to an employee after the interview, but this must be handled delicately because it is unlawful to retaliate, and care must be taken to avoid the appearance of intimidation or reprisals against interviewed employees.

D. State Laws Affecting Wages and Hours

The fact that an employee is not covered by or is exempt from federal law does not immunize an employer from minimum wage, overtime, and other responsibilities that may be imposed by state law. Moreover, as noted previously, federal wage and hour laws allow the states to adopt their own laws setting more stringent wage and hour standards. Many states have done so, notably in requiring overtime pay for hours worked in excess of eight hours daily. Some states, such as California, also impose significant penalties for pay stub and other wage payment infractions. Staffing firms should, therefore, be aware of their obligations under the laws of the states in which they do business. In recent years, lawyers for workers have increasingly brought more wage and hour claims in state courts, often as class actions. This is particularly true in states that afford damages recoveries and remedies beyond those afforded by the FLSA. For example, employees seeking to recover unpaid overtime have a four-year statute of limitations in California and a six-year statute of limitations in New York. In addition, some states provide expanded damage remedies beyond what is afforded by the FLSA. For example, treble damages are allowed for wage and hour violations in Massachusetts, and punitive damages are allowed in Illinois. For that reason, staffing firms should ensure that their payroll practices are compliant not only with federal law but also with the laws of the states where they do business. See the U.S. Department of Labor, Wage and Hour Division website, www.dol.gov/whd, for information about which states have adopted overtime pay laws.

E. State Meal Break and Rest Period Requirements

Twenty-one states have adopted laws that require employers to provide meal breaks to adult employees in the private sector. Additional states have adopted laws that require meal breaks specifically for certain subsets of workers such as seasonal farm workers, migrant workers, and minors. A copy of the U.S. Department of Labor, Wage and Hour Division’s table of Minimum Length of Meal Break Required under State Law for Adult Employees in the Private Sector is available on the website, dol.gov/whd/state/meal.htm.

Seven states also have rest period requirements: California, Colorado, Kentucky, Minnesota, Nevada, Oregon, and Washington. Staffing firms should familiarize themselves with any applicable meal break and rest period obligations under the laws of the states in which they do business.

4

Employment Agreements, Employee Handbooks, and Restrictive Covenants

Traditionally, the overwhelming majority of employees in the staffing industry were employed without formal employment agreements. Except for a relatively few senior executives at large companies, employees were simply employed at will with no written agreement with respect to their terms or conditions of employment. Staffing firms, like employers generally, have begun to reconsider the usefulness of employment agreements for a range of staff and, in some cases, for temporary employees. The impetus for such reconsideration has derived from several business and legal factors, including

■   The desire to protect confidential information and prevent unfair competition by imposing contractual restraints on postemployment conduct (i.e., restrictive covenants)

■   The need to clarify commission obligations toward departing sales representatives in an era where such employees often move to another staffing firm

■   The perception (not always accurate) that a written employment agreement provides job security and hence gives staffing firms a competitive edge in recruiting and retaining valuable staff members

■   The increasing tendency of states to pass laws requiring employers to notify employees of various benefits and obligations (which requirement is easily satisfied by written agreements)

■   The increasing tendency of courts to adopt exceptions to the employment-at-will rule, which has led many employers to conclude that the protections and advantages to be gained by having employment agreements outweigh the risks and drawbacks caused by such agreements

In light of these developments and the increasing industry interest in the pros and cons of employment agreements, this chapter addresses those topics in four sections:

A. Express Employment Agreements

This section discusses and describes written employment agreements.

B. Restrictive Covenants

This section reviews this specialized type of employment agreement, which is generally limited to protecting confidential information and precluding unfair competition.

C. Implied Employment Agreements

This section discusses how the courts are beginning to construe certain types of employer documents (especially employee handbooks and certain policies) as creating “implied agreements” between the employer and employee that can be enforced in the courts, and it offers guidance on drafting employee handbooks.

D. Arbitration Agreements

This section discusses the pros and cons of agreements to submit disputes to arbitration rather than court litigation or proceedings before often unsympathetic administrative agencies.

A. Express Employment Agreements

In determining whether to use written employment agreements, it is worthwhile to examine the positive and negative aspects of such agreements from the employer’s perspective.

1. Advantages of Employment Agreements

a. Certainty

Memorializing the terms and conditions of employment in a written agreement helps ensure that the parties have a mutual, explicit understanding of their relationship from the outset, particularly with respect to the scope of the duties the employee is being hired to perform, the employee’s compensation and benefits, the proper grounds and procedures for discharge (if any), confidentiality and conflicts of interest, and any postemployment restrictions on competition (restrictive covenants are discussed in detail in Section B of this chapter). Tip 44

Tip 44—Commission Sales Personnel

One of the most common situations in which staffing companies become embroiled with U.S. Department of Labor investigations is when commission sales personnel leave their jobs. Disputes frequently arise over calculation of commissions (i.e., on receipts, when order is placed or filled, etc.). It is often wise to spell out clearly all details regarding the payment of commissions to avoid confusion and resultant Department of Labor audits or investigations.

b. Preserves Employment-at-Will Status

To counter the possibility that a court may construe the employment relationship as one for a definite term or that can be ended only for just cause, a properly crafted employment agreement can expressly establish that the employment is at will, except to the extent the agreement itself provides otherwise.

c. Preserves Employer’s Flexibility to Add, Amend, Modify, or Delete Employee Benefits, Insurance Coverage, Etc.

An employment agreement not only specifies the benefits for which the employee will be eligible, it can also guard against an employee’s claim of lifetime benefits by explicitly providing that the employer has the right to modify or amend its benefit plans.

d. Compliance With State Legal Obligations to Notify or Inform Workers of Rights, Benefits, Etc.

Many states require notification to or consent by employees with respect to a variety of issues (e.g., vacation policy, monitoring telephone calls or emails, sexual harassment policy, etc.), and express employment agreements are a convenient vehicle for complying with these requirements.

e. Entire Agreement in Writing

A written employment agreement specifying that it contains the entire agreement between the parties and that it can only be modified by the parties in writing will make it difficult for the employee to later assert that he or she was made any oral promises that differ from the agreement (e.g., an oral guarantee of employment for a fixed term, a promotion, a bonus).

f. Defense of Wrongful Discharge Claims

An employer may be able to more easily defend a wrongful termination or discrimination lawsuit if it can show that the employee’s conduct was an express ground for discharge under the agreement. Moreover, since employment agreements frequently outline the duties and responsibilities the employee is being hired to perform, the employer may have an easier time demonstrating that the employee was not performing up to expectations.

g. No Additional Consideration For Restrictive Covenants

By deeming a certain percentage of the employee’s compensation to be consideration for any restrictive covenants (e.g., noncompete and nonsolicitation agreements) in the employment agreement, the employer may be able to avoid having to pay the employee additional consideration for such covenants if they are negotiated at the end of employment as part of a separation agreement. (This depends on state law.)

h. Possible Severance Savings

Specifying the employer’s severance pay policy (if any) in an employment agreement may be less costly than negotiating or litigating this issue later. A contractual severance pay provision may help prevent disputes at the end of the employment relationship regarding the employer’s severance policy and the amount of severance pay to which the employee is entitled.

i. Attraction of Qualified Executives

The relative security of an employment agreement may help the employer attract and retain qualified executives, especially if competitors also are offering such agreements.

2. Disadvantages of Employment Agreements

a. May Limit Right to Discharge

To the extent the agreement provides for a definite term of employment or specifies grounds for termination, it may limit the employer’s right to discharge at will (i.e., for any reason or no reason at all). In addition, if the contract provides that the employee will be discharged only for certain specified grounds, the employer may be limited to those grounds as justification for discharge and notice requirements. The issue of whether a termination was for cause or in accordance with contractual procedures may lead to wrongful discharge litigation.

b. Ability to Unilaterally Change Terms of Employment May Be Limited

Once the terms and conditions of employment are set forth in an agreement, the employer is bound by those terms and may lose the flexibility to change them unilaterally if business conditions or other circumstances change (absent appropriate contractual language).

c. Termination Procedures May Be Binding

Any procedures set forth in the agreement regarding termination of the employment relationship, such as notice provisions, due process-type procedures, or progressive discipline procedures, may be binding upon the employer and may hinder the employer’s flexibility in discharging the employee.

d. No Release of Future Claims

Unlike separation agreements entered into at the end of employment, employment agreements cannot contain waivers or releases of claims against the employer because the law prohibits the release of any claims that may arise in the future. Therefore, an employer desiring a release of claims upon the termination of employment would be required to pay the employee additional consideration above and beyond that to which he or she normally would be entitled under the employment agreement.

e. Difficult to Enforce Against the Employee

Agreements in which the employee agrees to work for the employer for a certain duration are difficult to enforce against the employee if the employee breaches. Despite an employment agreement for a definite term, the employer cannot compel the employee to finish out the term of his or her contract. This is because courts will not force a person to work for a particular employer, and generally will not prevent an employee from going to work for another employer, unless the former employer can show that the employee is “unique and extraordinary,” or that the restriction is necessary to prevent disclosure of trade secrets. Employment agreements may provide more security for the employee than the employer.

3. Illustrative Provisions

While it is impossible to list or describe every possible provision that may be included in an express employment agreement, the following illustrative provisions are a good starting point. Two forms of employment agreements (one for temporary employees and one for staff employees) are included in Appendix E.

a. Employment at Will

If the agreement is not for a definite term, and the employer does not want to limit itself to discharging only for cause, the agreement should state that both parties are free to terminate the employment relationship at any time or for any reason (i.e., employment at will). The employer may wish to include a provision requiring the parties to give a certain amount of notice of termination; a minimum of two weeks is customary.

b. Compensation and Benefits

The agreement should set forth the amount of compensation and benefits (e.g., salary, fringe benefits, bonus eligibility, vacation) and preserve the employer’s right to change such benefits in the future. These provisions will reduce any misunderstandings or later claims by the employee that he or she was promised greater compensation or continued benefits.

c. Consideration for Restrictive Covenants

The agreement should state that the employment itself, plus a certain percentage of the employee’s compensation (e.g., 10%), is given in exchange for the employee agreeing to whatever restrictive covenants are included in the agreement (e.g., noncompetition, nonsolicitation, confidentiality). (This depends on state law.)

d. Scope and Nature of Duties

The agreement should outline the general scope and nature of the duties the employee is being hired to perform, but it should reserve the employer’s right to change or add to those duties from time to time as it sees fit.

e. Employee Warranty

The agreement should contain a warranty that the employee is free to enter into the employment relationship and has no obligations inconsistent with unrestrained employment for the employer, such as a restrictive covenant with a former employer. Such a warranty may protect the employer from liability should the employee later be found in violation of a postemployment covenant with a former employer. In addition, the employee should agree to diligently follow the employer’s instructions and regulations and to devote his or her full working time, effort, and skill to the performance of assigned duties.

f. Conflict of Interest and Duty of Loyalty

The agreement should contain a promise by the employee not to act against the interests of the employer during the employment relationship. For example, the employee should agree not to plan, prepare for, undertake, or own an interest in any business or employment that is competitive with the employer.

g. Noncompete

If the employer thinks it is necessary, the agreement should include a noncompete covenant (i.e., an agreement that the employee will not enter into competitive employment for a period of time after the termination of the employment relationship). To be enforceable, noncompete covenants must be reasonable in time and geographic scope, among other requirements. The reasonableness requirement is discussed more fully in Section B of this chapter, because it varies on a state-by-state basis.

h. Nonsolicitation of Clients

The agreement should contain a promise by the employee not to solicit the employer’s clients for a reasonable period of time after the termination of the employment relationship. If possible, the agreement should generally define who are considered the employer’s clients. (This depends on state law, see Section B.)

i. Nonsolicitation of Employees

To prevent the unfair “raiding” of key employees, the agreement should provide that the employee will not solicit the employer’s employees (including temporary employees) for other employment for a reasonable period of time after the employment relationship ends. (See Section B.)

j. Confidentiality

The agreement should contain a promise by the employee not to use or disclose the employer’s confidential or proprietary information for his or her own benefit or for the benefit of any third party, either during or after the employment relationship. The confidentiality clause should recite the confidential nature of the specified employer’s information, should give general examples of the kinds of information considered to be confidential, and should contain an acknowledgment by the employee that the information is confidential. In addition, the employee should agree to return all confidential documents and all other materials and documents belonging to the employer promptly after the termination of the employment relationship. (See Section B.)

k. Notice of Covenants

The agreement should contain a promise by the employee that he or she will advise any prospective employer of the restrictive covenants in the agreement.

l. Intellectual Property

If applicable, the agreement should provide that all intellectual property (e.g., inventions, trademarks, copyrights, etc.) created or developed by the employee during the course of his or her employment belongs exclusively to the employer.

m. Injunctive Relief

The agreement should contain an acknowledgment by the employee that the employer is entitled to a court injunction to restrain violations of the restrictive covenants in the agreement, and that such violations will result in irreparable harm to the employer.

n. Liquidated Damages

The agreement should contain a liquidated damages provision entitling the employer to a certain amount of monetary damages in the event the employee violates any of the restrictive covenants in the agreement.

o. Arbitration

The agreement should include a provision stating that the parties agree to arbitrate any disputes arising out of the employment relationship. (See discussion of arbitration in Section D of this chapter.)

p. Attorneys’ Fees

The agreement should provide that, in the event the employee breaches any provision of the agreement (e.g., the restrictive covenants), the employee agrees to reimburse the employer for its attorneys’ fees and expenses incurred in enforcing the agreement.

q. Tolling of Time

The agreement should specify that the time periods agreed to in the restrictive covenant provisions of the agreement shall cease to run during any violation of those provisions by the employee.

r. EEO Policy

The agreement should provide that the employee is familiar with the company’s policy of strict compliance with equal employment opportunity laws and promises to adhere to those laws and the company’s personnel policies.

s. Waiver of Breach

The agreement should provide that a waiver by the employer of a breach of any provision of the agreement will not be construed as a waiver of any other breaches by the employee or as a waiver of other agreement rights.

t. Entire Agreement Set Forth

The agreement should provide that it represents the entire agreement between the parties and supersedes any prior written or oral agreements or understandings, and that any modification of the agreement must be in writing and signed by both parties.

u. No Coercion or Duress

The agreement should contain an acknowledgment by the employee that he or she has read the agreement; that he or she understands the nature and extent of the restrictive covenants; that the agreement would not be entered into by the employer without the restrictive covenants; that he or she is entering into the agreement voluntarily and of his or her own free will; and that he or she has not been coerced or suffered any duress in order to induce him or her to enter into the agreement.

B. Restrictive Covenants

Many staffing firms have been confronted with a serious problem: how to protect against, or at least minimize, the losses incurred when a key service coordinator leaves, either to start a new company or to join a competitor. Often, when such individuals depart, they take more than merely their knowledge of the staffing industry; in many cases, they attempt, and are successful, at luring away the former employer’s clients or temporary employees—or both.

There is no single answer to this problem, and certainly no legal remedy that provides an ironclad guarantee against such possible losses. However, there is a legal device that, if used as part of an overall damage control response to the departing employee, may substantially minimize the prospect of such losses.

This legal device is a specialized form of express employment agreement between an employer and employee, often referred to as a “restrictive covenant.” This section discusses what a restrictive covenant is, the kind of protection it may provide, and the circumstances under which courts will enforce it. Additionally, this section will examine some of the business and practical considerations that may affect a staffing firm’s decision to utilize this type of agreement. The Sample Employment Agreement With Regular Employee that is reproduced in Appendix E contains examples of several restrictive covenants. However, such an agreement should be drafted and tailored with state-specific requirements in mind.

1. What Is a Restrictive Covenant?

A restrictive covenant is a contract designed to restrain or limit an employee’s post-termination activities. As such, it must meet the legal criteria for valid contracts before a court will enforce it. A restrictive covenant may be an independent agreement, or, as discussed in Section A above, it may be included as part of a more comprehensive employment agreement.

2. Types of Restrictive Covenants

Like any contract, a restrictive covenant can be drafted in a variety of ways to achieve any number of goals. These are among the most common restrictive covenants:

■   Noncompete agreements, which prohibit or restrict a former employee from working for a competitor or establishing a competing business, generally within a specific geographic area and for a discrete period of time

■   Nondisclosure agreements, which prohibit a former employee from using or in any way revealing any confidential information, such as the preferences of a company’s clients or the names and addresses of its applicants

■   Nonsolicitation agreements, which prohibit or restrict a former employee from soliciting clients, applicants, or employees of his or her former employer

■   No-“raiding” agreements, which prohibit a former employee from soliciting or inducing former co-employees to leave the staffing firm’s employ

■   Some combination of the above Tip 45

Tip 45—Noncompete Agreements

Courts generally disfavor noncompete agreements and construe them against the drafter (i.e., the employer). As a result, if some less onerous restraint adequately serves its needs, a staffing company should seriously consider nondisclosure and/ or nonsolicitation agreements rather than a noncompete agreement. The more stringent noncompete agreements are difficult to enforce and may deter the recruitment of qualified employees.

3. Legal Concerns

As a general rule, courts look with disfavor on any agreement that restricts or restrains free trade and competition. Accordingly, they tend to interpret restrictive covenants against employers and will uphold them only under limited circumstances.

There are no hard and fast rules to predict when a court will enforce a restrictive covenant, and the laws in each state vary. There are certain guidelines, however, that should be considered by employers interested in using these types of agreements.

a. Consideration

For a restrictive covenant to be enforceable, it must be supported by what the law refers to as “consideration.” Generally, this means that an employer must provide an employee with some tangible benefit in exchange for the employee’s signing the agreement.

If a restrictive covenant is signed when an individual accepts employment, many courts have concluded that the offer of employment by the employer is sufficient consideration to support the agreement. By comparison, many courts will not enforce a restrictive covenant that an employee signed after being employed on the theory that the employee received no consideration in exchange for his or her promise not to engage in certain post-employment activities. While some courts have accepted continuing employment as valid consideration, a restrictive covenant by an existing employee is more likely to be enforced if the employee is given some additional consideration (e.g., a bonus, increased vacation, or a promotion) in exchange.

b. Legitimate Business Interests

Courts will enforce restrictive covenants only if the employer has a legitimate business interest worthy of judicial protection. Interests that the courts have protected include an employer’s trade secrets, certain confidential information—including, in some instances, confidential client and personnel information—and the loss of an employee’s unique services. An employer seeking to enforce a restrictive covenant has the burden of proving that the information sought to be protected is a trade secret or confidential or that the employee’s services are unique. A conclusory statement to this effect in the restrictive covenant itself is not likely to be sufficient.

i. Trade Secrets. A trade secret is any type of information (e.g., formula, device, pattern, or design) normally compiled over a number of years and at great expense that is known exclusively to the company. For information to qualify as a trade secret, most courts require that it be treated by the company with a high degree of confidentiality. In most instances, staffing firms have been unsuccessful in establishing that their client lists, employees, or business practices rise to the level of trade secrets.

ii. Confidential Information. Courts also will protect certain confidential information that, although not rising to the level of a trade secret, is worthy of judicial protection. As with trade secrets, courts have required that information claimed to be confidential be treated by the company with a high degree of secrecy.

In the staffing industry, some courts have protected certain confidential client information, including clients’ preferences, unique needs, buying habits, billing rates, and the names of key contact people, so long as the information is not readily available from some public source. But the identity of clients is often not viewed as confidential as a matter of law. Generally, courts are more willing to treat information about the employees of a staffing firm (e.g., their skills, availability, training, home telephone numbers, etc.) as confidential, as well as plans for business expansion, pending job orders, open requests for proposals, and specific or unusual billing or pricing practices, as long as such information is not publicly available.

iii. Unique or Extraordinary Services. Courts will enforce restrictive covenants involving the loss of an employee’s unique or extraordinary services. In determining whether an employee’s services are unique or extraordinary, courts look at whether an employee is irreplaceable or whether the loss of his or her services would cause irreparable harm to the employer. It generally is difficult to establish that a business executive’s services are either unique or extraordinary. Most cases finding an employee’s services unique or extraordinary involve either entertainment personalities or sports stars, whose particular talent and appeal are truly unique and impossible to replace.

In the staffing industry, the uniqueness of an employee’s services is seldom, if ever, a basis for enforcing a restrictive covenant. Employees in this industry, no matter how successful or skillful, rarely are considered by the court to be so unique as to be irreplaceable.

c. Reasonableness

Once an employer establishes a protectable interest (e.g., confidential client or employee data), courts will examine the agreement to determine if it is reasonable. Courts measure the reasonableness of a restrictive covenant primarily in terms of geographical limitations and time restrictions.

i. Geographical Limitations. Covenants should be limited in scope to those areas in which the employer does business or is reasonably expected to expand into at the time the covenant is signed. However, restricting a former employee from competing with the employer in any city in which it maintains an office may be unduly restrictive. In one case involving a national staffing firm, the court struck down a restrictive covenant in which an employee had agreed not to compete with the employer for one year within a 50-mile radius of any city in which the employer maintained an office.

ii. Time Limitations. What is reasonable will depend on the nature of the employer’s business. In the staffing industry, a time limitation of one year or less would be more likely to be found reasonable than a longer period, because one year is probably sufficient to allow the staffing firm time to re-establish a relationship with a client serviced by a departing counselor.

Courts are not likely to enforce covenants that appear to impair an employee’s right to earn a living in his or her chosen occupation or that injure the public’s interest in unbridled competition. Although some courts will rewrite or modify unreasonable provisions, it is prudent to draft a covenant that a court can enforce in its entirety rather than hope that a court will modify an unreasonable covenant.

d. Remedies

If an employee violates a valid and enforceable restrictive covenant, an employer may obtain injunctive relief or money damages or both. The employer also may be able to recover its litigation costs but generally not its attorneys’ fees. Moreover, a company or person who induces the violation of a restrictive covenant or knowingly benefits from the violation of a valid covenant may also be found liable for damages flowing from the violation. Tip 46

Tip 46—Restrictive Covenants

To increase the likelihood that a restrictive covenant will be enforced, experience suggests that staffing companies should identify precisely what interests they want to protect and draft an agreement tailored as narrowly as possible to achieve that goal. Companies should focus the agreements on specific employees and information, and they should modify standard form contracts for specific employees or categories (e.g., sales representatives versus recruiters who have no client contact). In addition, companies should be certain that they comply with their own agreements. For example, in one case, a court refused to enforce a restrictive covenant because it was not signed by the employer seeking to enforce the covenant.

4. Business Considerations

In addition to legal concerns, any staffing firm considering having its employees execute a restrictive covenant should probably consider certain business factors. For example, such an agreement may affect employee morale generally and, more particularly, may affect the individual employee involved. Some employees may find this type of agreement offensive or demeaning, or they simply may be wary of limiting their future ability to earn a livelihood.

Another consideration is when to present the agreement to an individual. If a company has all of its new employees sign some type of restrictive covenant, then it probably would not need to provide any additional consideration. If, however, an employer has existing employees sign the agreement, it will need to decide what form of additional consideration to provide and whether to provide greater inducements to certain employees. In addition, before deciding whether to utilize such covenants for existing employees, the employer should probably determine in advance what measures, if any, it is prepared to take with respect to those employees who decline to sign the agreement.

In weighing the pros and cons of drafting a restrictive covenant, a staffing firm may want to consider whether other services in the area are using such agreements, whether the competitive practices in its area of business warrant—or demand—that the company protect itself, and whether requiring such covenants may weaken the company’s ability to attract and retain qualified employees. In addition, in some states, courts will prohibit an employee, even without a contract, from using its former employer’s confidential information. Always consult legal counsel regarding the appropriate language for restrictive covenants.

5. Restrictive Covenants and the Prospective Employer

Restrictive covenants are not only an important subject for the present employer; they are an important item for any prospective employer to consider before extending an offer of employment to any applicant.

Just as a former employee may be liable for violating a restrictive covenant, in most states, any employer that induces an employee to violate the covenant, or intentionally and knowingly takes advantage of such a violation, may be subject to liability for damages or an injunction or both.

To avoid possible liability, it would be advisable, at a minimum, for any staffing firm to ascertain whether any applicant has signed a restrictive covenant with a former employer. If possible, a copy of the agreement should be obtained and reviewed for enforceability by counsel. Further, a company might want to consider contacting the former employer to discuss the situation or to work out an accommodation, or simply to verify an applicant’s statement that he or she never signed a restrictive covenant. Tip 47

Tip 47—Prior Employer Covenants

Before hiring a new employee, it is advisable to determine whether the employee has a contract with his or her prior employer containing a restrictive covenant and, if so, to assess the enforceability of that contract. It also is helpful to know whether the former employer has a history of suing to enforce its restrictive covenants, whether the employee has ever been sued, and the nature of the prior litigation. Finally, look closely at an applicant who appears to have access to confidential information about the prior employer’s clients and temporary employees. If this access is off-limits because of a restrictive covenant, then the short-term benefit to the prospective employer in using this information will almost certainly be offset by the long-term costs of litigation.

Once an applicant is hired, a staffing firm should take steps to avoid even the possibility that confidential information of the former employer will be used. Thus, a company should ensure that its employees are not misappropriating any tangible information of another service, such as a mailing list, list of applicants, billing rates, or anything else of value.

6. State-by-State Overview of Restrictive Covenants

Because state law controls the interpretation and enforceability of restrictive covenants, this section provides a brief summary of the law regarding restrictive covenants in each state. There have been few cases dealing with restrictive covenants between employers and employees in the staffing field. Nevertheless, there have been several cases involving employment agency personnel that may be useful for staffing firms to consider.

This summary is not intended, and should not be used, as a basis for drafting a restrictive covenant. Any employer interested in utilizing a restrictive covenant is advised to consult with counsel.

Alabama

Alabama, by statute, permits restrictive covenants that provide that a former employee will refrain from engaging in a similar business or soliciting the employer’s clients within a specified county, city, or part thereof where the employer does business. Accordingly, the covenant may not operate in an area where the employer no longer engages in the activity the covenant was designed to shield from unfair competition.

Alabama courts and legislation will enforce reasonable restrictive covenants restraining an employee from appropriating confidential information (including trade secrets), commercial relationships or contacts with customers, the good will associated with customers, patients, vendors, and specialized and unique training specifically given to that particular employee that involved a substantial business expenditure (provided it is set forth in writing). In order for such contracts to be enforceable, the restriction must be reasonably related to the employer’s interest and must not impose any undue hardship on the employee. An amendment to Section 8-1-1 of the Alabama Code on January 1, 2016, established reasonable time limits for noncompete and nonsolicitation agreements. Two years is presumed to be reasonable for noncompete agreements. Eighteen months is presumed to be reasonable for nonsolicitation agreements. One year is presumed to be reasonable for agreements preventing the seller of the good will of a business from competing against or soliciting the buyer’s customers. Alabama courts will enforce a covenant based on continued employment and compensation in return for the promise not to compete.

Alabama courts will sever or rewrite (i.e., “blue pencil”) unreasonable portions of a covenant and then enforce the covenant as modified.

Alaska

Alaska will enforce restrictive covenants if they are reasonable in time and geographic scope.

The Alaska Supreme Court adopted a rule of reasonableness in enforcing restrictive covenants. Under this rule, an overly broad restrictive covenant shall be modified by the court and enforced as modified unless the court determines that the employer did not act in good faith in drafting the covenant.

An agreement that restricts a former employee from expropriating information and clients is subject to a less stringent test of reasonableness than one that prohibits competition. In a relevant case, the court focused on the fact that the oral covenant was a selective restraint on the former employee’s ability to do business with people who were his former employer’s potential clients. The Alaska courts will modify unenforceable provisions in a restrictive covenant to render it enforceable if they find that the covenant was drafted in good faith.

Arizona

Arizona courts will enforce restrictive covenants, provided that such covenants are only broad enough to protect an employer’s legitimately protectable interests, namely, its client relationships and its confidential or trade secret information. One appellate court has held that a restrictive covenant must be ancillary to an otherwise valid agreement. For example, within an employment context, the employment agreement cannot consist entirely of a restrictive covenant. The employment agreement must also include terms or provisions usually associated with an employment contract, such as title, position, duration of employment, compensation, and duties or responsibilities.

In addition, the appellate court has held that a restrictive covenant in an employment agreement is valid and enforceable by injunction when the restraint does not exceed that reasonably necessary to protect the employer’s business, is not unreasonably restrictive of rights of the employee, does not contravene public policy, and is reasonable as to time and geographical scope.

As a general rule, a covenant not to compete that seeks to safeguard an employer’s client relationships will generally be enforced, provided it runs only as long as is necessary for the employer to replace the employee and give the replacement a chance to do the job. Arizona courts will not enforce an agreement simply because an employee subsequently acquired confidential information.

A change in the terms and conditions of employment (e.g., a promotion) or continued employment will provide sufficient consideration to support a covenant not to compete after the employment relationship has begun.

While Arizona courts may “blue pencil” a restrictive covenant by eliminating grammatically severable, unreasonable terms, the court cannot add provisions or rewrite them, even when the parties have authorized such revisions. An agreement not to solicit an employer’s clients will be enforced even absent a geographic limitation, but an employer has no protectable interest in preventing a former employee from obtaining the business of a client the employer lost through no action of the former employee. One appellate court has held that although a newspaper ad or a general mailing announcing the opening of a new office was not a solicitation, sending letters to specific people announcing a new office was a solicitation.

Arkansas

In 2015 Arkansas enacted State Bill 998 that greatly expanded the enforceability of noncompete agreements.

A noncompete agreement is enforceable if it is ancillary to an employment relationship or an otherwise enforceable employment contract to the extent that the employer has a protectable business interest (which may include, by statute: trade secrets, intellectual property, customer lists, goodwill with customers, knowledge of business practices, methods, profit margins, costs, and other confidential information that increases in value by not being known to a competitor, training, and “other valuable employer data that the employer has provided to an employee that an employer would reasonably seek to protect or safeguard from a competitor”).

Arkansas courts will enforce restrictive covenants that are reasonable in time and geographic area, provided the employee was given special training or had access to trade secrets or confidential information. Courts appear more willing to enforce covenants with one-year durational limitations rather than those with longer time restrictions, although a two-year restriction is presumptively reasonable unless the facts and circumstances of a particular case clearly demonstrate that two years is unreasonable compared to the employer’s business interests. Courts will allow a client restriction to substitute for geographic restrictions.

A federal court of appeals upheld a two-year restrictive covenant that prohibited the manager of an insurance agency from becoming a manager of another insurance company within 200 miles of the former employer. The court found that the employee had received special training and was privy to confidential client lists. The courts have consistently held that a contract must be valid as written, although in 2015 Arkansas State Bill 998 instructed courts to blue pencil or otherwise revise an overly broad contract to make its terms enforceable.

California

California, by statute, prohibits any contract that restrains an individual “from engaging in a lawful profession, trade, or business.” California courts have interpreted the statute to prohibit covenants restricting former employees from engaging in a lawful business, but not to preclude such agreements that are ancillary to the sale of a business, including its “goodwill.” The statute does not prohibit agreements that prevent either the disclosure of confidential information or the solicitation of an employer’s clients. The statute also does not prohibit agreements that prevent a former employee from “raiding” the employees of his or her prior employer.

California has enacted legislation declaring the following to be trade secrets and confidential information of an employment agency: the names, addresses, and identities of all clients who have listed with the agency within 180 days before an employee leaves; and the names, addresses, and identities of all applicants. The legislation, however, permits a former employee to use a client list in his or her own employment agency more than one year after the termination of his or her employment. Courts will not reform a covenant that is void or illegal under the statute even if the covenant has a provision stating that the parties agree that the court may narrow the covenant if it is found to be unfair. California has also prohibited an employer from naming a non-California jurisdiction as the applicable law to avoid California’s prohibition on noncompete agreements.

In sum, California is the most “pro-employee” state in this context in the U.S.

Colorado

Colorado, by statute, prohibits noncompete agreements. This prohibition does not apply to contracts for the protection of trade secrets, the recovery of expenses relating to training and educating an employee who has been employed for less than two years, or to executive or management personnel and their immediate staff. On April 2, 2018, the Colorado governor signed SB 18-082, which amended state law related to physician noncompete agreements, allowing physicians to disclose their continuing practice and contact information to a patient with a rare disorder whom they have been providing treatment.

The Colorado Court of Appeals has concluded that an account executive for a staffing firm was not employed in an executive or management position, and that it may protect as a trade secret job placement candidates with whom the employee has had actual contact during his final year of employment, but not those candidates to whom the candidate merely had access but never contacted.

In another Colorado Court of Appeals decision, the court held that information that an employment agency compiles about candidates, such as job qualifications and employment histories, is a trade secret.

An employer’s continued employment of a current at-will employee provides sufficient consideration for a noncompete agreement entered into after the inception of employment.

Although Colorado courts require restrictive covenants to be reasonable in duration and geographic scope, they have, on occasion, enforced broadly drafted covenants. For example, in one case, a covenant prohibiting competition for a five-year period in a 50-mile area was enforced. In another case, a court upheld a restrictive covenant that prohibited a former employee from contacting any of his former employer’s job candidates with whom he had access during his employment. On the other hand, a covenant precluding competition by a former employment agency employee within 35 miles of any franchise office was refused enforcement because the geographical restriction was too broad. The court modified the covenant and enforced it within 10 miles of Denver, the office where the former employee had worked. A court may modify or partially enforce a covenant.

Connecticut

Connecticut courts will enforce covenants not to compete that are reasonable and entered into knowingly and for adequate consideration.

In determining reasonableness, courts look at the length of time for the restriction, the geographical scope, the fairness of the protection afforded the employee, the extent of the restraint on the employee, and the interference with the public interest.

In 2016, Public Act No. 16-95 was signed into law which limits the allowable duration and geographical scope of any new, amended, or renewed physician noncompete agreement that restricts physicians from competing for a period longer than one year and a geographic scope of up to 15 miles from the “primary site where such physician practices.”

Courts are more likely to enforce an agreement when there is a high degree of similarity between an employer’s former and current employment, making it more likely that the former employer’s trade secrets will be used and disclosed by the employee during the course of his new employment.

Connecticut courts will also enjoin an employee from disclosing trade secrets. They will not, however, enjoin an individual from using a former employer’s client list if the names of the clients are readily available from other sources.

The Connecticut courts will allow client restrictions to substitute for a geographic restriction.

Finally, courts may narrow an otherwise overly restrictive covenant if the parties intended the provisions of the covenant to be severable.

Delaware

Courts will enforce reasonable covenants not to compete. A covenant is reasonable if the agreement is supported by consideration, is reasonable in time and geographic scope, and protects the employer’s legitimate business interests.

The court will allow a client restriction to substitute for a geographic restriction in a restrictive covenant.

Delaware courts will enforce restrictive covenants prohibiting a former employee from soliciting the clients of a former employer. The courts also have enforced covenants restricting competition by professional employees for as long as three years.

A Delaware court denied enforcement of a one-year statewide covenant not to compete between a former employee and an employment agency, not because of the duration or geographic scope, but because the covenant (1) did not protect a legitimate interest of the employer, given the very short “shelf life” of knowledge of contact persons and persons seeking employment, and (2) was oppressive to the former employee. In addition, the court questioned the duration of the covenant given “the particularities of the business, in which there are no exclusive commercial relationships, there is much competition, there is rapid turnover of applicants for jobs, and in which there appears to be no highly valuable trade secrets.”

In a Delaware Chancery Court decision, the court held that the identity of an employer’s clients could be a trade secret if the secrecy of the information provided an economic benefit. In this case, trade secret protection was only available where client identities were only known to the employee as a direct result of his or her employment. In some instances, courts will rewrite offensive provisions and enforce the contract as modified.

District of Columbia

An antitrust statute prohibits contracts that unreasonably restrain trade. A post-employment covenant not to compete may be seen as a form of restraint on trade. The District of Columbia follows the general rule requiring restrictive covenants to be reasonable. A nonsolicitation provision, as opposed to a noncompete agreement, does not necessarily require a geographic restriction.

District of Columbia courts look to the nature of the employer’s business to determine whether the temporal and geographic scope of a restrictive covenant is reasonable. A district court held that a one-year covenant precluding a former employee from rendering competitive services to a client of his former employer and from hiring former employer’s employees was reasonable. District of Columbia courts have found time restrictions ranging from one to 10 years to be reasonable with varying geographic restrictions.

The courts will modify overbroad covenants not to compete. In one case, an appellate court affirmed an injunction restraining a former employee from soliciting the former employer’s clients, even though the agreement as written was too broad to be reasonable.

Florida

Covenants entered into on or after July 1, 1996, are governed by a statute that provides presumptively reasonable and unreasonable time limitations for various types of contracts. In protection of trade secret cases, a court will presume any restraint reasonable in time if five years or less.

The statute further authorizes the court to modify unreasonable covenants and bars the courts from construing a restrictive covenant narrowly against the drafter.

An individual seeking enforcement of a restrictive covenant must establish the existence of a legitimate business interest justifying the covenant. A legitimate business interest can include trade secrets, confidential business information, goodwill, or specialized training. In a recent Florida Supreme Court case, the Court held that referral sources in the home health care industry could serve as legitimate business interests.

The old statute, which still governs covenants entered into before July 1, 1996, permits the use of restrictive covenants that restrain a former employee from competing or soliciting previous clients, so long as the former employer continues to carry on the same business, the covenant is reasonable in time and geographic area, and the covenant does not pose a threat to public health and welfare. Unlike the more recent statute, the older statute does not have presumptively reasonable and unreasonable time limitations.

Under the old statute, the Court of Appeals held that a covenant that prohibits an employee from working for one year within the territories he or she previously worked is reasonable even though the employee had no access to significant trade secrets.

Georgia

Under Georgia’s restrictive covenant statute, enforcement of contracts that restrict competition during the term of a restrictive covenant, so long as such restrictions are reasonable in time, geographic area, and scope of prohibited activities, is generally permitted. In assessing covenants not to compete, the Georgia courts will determine if the restrictions are reasonable (i.e., the covenants will be examined in terms of time, territorial effect, and whether they are supported by consideration and are reasonably necessary to protect the business interest of the employer sought to be protected). Under Georgia law, most restrictive covenants in employment contracts are examined under strict scrutiny because they usually involve parties of uneven bargaining power. However, in 2011, the restrictive covenant statute was amended. Georgia’s current restrictive covenant statute eschews the “strict scrutiny” standard in favor of more lenient enforceability rules. The statute provides two years or less is a presumptively reasonable time restriction; more than two years is presumptively unreasonable. The statute also allows “blue penciling.” Courts may now modify an overbroad covenant that is otherwise void and unenforceable, so long as the modification does not render the covenant more restrictive with regard to the employee than as originally drafted by the parties. These changes (as to the level of scrutiny to be applied, and the availability of blue penciling) only apply to agreements entered into on or after May 11, 2011.

To be enforceable, Georgia courts require that restrictive covenants be specific as to all terms. In 1990, the Georgia Supreme Court refused to modify an overly broad restrictive covenant because it held that the contract’s reference to a 75-mile radius from metro Atlanta was vague.

However, another decision held that a nonsolicitation agreement does not have to contain specific geographic restrictions. Moreover, nondisclosure covenants covering the former employer’s confidential business methods and covenants purporting to bar the hiring or “pirating” away of employees of the former employer are not necessarily void because they do not have a territorial limitation.

For example, a restrictive covenant limited to the employer’s clients that the former employee contacted while in the service of the employer would be enforceable, even without a specific geographic limitation.

Georgia courts have not been receptive to restrictive covenants that entirely prohibit employment agency counselors from competing with their former employers. As a result, they have refused to enforce covenants prohibiting counselors from competing for one or two years within 25 to 30 miles of the former employer. Courts have, however, prohibited counselors from soliciting former clients for as long as two years.

In a 1986 decision, the Georgia Supreme Court refused to enforce an overly broad agreement that restricted a former employee of a nationwide staffing firm from competing with the company for one year within 50 miles of any city where the staffing company maintained an office. Similarly, in a 1990 decision, the Georgia Supreme Court held that a noncompete agreement that included the words “or otherwise” following a list of prescribed activities was unenforceable because it was the functional equivalent of “in any capacity.” This rendered the covenant unreasonable because it unduly limited the employee’s activities. In 1998, the court upheld as reasonable a one-year client nonsolicitation covenant barring a former manager of a staffing firm from soliciting those clients to whom he had directly marketed during the one year prior to termination.

Georgia courts often will enforce nondisclosure provisions that reasonably restrict a former employee’s use of an employer’s trade secrets (i.e., client list), even if they refuse to enforce noncompete provisions because they are too broadly drafted. Even when an employee misappropriates a client list, courts will not enjoin its use if the client information on the list could have been obtained through proper means. Further, an employee is permitted to use client information that he or she has memorized. The Georgia Supreme Court has held that only “tangible” client lists may be entitled to trade secret protection.

Hawaii

Hawaii has a statute that governs the enforceability of covenants not to compete. The statute permits covenants not to compete in employment agreements whereby the employee agrees not to competitively use trade secrets of the former employer as long as the covenant is limited in time as reasonably necessary for the protection of the employer and does not impose an undue hardship on the employee.

Courts have held confidential pricing information, confidential information, trade secrets, and client lists as protectable interests. Courts have held that a three-year time restriction within the state of Hawaii is reasonable.

Hawaii courts will uphold restrictive covenants reasonable in geographic scope and duration that prohibit employment in any capacity with a competitor. A covenant will not fail for lack of an explicit time restriction because the courts have held that restrictions should endure as long as the information is kept a secret, and the information may be disclosed when it ceases to be confidential.

In 2015 Act 158 became effective, which voids any noncompete and nonsolicitation relating to an “employee of a technology business” (only in agreements entered into after July 1, 2015).

Idaho

Idaho courts will enforce reasonable restrictive covenants. A covenant lacking any limitation as to time, area, and scope of activity is unreasonable. Courts have enforced provisions that require a former employee to forfeit benefits as damages if he or she violates a noncompete agreement. The Idaho Supreme Court upheld an agreement that prohibited an insurance salesman from soliciting clients of the employer for two years.

Idaho courts have been willing to enforce broad covenants ancillary to the sale of a business, including one that prohibited countywide competition for five years. Courts are permitted to modify otherwise unenforceable restrictive covenants as long as they are not lacking in the essentials relating to area, time, and subject matter limitations.

On March 28, 2018, Idaho’s governor allowed the repeal of a portion of the state’s noncompete law to take effect without his signature. Previously, a company seeking to enforce a noncompete agreement against key employees or independent contractors could obtain an injunction against the person with a rebuttable presumption of irreparable harm that the employee had to disprove by showing he or she had “no ability to adversely affect the employer’s legitimate business interests.” The rebuttable presumption has now been removed and the employer must show an adverse effect on its business interests before an injunction will be issued.

Illinois

Illinois courts will enforce reasonable restrictive covenants. The covenant must be reasonable in geographic and temporal scope and necessary to protect the former employer’s legitimate business interests.

As in many states, Illinois courts distinguish between restrictive covenants ancillary to the sale of a business and those ancillary to an employment agreement. The former only needs to be reasonable to be enforceable. In order to enforce a restrictive covenant in an employment context, the employer, in addition to showing that the restriction is reasonable, must also show either that it has “near-permanent” relationships with its clients and, but for the employee’s association with the employer, the employee would not have had contact with the clients, or that the employee acquired and attempted to use trade secrets or confidential information of his or her former employer.

An appellate court refused to enforce a restrictive covenant against former permanent placement agency employees because the nature of the business lacked a permanency of clientele under the Illinois “near-permanency” test. The court reasoned that the businesses utilizing the personnel placement agency do not necessarily fill their hiring needs from one placement agency; rather, they pay a fee to whichever agency supplies the acceptable candidate.

One appellate court held that a client list that had cost the employer $60,000 to create was not a protected “trade secret” under the Illinois Trade Secret Protection Act. Under the act, a trade secret is information that is sufficiently secret to derive economic value from not being generally known to other persons who can obtain economic value from its disclosure, and that is the subject of efforts that are reasonable to maintain its secrecy.

It is unclear what time restrictions Illinois courts will find reasonable. In some cases, courts have refused to enforce two-year restrictions against salespeople soliciting former clients, while in other cases, courts have enforced three-year restrictions.

Illinois courts will modify unreasonable restrictive covenants that are vague and ambiguous, and they will enforce them as modified.

Indiana

Indiana follows the general rule of reasonableness in determining the enforceability of restrictive covenants. Indiana courts have upheld provisions prohibiting salespeople from competing in their former territories with their previous employers.

Indiana courts have upheld a covenant not to compete against former employees of a staffing firm where the covenant was reasonable in time and geographic scope. The court recognized that client and employee lists are confidential information, misappropriation of which can be enjoined. Conversely, the court recognized that cost, pricing, and marketing information are the weakest types of trade secrets because their value and reliability erode quickly. Another court, however, refused to enforce a restrictive covenant against a recruiter employed by an employment agency because there was insufficient evidence to show that the individual was using his former employer’s confidential information to recruit candidates.

In cases in which employers have sought to enforce contractual provisions intended to protect trade secrets, the characterization of information as a trade secret will be denied if the employer fails to show that the information could not have been learned by anyone skilled in the industry at large.

The Indiana Supreme Court has held that a covenant with an unlimited geographic scope is not unreasonable per se, but it may be enforceable if the employee has misappropriated trade secrets and employment with any competitor and this misappropriation poses a risk that those trade secrets will be divulged. Thus, an employee who was shown to have misappropriated confidential client information was enjoined from working anywhere for any competitor of his former employer for a period of one year.

If an agreement is unreasonably broad, courts will deny enforcement; they will not rewrite the agreement or enforce it to a limited extent. However, if an agreement contains distinct and easily severable provisions, Indiana courts may strike out the invalid provisions and enforce the valid provisions.

Iowa

Iowa courts will enforce reasonable restrictive covenants. The Iowa Supreme Court has developed a three-part test for the enforceability of any restrictive covenant, whether a nondisclosure covenant or a noncompete covenant. The courts will consider the following three factors:

■   Is the covenant reasonably necessary for the protection of the employer’s business?

■   Is the covenant unreasonably restrictive of the employee’s rights?

■   Is the covenant prejudicial to the public interest?

An Iowa court found enforceable a five-year, 500-mile radius covenant barring a bagel bakery plant manager from competing directly or indirectly with his former employer. But a five-year restriction is the very limit of what the courts have found reasonable.

In Iowa, continued employment for an indefinite period of time provides sufficient consideration (i.e., something of value given in exchange for the agreement) to support a covenant not to compete.

Where the courts find the covenant unduly restrictive, the court can modify the covenant.

Kansas

Kansas follows the general rule of requiring restrictive covenants to be reasonable and not adverse to the public welfare. The time and territory restrictions must be no greater than necessary to protect the employer’s interest. If the sole purpose of a covenant is to avoid ordinary competition, it will be held unreasonable and unenforceable.

A four-factor test applies to covenants not to compete in determining whether such a covenant is reasonable: (1) Does the covenant protect a legitimate business interest of the employer? (2) Does the covenant create an undue burden on the employee? (3) Is the covenant injurious to the public welfare? (4) Are the time and territorial limitations contained in the covenant reasonable?

An employee’s continued employment is not sufficient consideration to support a covenant not to compete entered into after the employment relationship has begun. However, an employee who has been retained, promoted, and entrusted with company secrets for a significant time after execution of a covenant has received a benefit to which he was not automatically entitled, which will constitute sufficient consideration.

Kansas courts will enforce restrictive covenants only to protect an employer’s legitimate interests; courts will not enforce covenants if the employer’s purpose was to eliminate competition.

Courts will modify unreasonable geographic restrictions and then enforce the agreement as modified.

Kentucky

Kentucky courts follow the general rule of requiring restrictive covenants to be reasonable. An agreement in restraint of trade is reasonable if, on consideration of the circumstances of the particular case, the restriction only affords fair protection to the interests of the employer and is not so large as to interfere with the public interests or impose undue hardship on the party restricted.

Kentucky courts will enforce a post-employment noncompete if there is “an additional mutuality of obligation for the contract” and “consideration is required to modify an existing noncompete contract.”

Concerning time and geographic limitations, “the general rule is that contracts in restraint of trade are not enforceable when they are unlimited as to both time and space, or … are unlimited as to space but limited as to time. However, where such contracts are unlimited as to time but are confined to a reasonable territory, they are enforceable.”

Kentucky courts have upheld restrictions requiring an employee to pay the employer a specific sum if the employee violates the noncompete clause.

Courts will modify an otherwise unreasonable restrictive covenant.

Louisiana

By statute, Louisiana permits restrictive covenants prohibiting an employee from engaging in a similar business or from soliciting clients of the employer. However, such agreements are limited to two years’ duration, must define the employer’s business, and must be confined to the route or territory in which the employer is engaged in business. Prior to a 1989 amendment, covenants not to compete were only enforceable if the employer had incurred substantial expense in training or advertising the employees whose competition it sought to restrict. This is no longer a requirement, however, for covenants entered into on or after Sept. 3, 1989, when the legislature amended the statute.

In addition, Louisiana courts have held that substantial expenses do not include normal administrative and supervisory expenses, access to training manuals and technical bulletins in a particular field, training primarily beneficial to the employer, or expenses for which the employer received the benefit of its investment before the employee was terminated.

Louisiana courts will enforce agreements prohibiting the disclosure of trade secrets, financial information, management techniques, or the use of an employer’s client lists depending upon, among other things, the purpose for which the lists are made, the manner in which clients are contacted after the employee’s termination, and the existence of a scheme to injure the former employer’s business. In addition, courts have refused to enjoin the competitive activities of a former employee if the restrictive covenant contains a provision for damages.

Courts will only delete overly broad restrictions and enforce the covenant to the extent reasonable if the contract contains a severability clause. However, covenants that are unenforceable because they do not meet the geographic requirements will not be modified by the courts.

Maine

Maine adheres to the general rule of reasonableness in enforcing restrictive covenants. Courts look to the duration of the covenant, the geographic area, and the employer’s interest. Protectable interests include a business’s good will, customer pool, and information about the financial holdings and transactions of its customers, when the employee has had substantial contact with the employer’s customers and has had access to confidential information, such as customer lists. To be enforceable, the agreement must impose no undue hardship upon the employee and be no wider in its scope than is reasonably necessary for the protection of the business of the employer. An employer may obtain enforcement of a reasonable covenant to prevent the solicitation of its clients. In one case, Maine’s highest court upheld a restriction on competition for a period of 16 months within a two-mile radius of the former employer.

The courts in Maine have held that durational limits are not necessary in nondisclosure clauses, as they are in noncompete agreements, because “confidentiality knows no temporal or geographical boundaries.”

Maine courts will modify unreasonable covenants and enforce them as modified.

Maryland

Maryland courts will uphold reasonable restrictive covenants. Maryland courts have found covenants reasonable with time limitations ranging from one to three years. The enforceability of geographic restrictions varies with the facts of each case. A nationwide restriction is unlikely to be enforced. However, an agreement that restricts an employee from soliciting clients need not have a geographic restriction. One Maryland court, however, refused to uphold a covenant restricting employment agency personnel from competing for two years in the absence of proof that the former employees had taken, or were likely to take, some of the employer’s clients.

Some Maryland courts will sever unreasonable restrictions and then enforce the agreement as modified; others will modify unreasonable covenants and enforce the agreement.

Massachusetts

Massachusetts courts will enforce reasonable restrictive covenants (for employees and independent contractors) to protect trade secrets, confidential data, and an employer’s goodwill. Noncompete agreements must be in writing, signed by both the employer and employee, and state that the employee has the right to consult counsel prior to signing. In 2018, a statute was enacted that provided a noncompete will only be enforceable if the time restriction is for one year or less post-employment (unless the employee breaches his or her fiduciary duty or steals the employer’s property, in which case the noncompete can last up to two years). The statute further provides that a noncompete will be presumed reasonable in scope if it is limited to the geographic areas in which the employee provided services or had a material presence or influence within the last two years of employment. Moreover, courts will enforce restrictions even in areas where an employer was not yet engaged in competition if, at the time the agreement was signed, it was reasonable for the employer to plan to expand in that area.

One unique aspect to the new statute is a requirement that noncompete agreements include a “garden leave” clause or other mutually agreed consideration. A “garden leave” clause requires the employer to pay the employee, for the duration of the noncompete period, at least 50 percent of the employee’s highest salary within the last two years of employment. The employer’s obligation to pay the garden leave is relieved only if the employee breaches the agreement.

Massachusetts courts are more willing to enforce noncompete agreements ancillary to the sale of a business than those between an employer and employee. Restrictive covenants entered into after the employee has begun to work will be scrutinized more carefully by the courts. It would be best to draft pre-employment agreements as a protection of confidential information.

Damages for a breach of a covenant not to compete are calculated as income or lost profits to the former employer.

A 1991 decision held that an at-will employee should be allowed to change employers freely, and competition should be encouraged as long as the employee does not appropriate the employer’s trade secrets, does not solicit the employer’s clients while still working for the employer, and does not carry away certain information, such as client lists.

Courts will modify unreasonable covenants and then enforce the remainder as written.

Michigan

Michigan by statute upholds the use of restrictive covenants provided they are reasonably limited as to time and area and as to the restrictions imposed. A court may modify an agreement to render it reasonable under the circumstances.

An employee’s covenant not to compete must be reasonable as to its duration, geographical area, and the type of employment or line of business. In a 1991 appellate decision, the court held that an agreement by an accountant not to contact or perform services for any clients of his accounting firm after his departure and to pay a fee in the event of breach was enforceable because it imposed only two restrictions and did not preclude the employee from competing with his former employer.

Michigan courts have recognized and enforced covenants not to use or disclose confidential information or trade secrets. Covenants entered into before March 29, 1985, are governed by repealed Mich. Comp. Laws Ann. §445.671 (West 1988), which prohibits contracts in which a person agrees to refrain from employment, a trade, a profession, or business with the exception of covenants not to compete lasting for up to 90 days after the termination of employment of an employee to whom the employer had furnished a route list. Such agreements are valid only in the territory in which the employee had worked.

Minnesota

Minnesota upholds the use of restrictive covenants, provided they are reasonably limited as to time and area and as to the restrictions imposed. However, the courts do not favor such restraints on trade, and they must be supported by consideration (i.e., something of value given in exchange for the agreement) if not ancillary to an employment agreement. Two recent cases confirm that Minnesota requires employers to provide advance notice of any noncompete to a potential future employee prior to the commencement of employment. A court may modify an agreement to render it reasonable under the circumstances.

Minnesota courts have reached differing results with respect to the enforceability of restrictive covenants in the personnel services industry. The key factor appears to be the time at which the restrictive covenant was made. Courts will more readily enforce restrictive covenants that are entered into at the inception of employment. In one case, the court refused to enforce an agreement precluding employment agency recruiters from competing for one year within 50 miles of the city because the agreement, which was signed by employees after they began working, was not supported by independent consideration. In another case, however, the court enforced a covenant supported by consideration that prohibited a manager of an employment agency from competing for one year within the same county because the covenant was reasonably limited in time and geographic area and it protected the employer’s confidential client relationships.

The Minnesota Court of Appeals upheld a restrictive covenant that prohibited a former employee from soliciting business from any clients of the employer with whom he had contact as an employee for a two-year period following termination of employment. At least one Minnesota court has approved a nationwide covenant not to compete lasting for a period of one year.

Mississippi

Mississippi follows the general rule of requiring restrictive covenants to be reasonable. “[T]hree aspects … are examined to determine the enforceability of a noncompete agreement: (1) the rights of the employer, (2) the rights of the employee, and (3) the rights of the public.” Under Mississippi law, courts will modify the geographic scope or duration of a covenant if it is unreasonable.

Mississippi courts often have upheld very broad restrictive covenants. In one case, the court upheld a covenant prohibiting an employee from competing for two years within 100 miles of any city in which he previously had worked. In another case, the court upheld a five-year restrictive covenant against an employment counselor prohibiting her from competing throughout the county where the former employer was located.

Mississippi courts place the responsibility of drafting squarely with the employer. In finding the terms of a restrictive covenant too vague to enforce, one court stated, “Given the unfavored status of noncompete agreements in the eyes of the law, the burden properly falls on the employer to draft a noncompete agreement which clearly delineates the scope of the employee’s permissible business activities following the termination of employment.”

Missouri

Missouri courts will uphold covenants that are reasonable, that protect a legitimate employer interest, and that are supported by consideration (i.e., something of value given in exchange for the agreement). Under Missouri law, an at-will employee’s continued employment after signing a covenant not to compete is sufficient consideration for the covenant. Missouri courts view covenants not to compete as restraints on trade, which are not favored under the law.

Trade secrets, client contracts, client lists, and customer relationships are the only legitimate interests employers can protect against unfair competition or misappropriation through noncompete covenants.

With respect to the employment agency industry, courts have upheld restrictive covenants precluding ex-employees from competing for one or two years. Missouri courts will enforce noncompete agreements against employees who have substantial client contacts even if the client list does not rise to the level of a trade secret.

The Missouri statute also protects written covenants “not to solicit, recruit, hire or otherwise interfere with the employment of one or more employees” to protect confidential or trade secret information; or client or supplier relationships, goodwill, or loyalty. If no such protectable interest exists, a covenant not to compete may still be enforced if its time limitation is one year or less following the termination of the employment relationship so long as the covenant does not purport to cover a secretarial or clerical employee.

Furthermore, the Missouri Supreme Court has ruled that a reasonable covenant will be enforced as long as the opportunity for influencing clients exists (i.e., an employer need not prove that a former employee actually solicited its clients or that there has been actual damage). According to the Court of Appeals, however, an employer has a protectable interest only in those clients who regularly patronize the employer’s business.

Missouri courts will reform unreasonable restrictions and then enforce the modified covenant. The court will not write in geographic restrictions where they are not provided.

Montana

Montana, by statute, prohibits contracts that restrict any lawful profession, trade, or business. Covenants not to compete will be enforced only when entered into in connection with the sale of a business. Upon dissolution, business partners may agree that one or more of them will not carry on a similar business within the statutory geographic area. In these instances, a restrictive covenant will generally be enforced if it is reasonably limited to time or place, is supported by adequate consideration (i.e., something of value given in exchange for the agreement), and protects a legitimate business interest without imposing an undue burden on the employer, employee, or public.

Despite the statute, courts will uphold a noncompete in the employment context if it is: (1) limited in time or place; (2) based on “good consideration”; and (3) is restricted in its operation in respect either to time or place and: (a) is based on good consideration; (b) affords only a fair protection to the interests of the employer; and (c) is not so large in its operation as to interfere with the interests of the public.

A restrictive covenant that required an employee to pay the employer a fee if he obtained the business of any client of the firm within 12 months after his employment ceased was upheld as reasonable.

Montana courts will blue pencil noncompetes by restricting the reach of noncompete provisions without voiding them entirely.

Nebraska

Nebraska courts will enforce reasonable covenants. However, the Nebraska Supreme Court has stated that a noncompete agreement is valid only if it restricts the former employee from working for or soliciting the former employer’s clients, or clients with whom the former employee actually did business.

Nebraska courts will not enforce terms of a restrictive covenant that are greater than reasonably necessary to protect an employer’s legitimate interest in client goodwill. Nebraska courts do not permit blue penciling of noncompete agreements, even where there is a severability clause in the agreement containing the noncompete clause.

An agreement restricting an employee from working for any of the employer’s clients who lived within 35 miles of any of the employer’s offices was too broad and unenforceable. On the other hand, a Nebraska court upheld a covenant restricting an office manager from contacting clients within a 75-mile radius where the employee had a personal relationship with the clients served and most clients were located within a 75-mile radius.

The Nebraska Supreme Court ruled that a covenant not to compete was unenforceable against a personnel recruiter because the recruiter obtained client information through his own diligence and skills rather than through the employer. The court also found that the covenant not to compete was too broad in geographic scope. The agreement defined the geographic area as the continental United States with a time restriction of one year. Nebraska courts will not modify unreasonable agreements. In a Nebraska Supreme Court decision, a contract that prohibited a former employee dentist from working with anyone within a 25-mile radius as opposed to just the employer’s clients was found to be overly restrictive. The court held that unreasonable covenants are not enforceable and not subject to reformation.

Nevada

Nevada has a statute that governs the enforceability of covenants not to compete. It provides, in pertinent part, as follows:

“Any … company … who willfully does anything intended to prevent any person who for any cause left or was discharged from his or its employ from obtaining employment elsewhere in this state shall be punished by a fine of not more than $5,000.”

The courts have interpreted this statute as applying only to persons who seek employment with someone else, not those who intend self-employment.

In cases where former employees started their own businesses, the Nevada courts have enforced reasonable restrictive covenants. For example, a Nevada court has held that a restriction limited to the city of Reno was warranted, but an area within a 100-mile radius of Reno was not warranted.

However, the statute provides an exception for people and employers that negotiate, execute, and enforce an agreement with an employee that, upon termination of employment, bars the employee from “(a) pursuing a similar vocation in competition with or becoming employed by a competitor or (b) from disclos[ing] any trade secrets, business methods, lists of customers, secret formulas or processes, or confidential information learned or obtained during the course of employment if the agreement is supported by valuable consideration and is otherwise reasonable in its scope and duration.”

In general, courts will sever unreasonable provisions and enforce the modified covenant.

New Hampshire

New Hampshire follows the general rule requiring restrictive covenants to be reasonable. In determining whether a restriction is reasonable, the courts will look to the time at which the contract was entered. New Hampshire courts will modify a covenant to make the terms reasonable, although before they will do so, an employer must prove that it acted in good faith in drafting the unreasonable terms. A noncompete agreement must be provided prior to or concurrently with any job offer or change in job classification— failure to meet this requirement renders an agreement null and void.

According to one New Hampshire court, covenants not to compete are enforceable “only to the extent that they prevent employees from appropriating assets that are legitimately the employer’s.” While no statute exists to govern the enforceability of such arrangements, courts have employed a three-part test:

■   Is the restriction greater than necessary to protect the employer’s legitimate interests?

■   Does the restriction impose an undue hardship upon the employee?

■   Would the restriction injure the public good?

Reasonable restrictions include the geographic area in which the employee worked and the amount of time it would reasonably take the employee’s replacement to demonstrate his or her effectiveness in the job, including the amount of time it might reasonably take the public to disassociate the former employee from the employer.

Courts have, on occasion, enforced broad restrictive covenants against professional employees, including a five-year covenant prohibiting a veterinarian from competing with a veterinary hospital within 20 miles of the hospital.

In a 1991 New Hampshire Supreme Court case, the court found a 100-mile radius restriction on an employee’s ability to compete with his former employer unreasonable because it went beyond the actual sales territory assigned to the employee while he worked for the employer. The court also rejected the covenant’s provision barring the employee for an 18-month period from servicing any client the employer had done business with during the preceding year. The court noted that the employer had clients far outside the employee’s allotted territory, and it found that the employer did not have a legitimate business interest in protecting its entire client base from the employee. However, the court did uphold a provision restricting the employee’s contact with clients known to the employee through his employment with the employer.

In a 2000 New Hampshire Supreme Court decision, the court ruled that a temporary staffing agency’s restrictive covenant was unenforceable because the agency’s costs to recruit and hire employees did not constitute a protectable business interest. Agency A required its employees to sign employment contracts containing a restrictive covenant that prohibited them from accepting “employment directly or indirectly at client company for a period of 90 working days following the termination of employment with [the agency].” The client company subsequently named Agency B as the exclusive, on-site, temporary employee provider. Agency B informed on-site employees that the client was no longer affiliated with Agency A and that the employees could apply for a position through Agency B. Agency A brought claims against Agency B for intentional interference with contractual relations. The court ruled that Agency A did not have a protectable interest because its employees were light industrial laborers who were not in a position to appropriate the agency’s goodwill and were without access to sensitive information. Post-employment restrictions on such employees “would be contrary to public policy and would impose an undue hardship, particularly for at-will employees who could be discharged at any time.”

Courts do not follow the blue pencil rule, but will partially enforce or reform overly broad restrictions if the employer shows good faith in executing the agreement.

New Jersey

While New Jersey adheres to the general rule of reasonableness in enforcing restrictive covenants, noncompete agreements are judicially disfavored and difficult to enforce. New Jersey courts find noncompete covenants reasonable if they simply protect the employer’s legitimate interests, impose no undue hardship on the employee, and are not injurious to the public.

New Jersey courts expressly recognize as legitimate the former employer’s interest in protecting trade secrets, confidential information, investment in the training of an employee, and usually clients. Although most New Jersey courts have required restrictive covenants to be limited in area, one court found that geographic limitations are unnecessary where the covenant seeks to prohibit solicitation of the employer’s clients.

New Jersey courts will reform a covenant to make it reasonable, but they require that the employer first prove that it acted in good faith in having the covenant signed.

New Mexico

New Mexico courts will enforce reasonable restrictive covenants. To create an enforceable agreement, courts have required employers to prove that they gave the employee adequate consideration (i.e., something of value given in exchange for signing the agreement); merely allowing the employee continued employment is insufficient.

If an agreement prohibits a former employee from soliciting an employer’s clients, any commissions received by the former employee in violation of the agreement belong exclusively to the former employer.

New Mexico courts have enforced two-year and three-year restrictive covenants.

Whether courts may modify a covenant not to compete if it is found to be unenforceable has not been decided in New Mexico.

New York

New York courts will enforce narrowly tailored noncompete agreements under limited circumstances, including to protect trade secrets or when the employee’s services were unique or extraordinary. New York courts may enforce certain types of restrictive covenants that prohibit an employee from soliciting his or her former employer’s clients and temporary employees, provided the client and employee information is confidential.

While New York courts disfavor restrictive covenants in the employment context and will generally enforce them only to the extent they are reasonable and necessary to protect valid business interests, there is, however, one significant exception. New York courts will enforce a restrictive covenant without regard to its reasonableness if the employee has been afforded the choice between not competing (and thereby preserving his benefits, e.g., stock options) or competing (and thereby risking forfeiture). This “employee choice doctrine” assumes that an employee who elects to leave a company makes an informed choice between forfeiting a certain benefit and retaining the benefit by avoiding competitive employment.

There has been a considerable amount of litigation in New York regarding the enforceability of restrictive covenants in the staffing industry. Many courts have been willing to protect information about a staffing firm’s employees, such as their names, addresses, and telephone numbers. On the other hand, staffing firms have had difficulty persuading courts that client lists are confidential in the staffing industry. Most courts have found that because staffing firm clients are available from public directories and similar publicly available listings, client lists are not confidential. On occasion, and depending on the precise facts, some specific, nonpublic information about clients may be treated as confidential (e.g., special billing or pricing arrangements, expansion or contraction plans, pending requests for proposals or bids, unusual client preferences or needs, or seasonal fluctuations requiring more temporary staff). New York courts will more readily enforce restrictive covenants, including noncompete agreements, in connection with the sale of a business or where the person against whom the agreement is enforced was a signature shareholder.

New York’s intermediate state appellate court held that continued employment, or in the court’s words, “forbearance of discharge,” would be sufficient consideration (i.e., something of value given in exchange for the agreement) to support a restrictive covenant for existing employees. Thus, an employer can require existing employees to execute a restrictive covenant so long as their execution of the agreement is a condition for their continued employment. New York courts will sever unreasonable provisions from a restrictive covenant and then enforce the remainder.

North Carolina

In North Carolina, for a restrictive covenant to be enforceable against a former employee, the covenant must be in writing, reasonable as to time and territory, made part of an employment contract, based on reasonable consideration (i.e., something of value given in exchange for the agreement), and not against public policy.

Courts have upheld a two-year covenant prohibiting competition within 350 miles of the former employer, as well as a five-year covenant precluding competition in the area where the former employee had been active.

If a covenant not to compete is found to be overbroad, North Carolina courts will not attempt to rewrite the covenant. At most, the court may choose to enforce a distinctly separable part of the covenant.

Nondisclosure or non-use contracts are not restraint-of-trade contracts, and North Carolina may enforce them even if they are not limited as to time and territory.

North Dakota

North Dakota, by statute, prohibits all covenants that restrict any lawful trade, profession, or business, except when such agreements are ancillary to the sale of a business or stem from a partnership agreement. The enforceability of agreements permitted under this exception is limited to within the specified county, city, or part of either where the property of the former business was located or where the business was conducted. With respect to the dissolution of a partnership, the limitation is “within the same city where the former partnership was located.”

Ohio

Ohio courts will enforce reasonable restrictive covenants entered into at the beginning of the employment relationship or that are agreed to in return for some significant benefit to the employee (e.g., promotion to a management position). There is a split of authority in the Ohio courts regarding whether continued employment is sufficient consideration for an employee’s execution of a covenant not to compete after employment has commenced. In 2002, an appellate court held that continued employment of an at-will employee was sufficient consideration to support a restrictive covenant entered into after the commencement of the employment relationship, because enforcing only those restrictive covenants entered into at the inception of employment “would either permit the employer who finds itself in legitimate need of covenants not to compete from certain of its employees to fire them all and then require them, as a condition of being re-hired, to execute covenants not to compete, or, worse yet, it would require the employee to fire those employees and inform them that as much as it would like to re-hire them, it is forced to hire new employees to replace them, so that it may obtain covenants not to compete that are reasonably related to its legitimate business needs.”

A two-year, 50-mile covenant precluding competition by a former employee of an employment agency was refused enforcement because there were no trade secrets or confidential information and there was no evidence that the employee had directed away or influenced any clients of the former employer.

Ohio courts will generally enjoin former employees from soliciting a former employer’s clients.

Generally, restrictive covenants with overly broad geographic limitations (e.g., the United States) will not be enforced, although at least one case enforced an agreement prohibiting an employee, for two years, from divulging confidential client information, even though the agreement did not contain any geographical limitation.

Oklahoma

Oklahoma, by statute, prohibits covenants that restrict any lawful profession, trade, or business. Nevertheless, courts will prohibit a former employee from divulging confidential information and will restrict an individual from soliciting a former employer’s clients.

In one case involving a staffing firm, an Oklahoma court upheld a restrictive covenant and enjoined a former employee for a period of nine months from soliciting any of the company’s clients whose accounts she worked on or who she otherwise knew to be a client of the firm by virtue of her employment.

A law passed in 2001 gives effect to restrictive covenants, provided that an employee is “permitted to engage in the same business as that conducted by the former employer or in a similar business…as long as the former employee does not directly solicit the sale of goods, services, or a combination…from the established clients of the former employer.” Oklahoma courts may modify unreasonable restrictive covenants as long as they do not have to rewrite the entire contract to make it enforceable.

Oregon

As a general rule, Oregon law prohibits restrictive covenants unless they are entered into at the time an employee is hired or upon “subsequent bona fide advancement.” Such agreements must be reasonable in terms of time and territory, and they must not impose an undue burden on the employee. Employers are required to notify a potential employee in writing at least 72 hours before the first day of employment if acceptance of an arbitration agreement is a required condition of employment and in writing at least two weeks in advance of the start of employment if the noncompete is a required condition of employment.

In a case decided by the appellate court, a restrictive covenant limited to a 90-day period and to specific client work sites was found enforceable. Agency A required its employees to sign employment contracts containing a restrictive covenant that prohibited them from accepting “employment directly or indirectly at client company for a period of 90 working days following the termination of employment with [the agency].” The client company subsequently named Agency B as the exclusive, on-site, temporary employee provider. Agency B signed on employees of Agency A, and Agency A sued. In finding the restrictive covenant enforceable, the court considered the nature of the temporary employment industry and an agency’s interest in maintaining its relationship with its clients: “In the context of the temporary employment service industry, employees are the very commodity in which both plaintiff and defendant deal. [Client companies] pay an hourly rate to a vendor for filling a position; a portion of that revenue is passed to the employee who fills the position. In the absence of an enforceable restrictive covenant, plaintiff’s employees simply could have agreed with [the client company] to eliminate the middleman, thereby diverting all of plaintiff’s business—a process known as disintermediation.”

Oregon does allow “bonus restriction agreements” in which an employee agrees to forfeit a bonus if he or she does not honor an enforceable restrictive covenant. To be enforced, such an agreement must have reasonable time and geographic limitations, and it must involve an employee with substantial managerial responsibility or knowledge of client requirements, trade secrets, or other confidential information. If an employee violates the agreement, the only penalty that may be imposed is forfeiture of either profit sharing or some other bonus compensation that has not yet been paid.

Oregon courts have, on occasion, modified unreasonable covenants to make them reasonable. According to the Oregon Court of Appeals, a noncompete agreement that is unlimited as to geographic area is not void per se; a court should interpret the agreement to make it reasonable under the circumstances.

Pennsylvania

In Pennsylvania, restrictive covenants will be enforced to the extent they are meant to protect the employer’s relationship with its clients, confidential information, unique extraordinary skills, or trade secrets. The Pennsylvania Supreme Court has upheld an agreement prohibiting a sales manager of a staffing firm from competing for one year within 50 miles of Philadelphia.

The Pennsylvania courts have affirmed one- to three-year restrictive covenants.

Pennsylvania courts have also recognized “business information” and “goodwill” as legitimate interests protectable by a limited covenant not to compete.

Courts have enforced a covenant restricting a former employment agency employee from competing for one year in 21 states and the District of Columbia, as well as a covenant restricting an employment counselor from competing for one year within 75 miles of any city in which the employer “maintains a personnel consulting service.”

Courts have recognized that client lists, if not readily available from outside sources, constitute trade secrets. Even if a covenant is enforceable, a court may not enjoin an employee from competing where the employer fails to show that it has suffered, or will suffer, irreparable harm because of the employee’s activities. Pennsylvania courts may reform an otherwise unenforceable noncompete covenant in an employment contract. Courts also have upheld damage awards against former employees and clients for conspiring to take advantage of an employer’s business opportunities.

Rhode Island

Rhode Island courts will enforce reasonable restrictive covenants. Interests that the courts have found worthy of judicial protection include trade secrets, an employer’s goodwill, and an employee’s unique services. Rhode Island courts will not enforce a covenant if the employer’s only interest is to be free from competition by its former employees.

Finding that the restraint imposed by a noncompete provision was greater than needed to protect the employer’s legitimate interest, a court ruled that a restrictive covenant with a one-year, 50-mile radius limitation was unreasonable and therefore unenforceable against a recruiter “in light of the fact that the employee was not trained in unique or novel services by the employer and that the employee did not have access to any trade secrets.”

A ruling by the Rhode Island Supreme Court allows unreasonable restraints in restrictive covenants to be modified and enforced, whether or not their terms are severable, unless the circumstances indicate bad faith or deliberate overreaching on the part of the employer.

South Carolina

South Carolina adheres to the general rule of reasonableness in determining the enforceability of restrictive covenants. A nondisclosure agreement that defines trade secrets so broadly that it encompasses all the information learned by an employee is subject to the same scrutiny by the South Carolina courts as covenants not to compete. Restricting a former employee from contacting the employer’s current clients has been upheld as reasonable. South Carolina courts may invalidate parts of a restrictive covenant, yet uphold the remainder of the agreement if the agreement contains a severability clause; however, when a covenant contains no such provision, is broader than necessary for the protection of the employer’s legitimate interests, does not contain reasonable geographic and time restraints, is unduly harsh and oppressive to the employee, violative of public policy, or unsupported by valuable consideration, “the covenant is totally defective and cannot be saved.”

South Dakota

Although South Dakota, by statute, prohibits any contract that restrains the exercise of a lawful profession, trade, or business, it does allow for agreements prohibiting an employee, for a maximum of two years, from engaging in the same business as a former employer, provided the covenant includes a geographic limitation.

South Dakota courts will enforce provisions prohibiting an employee from disclosing trade secrets or soliciting an employer’s clients, provided the restrictions are reasonable. Continued employment is sufficient consideration (i.e., something of value given in exchange for the agreement) to enforce a restrictive covenant under South Dakota law, which means that an agreement signed by a current employee will be enforced so long as the employee is required to sign the agreement as a condition for continued employment.

The circumstances under which an employee leaves his or her employer will impact a court’s analysis of an agreement’s reasonableness. When an employee is fired, the South Dakota courts apply a balancing test to determine reasonableness. However, when an employee voluntarily quits and goes into competition with his or her former employer, as long as the agreement complies with state law, the courts consider it to be reasonable.

South Dakota courts will not enforce “no-hire” agreements between rival companies.

Tennessee

Tennessee adheres to the general rule of reasonableness in enforcing restrictive covenants. Tennessee courts have enforced the following covenants: a nationwide two-year restriction for a sales manager and a three-year client restriction for a former partner of a consulting firm.

Tennessee courts will modify unreasonable portions of a restrictive covenant and then enforce the agreement as modified. Courts have held that an employer has a legitimate, protectable interest in the “time, effort, and expense” of training its employees if the expense is considerable. On such a basis, courts have upheld restrictions limiting former employees from providing services to the same clients to whom they provided services through their former employers.

Texas

Texas has a statute that governs the enforceability of covenants not to compete. The statute provides that a covenant not to compete is enforceable if two criteria are met:

First, the covenant must be ancillary to an otherwise enforceable agreement (e.g., a nondisclosure agreement); and it must contain limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the employer. For a noncompete agreement to be “ancillary to or part of an otherwise enforceable agreement,” the consideration given by the employer in the otherwise enforceable agreement must give rise to the employer’s interest in restraining the employee from competition and must be designed to enforce the employee’s consideration or return promise in the otherwise enforceable agreement. Texas courts have found such consideration in business goodwill incident to the sale of a business and when an employer promises to provide, and does provide, trade secrets, or unique and specialized training.

Second, it must contain reasonable limitations as to time, geographical area, and scope of activity to be restrained.

An at-will employment agreement will not be considered sufficient consideration to support a noncompete covenant. The Texas Supreme Court has held that a covenant not to compete signed by a current employee in consideration for stock options could be enforceable since the consideration was reasonably related to the company’s interest in protecting its goodwill.

In a 1991 court of appeals decision, the court, relying on the statute, refused to enforce a restrictive covenant because it contained unreasonable limitations concerning time, geographical area, and scope of activity to be restrained.

The covenant-not-to-compete statute does not govern trade secret nondisclosure covenants, which are not restraints on trade.

A court of appeals decision held that a covenant barring a former employee from competing against a two-way radio business within a 100-mile radius of a fixed point was reasonable. In another case, the court of appeals held that a one-year client nonsolicitation restriction was reasonable.

Texas courts will modify an otherwise unreasonable or overly broad provision in a covenant not to compete.

Utah

Utah courts adhere to the rule of reasonableness in enforcing restrictive covenants. Utah courts will enforce noncompete agreements only when an employer can show that the employee’s services were special, unique, or extraordinary, or that the employee helped to create the employer’s goodwill (i.e., the public’s positive perception of and patronage of the business). Utah courts will enforce a nondisclosure agreement if trade secrets or other confidential information are involved. The right to enforce an employee’s covenant not to compete is personal to the employer and expires when the employer goes out of business.

A Utah court upheld a covenant barring a former store manager from competing with his former employer within a two-mile radius of his former employer’s store for a five-year period.

In 2016, the legislature enacted the Post-Employment Restrictions Act, which provides that an employer and an employee may not enter into a noncompetition agreement for a period of more than one year from the day on which the employee is no longer employed by the employer. Two types of agreements are excepted from this restriction: (i) a severance agreement and (ii) an agreement related to the sale of a business. The Act penalizes employers whose agreements are found unenforceable.

Whether or not courts have the authority to blue pencil a restrictive covenant is still an open question in Utah.

Vermont

Vermont adheres to the general rule of reasonableness when determining the enforceability of restrictive covenants. The Vermont Supreme Court would not enforce a broad covenant restricting an employee from competing for three years in any territory the employer now serves or intends to serve, because the lower court failed to determine whether the contract was reasonable in its geographic scope.

Vermont courts can modify an overly broad covenant not to compete. However, bad faith on the former employer’s part may be a reason for a court to decline to reform an overly broad covenant.

By statute, Vermont expressly prohibits barber and cosmetology schools from requiring any individual to enter into a covenant not to compete as a condition of training for licensure.

Virginia

Virginia courts will enforce reasonable restrictive covenants. Courts allow more latitude in determining the reasonableness of such covenants when they relate to the sale of a business.

The Virginia Supreme Court has held that when a former employer seeks to prohibit a former employee from working for its competitors in any capacity, it must prove a legitimate business interest for doing so. Further, the Virginia Supreme Court has upheld a two-year agreement prohibiting employees from competing within the counties in which they had worked for their former employer. The court concluded that the agreements were reasonable because the employees were familiar with the employer’s clients and methods of operation.

Virginia courts have enforced agreements with time restrictions of one to three years. However, the Virginia Supreme Court found a restrictive covenant with a one-year, 50-mile radius limitation unenforceable, because the agreement prohibited the employee from being employed in any capacity by a competing company. The court reasoned that the former employer failed to demonstrate a legitimate business interest that required such a restriction.

Virginia courts will not modify unreasonable or overly broad provisions in a restrictive covenant.

Virginia courts have awarded punitive damages for intentional interference against a company that hired away 20 employees from their former employer because the company was aware that the former employees were bound by noncompete covenants.

Washington

Washington courts will enforce reasonably drawn restrictive covenants and will limit the scope of restrictive covenants to those areas and time periods that are deemed absolutely necessary to protect the employer’s legitimate interests. Whether a covenant not to compete is reasonable is determined using a three-part test: (1) whether restraint is necessary for the protection of the business or goodwill of the employer, (2) whether it imposes upon the employee any greater restraint than is reasonably necessary to secure the employer’s business or goodwill, and (3) whether the degree of injury to the public warrants non-enforcement of the covenant.

The courts enforced a three-year noncompete agreement against professional employees that provided for liquidated damages equal to 35% of fees collected in violation of the agreement.

West Virginia

West Virginia follows the general rule of reasonableness in enforcing restrictive covenants. Information found worthy of judicial protection includes client information unique to an employer. The general managerial skills acquired by an employee are not a protectable interest of the former employer.

The West Virginia Supreme Court has ruled that a restrictive covenant with a two-year, 50-mile radius limitation was not overly broad. The court has found that where time or area limitations are excessively broad, or where the covenant appears designed to intimidate employees rather than to protect the employer’s business, courts should hold any such covenant void and unenforceable and not undertake even a partial enforcement. Barring excessive limitations, a reasonable restrictive covenant is presumptively enforceable in its entirety if the employer shows that it has interests requiring protection from the employee.

One West Virginia court has concluded that an agreement that is not designed to protect an employer’s legitimate interests may constitute unlawful interference with a former employee’s business interests, and that it may then subject an employer to potential liability for actual and punitive damages.

West Virginia courts will modify a restrictive covenant “to comport with the equities of the case.”

Wisconsin

Wisconsin statutorily permits restrictive covenants that are reasonably necessary to protect the employer’s interests. The statute applies to nondisclosure covenants as well. The statute provides that a restrictive covenant that imposes an unreasonable restraint is illegal, void, and unenforceable in its entirety even if portions are reasonable. A two-year restraint in covenants not to compete is considered reasonable.

The Wisconsin Supreme Court held that the statute also applies to “no-hire” agreements between employers when the effect of the agreement is to restrict the employment of company employees. The court ruled that such an agreement constitutes an unreasonable restraint of trade and violates the public policy of the state.

Wyoming

Wyoming courts will enforce reasonable restrictive covenants. To be reasonable, the restraint must afford fair protection to the employer without unnecessarily interfering with the interests of the public. Wyoming has recognized that the legitimate interests of an employer that may be protected from competition include (1) trade secrets communicated to the employee during the course of employment; (2) confidential information communicated by the employer to the employee but not involving trade secrets, such as information on a unique business method; and (3) special influence by the employee over the employer’s clients, obtained during the course of employment.

Courts allow blue penciling of otherwise unenforceable agreements.

C. Implied Employment Agreements

1. General

Employers have long been aware that clearly communicating their requirements and human resources policies is a valuable method to avoid employee confusion and controversy. Moreover, it is important for employers to keep employees informed as to what the employers provide to them and what is expected in return. Whether referred to as the personnel manual, the employee handbook, or simply a compilation of memos and policies distributed to new employees, these documents are viewed by employees as setting the employer’s policy on the questions addressed. However, the courts have begun to view these personnel documents as contractual in nature, much to the surprise of the employers who issue them. Rather than forfeit the advantages of employee handbooks, employers, including staffing firms, have recognized that properly crafted employee handbooks continue to be a vital communication tool and device to protect employers from wrongful discharge and similar employment-related claims.

2. Employee Handbooks

Many staffing firms either already have or are intending to develop an employee handbook. Generally, an employee handbook is a document that introduces employees to the company and describes the company’s employment policies, guidelines, and benefits. There are both advantages and disadvantages to employee handbooks.

a. Purposes

The purpose of an employee handbook is twofold. First, a handbook communicates to employees what the company expects of them in connection with their employment (e.g., how they should behave; what types of conduct are against company policy; what procedures they should follow regarding absences, illness, vacations, complaints, and the like). Second, the handbook lets employees know what they can expect from the company in terms of the employment relationship, compensation, benefits, advancement, discipline, work environment, responsiveness to employees’ concerns, etc.

An employee handbook does not normally contain all of the company’s policies and procedures in full detail. Such a detailed description of the company’s policies is more appropriate in a company’s policy and procedure manual designed exclusively for managers. Employee handbooks typically outline the most basic human resources policies; are written in plain, understandable language; and are geared toward the employees’ point of view.

b. Advantages of Employee Handbooks

Having written, standardized policies promotes consistent treatment of employees, which helps maintain morale, decreases the risk of employment discrimination or other legal complaints based on inconsistent treatment, and makes it less likely that employees will turn to a labor union to ensure fair treatment. Employee handbooks also make it easier for employers to comply with the ever-increasing number of legal regulations regarding the provision of written policies to employees. Many states now require employers to put certain policies in writing and communicate them to employees (e.g., policies regarding working hours, monitoring of email, Internet access, and telephone calls, illness leave, vacations, personal and family leave, holiday pay, and smoking in the workplace). In addition, a published sexual harassment policy and complaint procedure is now an affirmative defense— established by court decisions—against claims of sexual harassment if the policy is circulated and enforced. Employee handbooks provide a convenient method for employers to communicate such written policies to their workforce in a single document. Employee handbooks also can serve the important purpose of letting employees know what type of performance the company expects and what types of conduct the company considers unacceptable. Finally, an employee handbook can be useful in defending against wrongful discharge or discrimination lawsuits if the employee can be shown to have violated work rules or other provisions expressly set forth in the handbook, defeating oral promise claims.

c. Disadvantages of Employee Handbooks

The primary disadvantage of employee handbooks is their potential to legally bind the employer to whatever policies and procedures are stated therein. Employee handbooks in some circumstances can constitute implied contracts of employment that limit an employer’s right to discharge employees at will. For example, if a handbook provides that employees will be discharged for engaging in certain specific types of conduct, it may create an implied promise that employees will not be discharged for different or lesser offenses. Similarly, statements that employees will only be discharged for good cause, will remain employed as long as they are doing their job, or other representations regarding job security may limit the employer’s ability to discharge. If an employee handbook provides for warnings or other progressive discipline measures, the employer may be bound to follow those procedures before discharging an employee. In addition to provisions regarding termination of employment and discipline, an employer can be bound to its written handbook provisions regarding such items as vacations, vacation pay, severance pay, layoff and recall procedures, bonuses, compensation, and other terms and conditions of employment. Although many of these pitfalls can be avoided by proper drafting, companies should always bear in mind that they may someday be legally bound to deliver on any express or implied promises made in their employee handbook.

3. Common Employee Handbook Topics

Although employee handbook topics vary between companies depending upon the company’s management philosophy and priorities, there are a number of topics that routinely appear in handbooks. For companies considering drafting an employee handbook, the following list of topics is a useful starting point. Companies that already have an employee handbook may wish to compare the topics in their handbook with those on the following list:

■   Welcoming statement

■   Introduction or purpose of handbook (including prominent contract disclaimer and reservation of right to amend)

■   Brief history of company

■   Equal employment opportunity policy

■   Sexual and other harassment policy and complaint procedure

■   Reasonable accommodations policy

■   Alcohol-free and drug-free workplace policy (including policy on drug testing)

■   Smoking policy

■   Electronic monitoring policy (email, computers, phones, blogging, etc.)

■   Employee responsibilities, conflicts of interest, and business ethics (including loyalty to company, nondisclosure of confidential company information, nonsolicitation, and use of position for personal advantage)

■   Employee safety

■   Hours of work, attendance, and tardiness

■   Grooming and attire (dress codes)

■   Use of telephones

■   Solicitation and distribution of literature

■   Use of bulletin boards

■   Holidays

■   Vacations

■   Sick and personal leave

■   Family and medical leave (including pregnancy disability leave)

■   Bereavement leave

■   Jury duty

■   Military leave

■   Voting leave

■   Salary administration

■   Performance evaluations

■   Classification of employment

■   Payroll procedures (regular pay, overtime, etc.)

■   Workplace searches

■   Discipline and termination

■   Severance pay policy

■   General employee complaint procedure or open-door policy

■   Alternative dispute resolution

■   Employee benefits and the Consolidated Omnibus Budget Reconciliation Act (disability, dental, workers’ compensation, etc.)

■   Employment of relatives

■   Employee’s acknowledgment of receipt of handbook

4. Provisions That Should Be in Every Employee Handbook

Regardless of how many or how few topics an employer chooses to address in its employee handbook, there are certain provisions that are recommended for inclusion in all employee handbooks for the purpose of minimizing legal exposure.

a. Contract Disclaimer

As discussed above, under some circumstances, an employer can be legally bound by the provisions in its employee handbook on the theory that the handbook constituted an implied contract with the employer. An employer can minimize the risk of being contractually bound by its employee handbook by including a properly drafted, prominently displayed disclaimer that clearly and explicitly states that the employment relationship is at will and that the employee handbook is not intended to create a binding contract. An example of such a disclaimer is as follows:

The employment relationship between [the Company] and each of its employees is employment-at-will. Just as any employee is free to end his or her employment with [the Company] at any time for any reason, [the Company] in its sole discretion may terminate an employee’s employment at any time, for any reason, without prior notice or warning. No supervisor, manager, employee, or other representative of [the Company], other than [the Company’s] president, has authority to make any promise or commitment contrary to the foregoing, or to enter into any agreement with an employee for employment for any specified duration. Any such agreement entered into by the president of [the Company] must be in writing.

This employee handbook is intended to provide information regarding [the Company’s] employment practices and policies. Except for the policy of at-will employment, this handbook and the practices and policies it refers to may or may not be followed in certain instances, and are subject to change at any time, without notice, at [the Company’s] sole discretion. This handbook does not constitute a contract or obligation on the part of the company and does not guarantee employment for any specific duration.

If the handbook contains a section that deals with progressive discipline or lists grounds for termination, those provisions should also clearly and explicitly disclaim any intention to create contractually binding procedures or grounds for termination. Any progressive discipline provision should state that the procedures are merely guidelines that may or may not be followed depending on the circumstances, and that the company is free to discharge any employee with or without warning or notice. Lists of specific infractions or grounds for termination should be accompanied by a statement that the list is not all-inclusive, that the list does not alter the employment-at-will relationship, and that the company and employee are free to terminate the employment relationship at any time with or without cause.

b. Employee Acknowledgment

To prevent claims by employees that they were not given a copy of, or have never seen, the employee handbook (which, ironically, can prevent enforcing the disclaimer against the employee, yet not the policies against the employee), each employee should acknowledge that he or she received a copy of the handbook and understands that it does not create a contract of any kind. Such an acknowledgment could read as follows:

I acknowledge my receipt of the [the Company’s] Employee Handbook. I understand that this Employee Handbook is intended to provide information regarding [the Company’s] employment practices and policies, and that this Handbook and the practices and policies it contains, except for the policy of at-will employment, are subject to change at any time, with or without notice, at [the Company’s] sole and absolute discretion. This Handbook does not constitute a contract or obligation on the part of [the Company], and does not guarantee my employment for any specific duration.

I also acknowledge that the employment relationship between [the Company] and myself is employment-at-will so that both [the Company] and I remain free to choose to end our work relationship at any time, for any reason, with or without notice. No supervisor, manager, employee, or other representative of [the Company], other than the [the Company’s] president, has authority to make any promise or commitment contrary to the foregoing, or to enter into any agreement with me for employment for any specified duration. Any such agreement entered into by the president of [the Company] must be in writing.

I have read and understand the above statements, and I understand that it is my responsibility to read and comply with the policies contained in this handbook and any revisions made to it.

Date:
Employee Signature:

Employee Name: (typed or printed)

c. Workplace Harassment Policy and Complaint Procedure

A written policy prohibiting harassment of any employee because of the employee’s sex, race, age, disability, religion, national origin, or other protected category, and containing a complaint procedure, is essential for employers seeking to reduce harassment claims. Although not a legal requirement, an employer’s policy and procedure for dealing with sexual harassment is a significant factor in determining the extent of an employer’s liability for the harassment of one of its employees. A pair of U.S. Supreme Court decisions in 1999 affirm that an employer may establish a defense against a hostile environment harassment claim based upon the conduct of a manager only if it can show that it acted reasonably to prevent and promptly correct any harassing conduct, and that the employee unreasonably failed to take advantage of opportunities available to correct or otherwise avoid the problem, such as an anti-harassment policy.

In light of the #MeToo movement, employers should revisit their sexual harassment policy to ensure compliance with rapidly changing state and federal law, including increased training obligations and notice requirements. At a minimum, a harassment policy, including a sexual harassment policy, should state in strong terms that harassment in any form is against company policy and will not be tolerated; set forth a definition of harassment along with illustrative examples of prohibited conduct; and set forth a user-friendly complaint and investigation procedure by which employees are encouraged to report harassment to neutral company officials, who will fully investigate the matter and take immediate corrective action if appropriate. The policy should also contain an assurance that no employee will be penalized in any manner for reporting harassment or utilizing the complaint procedure. A sample Prohibition of Harassment Policy can be found in Appendix E of this guide.

D. Arbitration Agreements

Even if the staffing firm has an express employment agreement with its employees, it would be wise to consider a separate agreement requiring that all disputes arising out of employment be submitted to binding arbitration. It should be noted, however, that an employer cannot rely upon an arbitration agreement to prevent an employee from filing a charge with the Equal Employment Opportunity Commission. Moreover, pursuant to a 2002 decision of the U.S. Supreme Court, an arbitration agreement cannot serve to bar the EEOC from pursuing victim-specific relief, such as back pay, reinstatement, and damages, in court. A form of an arbitration agreement is reproduced in Appendix E.

According to a Supreme Court decision, employers may require arbitration of employment-related disputes. The court restated its support of the Federal Arbitration Act’s strong federal policy favoring arbitration when the parties have a valid arbitration agreement, and specifically pointed out the benefits of arbitration in the employment context.

Determining what constitutes a valid arbitration agreement continues to be the focus of litigation by employees seeking to avoid arbitration. For example, a Supreme Court decision in 2000 opened a door to attacking the enforceability of arbitration agreements based on the allocation of arbitration costs in the agreement. The Court held that “large arbitration costs” could preclude a litigant from “effectively vindicating” statutory rights through arbitration, thereby making the agreement invalid. Some courts have adopted a case-by-case approach to determining enforceability, analyzing factors such as the claimant’s ability to pay arbitration fees and costs, the expected difference in cost between litigation and arbitration, the bargaining power between the parties, procedures that favor the employer, and any limits placed on employees’ rights and remedies. In 2013, the Supreme Court clarified that the fact that the cost of proving a statutory remedy may exceed the possible benefit does not constitute the elimination of the right to pursue that remedy. Employers should try to ensure that arbitration agreements are fair to the employee. For example, the employer should cover the costs of the arbitration and provide the employee with clear rules governing the arbitration process, such as those provided by the American Arbitration Association’s Rules for the Resolution of Employment Disputes.

The law in this area has been in a state of flux, but the Supreme Court created some certainty in this area in 2010 in Stolt-Nielsen v. AnimalFeeds International Corp. The Supreme Court reaffirmed that an arbitration agreement is a contract of consent, and not coercion, the parties are free to structure their arbitration agreements as they see fit, and an agreement that is silent on the availability of class action procedures cannot be construed to allow class-wide claims in arbitration. However, in 2013, in Oxford Health Plans LLC v. Sutter, the Supreme Court agreed that the arbitrator should decide whether a contract authorizes class arbitration. The Court held that when an arbitrator determines that the parties to an arbitration intended to authorize class-wide arbitration, that determination survives judicial review as long as the arbitrator was arguably construing the contract—even if that interpretation was incorrect. If there is any doubt as to whether class arbitration is permitted, one might avoid having the arbitrator decide the issue by arguing that the availability of class arbitration poses a question of arbitrability. The Court in Oxford stated that questions of arbitrability are “gateway matters” that are presumptively for the courts to decide. This is important to employers, since class-wide arbitration does not involve the same legal protections that are afforded during class litigation in court (e.g., ability to appeal). Thereafter, on May 21, 2018, a divided Supreme Court confirmed in Epic Systems Corp. v. Lewis that class action waivers in mandatory employment arbitration agreements are enforceable under the Federal Arbitration Act.

1. Advantages of Arbitration

Arbitration of disputes may have several advantages over traditional court litigation. The primary advantages involve cost and speed of resolution. Because arbitration proceeds much more quickly than court litigation and usually provides a more limited opportunity for discovery (e.g., depositions, production of documents, interrogatories), it can result in a substantial savings in legal fees, costs, and resources. Arbitrators also may not have the authority to award punitive damages in some states, and they often do not award attorneys’ fees to the prevailing party. Another advantage of arbitration is that it is more informal and provides more privacy to the parties than court litigation or administrative proceedings. Private resolution of alleged equal employment opportunity violations also avoids the risk of being viewed by local enforcement agencies as a repeat offender. Arbitrators are less likely to be swayed by sympathy and prejudice than would a jury.

A possible (but so far untested) advantage to having arbitration agreements with temporary employees is that they may be written to require that disputes with clients also must be submitted to arbitration. This may reduce the client’s costs and spare it the embarrassment of a public court proceeding.

2. Disadvantages of Arbitration

Arbitration has several disadvantages that need to be considered. Arbitrators usually are not lawyers and may be less likely to follow prevailing law and compelling legal arguments than to reach a decision based on overall “fairness.” In particular, arbitrators may be less receptive to technical procedural arguments that may be available to the employer, such as timely filing and statute of limitations issues. The speed with which an arbitrated matter is resolved and the resultant cost depend to a large degree on the individual arbitrator’s schedule and case management skills. Arbitrators also are more likely to give the employee some relief rather than nothing at all, and to reach a compromise verdict in close cases. Other disadvantages are that arbitrators generally do not follow traditional evidentiary rules and are more inclined to allow any type of proof into evidence; they are not required to state the reasons for their decision; there is usually no opportunity to dismiss claims by motion in arbitration, and an arbitrator rarely will dismiss a case prior to hearing; and the grounds for appealing an arbitrator’s decision are extremely narrow. Tip 48

Tip 48—Arbitration Agreements

The arbitration agreement should be a separate document signed by the employee and the company. It is often included in a job application form. Inclusion of an arbitration clause in the employee handbook should be avoided because it may not be enforceable. Conversely, if the employer seeks to enforce a handbook arbitration provision, that action could be construed as evidence that other provisions of the handbook create enforceable contractual obligations as well.

The enforceability of mandatory arbitration agreements in the employment context remains controversial. Employers who wish to explore using arbitration should consult with employment counsel to ensure that the specific provisions of the arbitration agreement are fair and reasonable to both sides, and that the agreement to arbitrate is enforceable.

5

Immigration Reform and Control Act

Until the enactment of the Immigration Reform and Control Act of 1986, employers could employ “undocumented” or “unauthorized” aliens without legal consequence. Many observers believed that the availability of work for aliens encouraged illegal immigration to the United States. Meanwhile, unemployment among U.S. citizens remained high.

Congress responded by enacting IRCA, which was signed into law by President Reagan on Nov. 7, 1986. Under IRCA, employers are prohibited from hiring anyone who is not authorized to work in the U.S. IRCA also prohibits employers from refusing to hire or from discharging anyone who is authorized to work based on national origin or, with respect to citizens, permanent residents, refugees, and asylees, citizenship status. In early 2003, in conjunction with the creation of the U.S. Department of Homeland Security, the administration and enforcement of IRCA were transferred from the former Immigration and Naturalization Service to two DHS components, U.S. Citizenship and Immigration Services and U.S. Immigration & Customs Enforcement. The U.S. Department of Justice’s Civil Rights Division continues to be responsible over citizenship status discrimination and other related discriminatory practices, though the responsible sub-office recently changed its name from the Office of Special Counsel for Immigration-Related Unfair Employment Practices to the Immigrant and Employee Rights Section (“IER”). The IER maintains a database of Technical Assistance Letters (available at https://www.justice.gov/crt/technical-assistance-letters) by which it responds to written requests for technical assistance about the anti-discrimination provision it oversees.

In order for employers to determine who is authorized to work in the U.S., without engaging in unlawful discriminatory practices, IRCA mandates employers to examine certain documents from employees and complete a form created specifically for complying with IRCA, called the Form I-9. Tip 49

Tip 49—Amendments

From time to time, the USCIS will change the documents that are acceptable to comply with the Form I-9. Staffing firms should monitor the issuance of any new rules and any revised Form I-9.

These procedures impose additional burdens on employers, and some employers may be tempted to ignore IRCA. However, there may be substantial penalties for violations. Therefore, it would be unwise for staffing companies not to comply with IRCA.

This chapter explains the key provisions of IRCA, with an emphasis on provisions that are especially relevant to staffing firms. Tip 50

Tip 50—Handbook for Employers

USCIS continues to publish a “Handbook for Employers” that describes IRCA’s requirements, the Form I-9, and compliance procedures. Copies of the handbook can be obtained from the website maintained by USCIS (uscis.gov) at https://www.uscis.gov/i-9-central/handbook-employers-m-274.

A. Employers Cannot Hire Unauthorized Workers

1. Effective Date

A staffing company may not lawfully hire an individual whom it knows or should know is not authorized to work in the U.S., nor may it continue to employ an individual hired after Nov. 6, 1986, upon learning that the employee is not authorized to work in the U.S.

2. Unauthorized Aliens

Individuals who have entered the U.S. unlawfully or have overstayed their visas are not authorized to work in the U.S. unless they have been granted employment authorization by USCIS. In addition, some foreign nationals who have legally entered the U.S. (e.g., tourists and exchange students) may lack work authorization or possess only limited authorization to work in this country for a particular employer.

B. Employers Must Verify That Employees Are Authorized to Work

In order to determine whether an employee is authorized to work, staffing firms must follow verification procedures specified by IRCA for all employees hired after Nov. 6, 1986, including U.S. citizens and nationals. IRCA applies to both employees hired for temporary assignments and those hired for regular positions with the staffing firm itself.

1. Verification Procedures

a. Pre-Employment Screening

Because some applicants for employment may be unauthorized for employment or may have time-limited employment authorization that could require employer sponsorship for employment-based immigration benefits in the future, staffing companies may wish to ascertain in advance of the hire date whether these conditions exist. Pre-hire screening for work authorization or for the need, at present or in the future, to be sponsored by the employer for a work visa or permit saves time, burden, and expense, and avoids later surprises. The IER, a unit of the U.S. Department of Justice’s Civil Right Division with authority over citizenship status discrimination and other discriminatory practices, has approved a variety of pre-screening questions that will flesh out in advance whether a candidate for employment lacks work authorization or will need employment sponsorship for immigration benefits. One formulation approved by IER states:

1. Are you legally authorized to work in the United States? Yes ___ No ___

2. For purposes of the following question, “sponsorship for an immigration-related employment benefit” means “an H-1B visa petition, an O-1 visa petition, an E-3 visa petition, TN status, and ‘job flexibility benefits’ (also known as I-140 portability or Adjustment of Status portability) for long-delayed adjustment of status applications that have been pending for 180 days or longer.” (Please ask us if you are uncertain whether you may need immigration sponsorship or desire clarification.)

Will you now or in the future require “sponsorship for an immigration-related employment benefit?” Yes ___ No ___

These two questions are proper because the first screens out unauthorized workers and the second, which applies only to individuals holding temporary visa status, does not trigger potential citizenship status discrimination.

b. Employer Must Decide Whether to Use Paper or Electronic I-9s

Employers may complete I-9s in paper or electronic formats. If a staffing firm decides to use a paper format, it is recommended to use the fillable PDF, available on the USCIS website (https://www.uscis.gov/i-9), which contains error- and omission-prevention technology. This hybrid paper fillable PDF must still be printed and signed as appropriate.

USCIS regulations allow for electronic signature and storage of Form I-9 as long as stringent conditions are met concerning the functionality of the electronic system, including its record-retrieval, indexing, and audit-trail features. Electronic I-9s offer many advantages. Virtually all commercial systems feature error-prevention capability, multi-location access, and reduction of storage space. Many vendors also provide an easy interface with the federal government’s E-Verify program, a web-based tool to cross-check a new hire’s documents against the records of the Social Security Administration and the Department of Homeland Security.

Staffing firms considering whether to use an electronic I-9 system should carefully evaluate the technical features for compliance with USCIS’s detailed specifications for electronic signature and storage of I-9s. For example, some systems reportedly lack an adequate audit trail feature showing each time a particular individual accessed, entered, or deleted data. Without such functionality, federal immigration officials could well allege that the employer failed to maintain I-9s for all employees processed electronically. The staffing firm should consult its IT staff, outside experts, and legal counsel to determine whether particular electronic I-9 vendors’ products comply with USCIS’s requirements.

c. Employee Completes Section 1 of Form I-9

Employers may not require an applicant for employment to complete the I-9 unless and until he or she has accepted an offer of employment. USCIS regulations require that the employer cause each new employee to complete Section 1 of Form I-9 on or before the date of hire. The date of hire means the first day when the employment in exchange for wages or other remuneration begins. The employer should review the I-9 immediately upon completion of Section 1 by the employee and determine that he or she has completed it properly, legibly, and fully, pointing out any errors or omissions at that time for prompt correction. If the employer has assisted the employee in completing Section 1, the employer should so indicate in the Preparer attestation. (Note that, if an employer hires an individual for less than three business days, Section 2 must be completed no later than the hire date. Otherwise, a longer period is allowed for completion of Section 2, as noted below.)

A special option applies to staffing firms. A staffing firm may arrange for the employee to complete Section 1 and for the firm to complete Section 2 of the I-9 when the individual is added to the staffing firm’s placement pool. USCIS explains the procedure in this excerpt from its website:

In the case of a staffing agency, acceptance of an offer and entry into the assignment pool can be considered equivalent to an offer and acceptance of employment, after which Form I-9 may be completed. The agency does not need to delay the verification until the worker actually has accepted a particular assignment. The date the staffing agency should put in Section 2 “Certification” of Form I-9 is the date of acceptance of an offer and entry into the assignment pool.

So, as a practical matter, “time of hire” for I-9 purposes can be the point at which, during the initial application process, the staffing firm determines that the individual is suitable for assignment. Alternatively, the staffing firm may wait until the first placement, treat that as the date of hire, and then follow the standard procedure applicable to other nonstaffing employers. Notwithstanding these two options, USCIS recently reminded employers on its website that they should not leave the form blank while awaiting the employee’s first assignment; employers must choose one of the above two options. The decision of which day to use as the temporary employee’s date of hire will have ramifications throughout the verification process and should be discussed with competent counsel.

Employers must complete Section 2 of the I-9 within three business days of hire. For example, if the employee begins working on Tuesday, the employer must complete Section 2 by Friday.

d. Employer Examines Documents

Employees hired after Nov. 6, 1986, must present acceptable, original documentation of identity and work authorization. The newly hired employee has three days from the date of hire to provide such documentation for inspection by the employer. The employer need not examine the employee’s documents of identity and employment authorization as a forensic document examiner might inspect this documentation but rather as a conscientious person might reasonably look at them. The employer must conclude that the documents relate to the individual presenting them and appear to be genuine.

The Lists of Acceptable Documents can be found on the last page of the instructions to the current Form I-9, which expires on August 31, 2019, and is accessible at https://www.uscis.gov/i-9. All documents proving employment eligibility must be unexpired. Previous versions of Form I-9 may no longer be used. These versions included a wider array of List A documents, including the following, that are no longer acceptable: Certificate of United States Citizenship, Certificate of Naturalization, Unexpired Re-Entry Permit (Form I-327), and Unexpired Refugee Travel Document (Form I-571). Staffing firms should consult with their own legal counsel if they have questions.

i. List A. Documents that provide proof of both identity and employment authorization:

1. U.S. Passport or U.S. Passport Card

2. Permanent Resident Card or Alien Registration Receipt Card (Form I-551) Tip 51

3. Foreign passport that contains a temporary I-551 stamp or temporary I-551 printed notation on a machine-readable immigrant visa

4. Employment Authorization Document that contains a photograph (Form I-766)

5. For a nonimmigrant alien authorized to work for a specific employer because of his or her status:

a.  Foreign passport; and

b.  Form I-94 or Form I-94A that has the following:

(1) The same name as the passport; and

(2) An endorsement of the alien’s nonimmigrant status as long as that period of endorsement has not yet expired and the proposed employment is not in conflict with any restrictions or limitations identified on the form.

6. Passport from the Federated States of Micronesia (FSM) or the Republic of the Marshall Islands (RMI) with Form I-94 or Form I-94A indicating nonimmigrant admission under the Compact of Free Association Between the United States and the FSM or RMI

Tip 51—Form I-551 Without Signatures

On May 1, 2017, USCIS began issuing redesigned cards that no longer display the individual’s signature. However, some cards issued after May 1, 2017, may still display the previous format. Both the previous and new cards will remain valid until the expiration date shown on the card.

ii. List B. Documents that are acceptable only to prove identity:

1. Driver’s license or ID card issued by a state or outlying possession of the United States, provided it contains a photograph or information such as name, date of birth, gender, height, eye color, and address

2. ID card issued by federal, state, or local government agencies or entities, provided it contains a photograph or information such as name, date of birth, gender, height, eye color, and address

3. School ID card with a photograph

4. Voter’s registration card

5. U.S. Military card or draft record

6. Military dependent’s ID card

7. U.S. Coast Guard Merchant Mariner Card

8. Native American tribal document

9. Driver’s license issued by a Canadian government authority

For individuals under age 18 who are unable to present a document listed above, the following are acceptable documents to establish identity only:

10. School record or report card

11. Clinic, doctor, or hospital record

12. Day-care or nursery school record

Parents or legal guardians helping minors (persons under age 18) and employees with disabilities should review the guidelines in the Handbook for Employers: Instructions for Completing Form I-9 (M-274), accessible at https://www.uscis.gov/i-9-central/handbook-employers-m-274, before completing Section 1. Minors and workers with disabilities may use special procedures to prove identity if they cannot present an identity document for Form I-9. The special procedures include (1) the parent or legal guardian completes Section 1 and writes either “minor under age 18” or “special placement,” whichever applies, in the employee signature block; and (2) the employer inserts “minor under age 18” or “special placement” under List B in Section 2.2. The minor’s parent or legal guardian fills in and signs on the Form I-9 the “Preparer/Translator Certification.” The employer writes in Section 2, “Employer Review and Verification,” under List B in the space after the words “Document Identification #,” the words “minor under age 18.”

iii. List C. Documents that are acceptable only to establish employment authorization:

1. A Social Security Account Number card, unless the card includes one of the following restrictions:

a.  NOT VALID FOR EMPLOYMENT

b.  VALID FOR WORK ONLY WITH INS AUTHORIZATION

c.  VALID FOR WORK ONLY WITH DHS AUTHORIZATION

2. Certification of report of birth issued by the Department of State:

a.  Certification of Birth Abroad issued by the Department of State (Form FS-545)

b.  Certification of Report of Birth issued by the Department of State (Form DS-1350)

c.  Consular Report of Birth Abroad (Form FS-240)

3. Original or certified copy of birth certificate issued by a state, county, municipal authority, or territory of the United States bearing an official seal

4. Native American tribal document

5. U.S. Citizen ID Card (Form I-197)

6. Identification Card for Use of Resident Citizen in the United States (Form I-179)

7. Employment authorization document issued by the Department of Homeland Security

If the employee does not have one of the documents in List A (i.e., a document that provides proof of both identity and work authorization), the employee must present one of the documents from List B to establish identity and one of the documents from List C to establish employment eligibility. Documents that establish employment eligibility cannot be accepted to establish identity and vice versa. The one exception to this is a Native American tribal document, which is included on List B and List C. A Native American tribal document may be used for proof of both identity and employment eligibility. Tip 52

Tip 52—Examinations of Documents

Care must be taken in requesting and relying on documents.

A staffing firm should only accept documents that appear genuine and relate to the person presenting them. If a document appears to have been forged or altered or otherwise looks unreliable, it is advisable to require the person to present another form of acceptable documentation. If he or she cannot produce alternative documentation of the individual’s choosing to confirm his or her identity and/or work authorization, the employer should decline to employ the individual. If the person cannot present, within three days, a receipt for appropriate documentation or an actual document that appears genuine, it is unlawful to hire or continue to employ such individual until he or she can comply with the document requirements.

Nonetheless, staffing firms should bear in mind the following direction from the IER website regarding document examination: “Employers should not discriminate against workers during the Form I-9 and E-Verify processes. They should not request more or different documents than are required to establish a worker’s identity and eligibility to work in the United States, tell workers which document(s) to present, or reject documents that appear to be reasonably genuine upon their face because of the worker’s citizenship status or national origin.”

iv. Receipts. If an employee cannot present a necessary document (or documents), the employee may be able to present an acceptable receipt instead of a document from the Lists of Acceptable Documents. Receipts are unacceptable, however, if they show that a person has applied for an initial grant of employment authorization, or for renewal of employment authorization. Employers cannot accept receipts if employment will last less than three days. Receipts are acceptable when completing Form I-9 for a new hire or when reverification is required.

Employees must present receipts within three business days of their first day of employment, or in the case of reverification, by the date that reverification is required, and must present valid replacement documents within the deadlines noted below.

There are three types of acceptable receipts:

1. A receipt showing that the employee has applied to replace a document that was lost, stolen, or damaged. The employee must present the actual document within 90 days from the date of hire.

2. The arrival portion of Form I-94/I-94A with a temporary I-551 stamp and a photograph of the individual. The employee must present the actual Permanent Resident Card (Form I-551) by the expiration date of the temporary I-551 stamp, or, if there is no expiration date, within one year from the date of issue.

3. The departure portion of Form I-94/I-94A with a refugee admission stamp or computer-generated printout of Form I-94 with admission code “RE.” The employee must present an unexpired Employment Authorization Document (Form I-766) or a combination of a List B document and an unrestricted Social Security card within 90 days of the date of hire.  Tip 53

Tip 53—Documentation Required

The staffing firm should not specify the particular document(s) it wishes to examine or require that newly hired employees produce additional or different documents other than those that IRCA requires.

e. Employer Completes Section 2 of Form I-9

As noted above, employers must complete Section 2 within three business days of hire. In completing Section 2, the date of hire must be inserted where indicated. As with Section 1, Section 2 must be completed legibly, fully, and properly, with an immediate review and correction of any errors or omissions. Additional information on completion of the I-9 can be found at USCIS’s website: https://www.uscis.gov/i-9-central/questions-and-answers.

f. Employer Retains Forms I-9

Forms I-9 must be retained for the later of three years, or one year from the date of termination. This is known as the “retention rule.” Thus, Forms I-9 must be retained for a minimum of three years. The I-9s should be maintained in a separate file, not in the individual’s personnel file. The employer should calendar the date of destruction of the I-9, i.e., the date when the employer may lawfully dispose of it. Prompt destruction, assuming no government inspection or litigation has begun, allows employers to eliminate potential liability for paperwork errors that might be discerned from a review of the I-9 forms.

g. Employer Decides Whether to Photocopy the Documents Presented

IRCA permits, but does not require, an employer to copy the documents presented by the employee, provided the copies are filed with the Form I-9. Whether to copy or refrain from copying such documents is a topic that will vary with each employer’s unique circumstances. If you do choose to retain copies of an employee’s presented documents, you must do so for all employees, regardless of actual or perceived national origin or citizenship status, to avoid violating the anti-discrimination laws. Remember to copy both the back and the front of the documents and retain the copies with the Form I-9. A staffing firm should consult with counsel before adopting or changing its policy on this subject. Tip 54

Tip 54—Copies of Documents Required

It might be prudent for staffing firms to make and retain copies of documents presented so that in the event an employee hired on or after Nov. 7, 1986, is in fact ineligible to work, the staffing firm can show that it relied in good faith on apparently genuine documents. Retention of copies might also be helpful as a means of making technical or procedural corrections to the Form I-9 and thus avoid fines for paperwork violations, e.g., filling in a document number based on the number appearing on the copy. On the other hand, a retained copy might reveal, upon later review, that the employer should have discovered that the document was false or fraudulent, e.g., a document that purports to have been issued by the former immigration agency, Immigration and Naturalization Service, after INS had been abolished in 2003.

h. E-Verify

DHS through its component, USCIS, maintains an interactive database known as E-Verify containing records generated by USCIS, the State Department, and the Social Security Administration. ICE encourages employers to enroll voluntarily in E-Verify in order to make it harder for unauthorized workers to gain employment.

Aside from voluntary enrollment, the Federal Acquisition Regulations require certain federal contractors to use E-Verify. Similarly, some states, such as Arizona, also require firms doing business in the state to enroll in E-Verify—a requirement that has been upheld by the U.S. Supreme Court. Additionally, employers employing foreign students may also be required to enroll to benefit from STEM extensions for these foreign students.

E-Verify is not a substitute for I-9 employment verification. It is an added check to verify eligibility for employment. With two exceptions, E-Verify may only be used to confirm the employment authorization of new employees (i.e., those hired after the employer has enrolled and gained access to the DHS database). Two exceptions that permit the verification of current employees are:

1. Federal contractors must use E-Verify to confirm employment eligibility of current employees who are assigned to a particular federal contract containing a mandatory E-Verify provision; and

2. Employers who receive from a current employee new identifying information that is different from the information previously provided in Section 1 of Form I-9, e.g., a different name, Social Security number, date of birth, or status attestation, must run an E-Verify query.

Enrollment in E-Verify begins when an employer executes a memorandum of understanding (MOU) with DHS. Various versions of the MOU are accessible at https://www.e-verify.gov/sites/default/files/everify/memos/MOUforEVerifyEmployer.pdf. In situations where an employer voluntarily enrolls in E-Verify, the enrollment may be limited to a single work site. Some employers may want to consider this option because the enrolled work site can then serve as a pilot location enabling the employer to learn whether the staff and resource demands of E-Verify are warranted in light of its anticipated benefits.

There are advantages and disadvantages in using E-Verify. The most prominent benefit is an affirmative defense against a charge of employing unauthorized workers. Nonetheless, the experts agree that E-Verify is still plagued by identity fraud. The government continues to enhance the system, including entering into agreements with various states to compare an individual’s presented identity against his or her driver’s license. Further, the use of E-Verify requires constant monitoring to ensure information is and remains valid. Nonetheless, many companies with whom staffing agencies contract for staffing services require the staffing agencies to use E-Verify. Staffing agencies should be mindful of the benefits and drawbacks associated with E-Verify when entering into such agreements.

E-Verify changes the I-9 process in certain ways. It imposes a “photo matching” obligation. In particular, the employer must compare the document of identity and/or employment authorization provided by the employee to the document shown on the E-Verify screen. Photo matching is automatically activated if an employee has presented with his or her Form I-9 any of the following documents:

■   I-551 (Permanent Resident Card)

■   Form I-766 (Employment Authorization Document)

■   U.S. passport or passport card

If an employee presents any of these documents as the I-9 verification document, the employer must make a copy of that document and keep it on file with Form I-9 (even if the employer otherwise has a policy of not copying documents of identity and employment eligibility when completing an I-9).

E-Verify will either confirm employment eligibility or issue a tentative nonconfirmation (TNC) notice generated by SSA and/or DHS indicating a mismatch between the information provided by the employee and the information contained in the records of the agency (SSA and/or DHS) issuing the TNC. The employer must provide a copy of the TNC to the employee who then must decide whether or not to contest the TNC. If the individual declines to contest it, he or she must be terminated immediately. If the individual contests the TNC, he or she has eight federal work days within which to appear at an SSA office or contact a DHS office to resolve the mismatch. During this period, the employer must continue to employ the individual and accord all typical employee benefits. Ultimately, E-Verify will issue an employment authorization notification or a final nonconfirmation (requiring immediate termination). Employers can terminate an individual based on a final non-confirmation without civil or criminal liability. Failure to notify USCIS of continued employment will create a rebuttable presumption that the employer employed the individual with knowledge that the person was unauthorized for employment.

2. Responsibility for Compliance in the Staffing Industry

a. Contract Labor

USCIS’s IRCA regulations adopt the definition of “employer” recommended by ASA. The regulations provide that in the case of contract labor or services, the contractor, and not the person using the contract labor or services, is the employer. As recognized in the USCIS Handbook for Employers (Form M-274), an agreement between a staffing firm and a client for the provision of temporary employees is an example of a contract labor arrangement. Therefore, a staffing firm, as the contractor, must comply with IRCA with respect to all of its temporary employees, while its clients have no responsibility to verify the employment status of temporary employees.

b. Agents

USCIS regulations permit an agent or anyone acting directly or indirectly in the employer’s interest to fulfill the verification procedures. Therefore, if a staffing firm receives a request for temporary services from a client located far from the staffing firm’s office, the staffing firm may designate an agent to verify the employee’s identity and work authorization on its behalf. However, liability remains with the staffing firm for any failure of a third party to comply with the verification requirements.

c. Recruiters and Referrers for a Fee

A 1991 amendment to IRCA relieves “recruiters and referrers for a fee” (i.e., permanent placement agencies) from complying with I-9 verification and record-keeping requirements, except for recruiting and referring agricultural workers for whom they must still satisfy these requirements. This amendment reflects the fact that permanent placement agencies are not the employers of the candidates they recruit or refer. Note, however, that recruiters and referrers for a fee are still precluded from knowingly referring unauthorized aliens.

On the other hand, because a staffing firm supplying temporary employees, not permanent placement candidates, is the employer, staffing firms providing temporary employees must still comply with the verification procedures and completion of Forms I-9. In specific instances where a staffing firm is acting as a “recruiter or referrer for a fee” on a retainer or contingency basis, such as in a situation where the staffing firm recruits or refers a candidate to another company for a permanent placement, a Form I-9 need not be completed by the referring party. Any staffing firm that has acted as a “recruiter or referrer for a fee” in the past must retain any previously completed Forms I-9 for the required duration under the retention rule.

3. Covered Employees

a. Employees Hired After Nov. 6, 1986

Employers must complete the verification procedures within three days after commencement of employment for all employees hired after Nov. 6, 1986. Under USCIS regulations, an employer will not be deemed to have hired an individual for employment (and thus need not complete a new I-9) if “the individual is continuing in his or her employment and has a reasonable expectation of employment at all times.” Tip 55

Tip 55—Exceptions From the Definition of ‘Hire’ and the Duty to Prepare a New I-9

Whether the individual had a reasonable expectation of employment will depend on the facts in a given case.

USCIS offers many questions for employers to consider in determining whether an individual should be treated as not having been hired anew to trigger the need for a new I-9. The list of questions can be found on the USCIS website at https://www.uscis.gov/i-9-central/complete-correct-form-i-9/complete-section-1-employee-information-and-verification/continuing-employment.uscis.gov/sites/default/files/files/form/m-274.pdf

b. Employees Hired Before Nov. 7, 1986

IRCA provides that employers need not verify the work authorization of employees continuously in their employ since before Nov. 7, 1986 (“grandfathered employees”). Nor must employers complete the verification procedures for employees hired before Nov. 7, 1986, who return to work after Nov. 6, 1986, following a temporary leave of absence, approved by the employer, if there was a reasonable expectation of employment at all times.

If an employee initially hired before Nov. 7, 1986, is terminated (i.e., the staffing firm decides not to send the employee on any further assignments), the employer must complete the verification procedures if such employee is rehired after Nov. 6, 1986. Tip 56

Tip 56—IRCA Compliance

In order to ensure compliance with IRCA, if an employee has had a significant break in temporary assignments, employers should reverify employment eligibility by completing a new Form I-9 or updating the form already on file.

4. Time for Compliance for Temporary Employees

Because of the practical difficulties imposed if staffing firms were required to wait until after the commencement of employment (i.e., when the employee is on the payroll), USCIS, as noted above, allows the staffing firm to verify an employee’s work eligibility upon the acceptance of an offer of employment, regardless of whether the employee will immediately commence employment. Thus, as noted above, after a staffing firm has invited an applicant to be available for temporary work and the applicant has accepted and been added to the assignment pool, the staffing firm may complete the Section 2 verification requirements at that time. Tip 57

Tip 57—Applicants

Because IRCA requires employers to examine certain documents that may reveal the person’s age, national origin, or other factors that cannot be taken into account in making employment decisions, employers should not have the applicant complete the Form I-9 at the same time the application form is completed (usually before any interview, testing, etc.). To avoid the inference that the I-9 data were taken into account in making the employment decision, the applicant should not be asked to complete Form I-9 until after a bona fide offer of employment is made and accepted. This generally does not occur until after the applicant has been tested and interviewed by a staff employee (who can ensure that Form I-9 is properly completed).

Staffing agencies seeking to facilitate the verification of new temporary employees should discuss best practices with a competent attorney to properly avoid claims of discriminatory screening.

5. Repeated Verification (Reverification)

In some circumstances an employer may need to reverify an employee’s work authorization. Reverification will be required if the individual attests in Section 1 that he or she is an alien authorized to work for a limited period of time, except certain asylees and refugees presenting documents other than employment authorizations may not need to be reverified. The employer’s duty of reverification also applies to lawful permanent residents who present a temporary I-551 stamp or printed notation on a machine-readable immigrant visa in their passport as a List A document. If, however, a lawful permanent resident presents an alien resident card with a two or 10-year expiration date in order to satisfy the List A requirement, the duty to reverify employment eligibility does not apply.

a. Limited Work Authorization

If an employee’s work authorization is for a limited duration (e.g., some USCIS documents authorize an alien to remain in the U.S. for a fixed period of time), the staffing firm must repeat the verification process no later than the date on which the authorization expires. Employers must therefore create a calendar system to provide early warning to the firm and the affected employee that employment eligibility must be reverified on or before the date of expiration of employment authorization (or the expiration date shown on the temporary I-551 stamp or immigrant-visa notation in the passport). USCIS may take up to 120 days or longer to issue a renewed employment authorization. Thus, the docket system should allow for adequate time to renew employment eligibility. Most electronic verification systems will include an automated process for this reverification. If the person lacks employment authorization on the date of expiration, he or she must be terminated or placed on leave of absence and not permitted to render on-site or off-site services to the employer unless and until the individual presents a new form of unexpired employment authorization acceptable under List A or Lists B and C.

If the employee’s work authorization is renewed by USCIS, the employer must update the Form I-9 to reflect the current authorization. Section 3 of Form I-9 is designed for this purpose. If Section 3 has been used, an employer may insert the name of the employee in Section 1 of a new Form I-9 and complete Section 3 on the new version even if the form has not been used. If the employee does not present documentation of currently valid work authorization, the employer may not lawfully continue the individual in its employ. Tip 58

Tip 58—Work Authorization for Limited Duration

For employees with work authorization for a limited duration, a staffing firm may consider noting on such an employee’s personnel card that his or her employment authorization is for a limited time and the date of expiration. It would be prudent for the staffing firm to routinely check this information before assigning any temporary employee, rather than run the risk of inadvertently violating IRCA.

b. Rehires

A staffing firm may rehire an employee within three years and complete a new Section 3 or complete a new Form I-9. However, upon each rehire, the employer must inspect the Form I-9 and determine that the form relates to the individual and that the individual is still authorized to work. The benefits and downsides to completing a new Section 3 should be discussed with competent counsel.

6. Enforcement

ICE is responsible for the enforcement of the I-9 requirements relating to paperwork compliance and to the law prohibiting the employment of individuals whom the employer knows or should know lack employment authorization. ICE conducts lead-based and random inspections of employers to ensure compliance with IRCA. ICE also focuses on critical infrastructure. Employers will receive at least three days’ notice prior to inspection of its Forms I-9. No subpoena or warrant is required for such inspection. In addition, ICE may inspect I-9s and other employer records without advance notice if it obtains a warrant, based on probable cause, for entry onto the premises of suspected violators. Any employer that receives a Notice of Inspection should consult with competent counsel.

7. Penalties

a. Prohibition Against Knowingly Hiring, Continuing to Employ, Recruiting, or Referring Unauthorized Aliens

If, after November 2, 2015, a staffing firm is found to have knowingly hired, continued to employ, or recruited or referred for a fee an alien whom the staffing firm knows to be unauthorized, the staffing firm may be required to (1) cease and desist from such violations, (2) comply with IRCA, and (3) take remedial action. In addition, a staffing firm may be subject to a penalty of not less than $559 and not more than $4,473 for each unauthorized alien with respect to whom the offense occurred on or after November 2, 2015; not less than $4,473 and not more than $11,181 for each unauthorized alien with respect to whom the second offense occurred on or after November 2, 2015; and not less than $6,709 and not exceeding $22,363 for each unauthorized alien with respect to whom the third or subsequent offense occurred on or after November 2, 2015. Penalties will be moderately lower for offenses that occurred between March 27, 2008 and before November 2, 2015, and even lower for offenses that occurred before March 27, 2008. Note that these penalty figures are adjusted annually for inflation.

When multiple violations are found in a single proceeding, a penalty may be levied with respect to each violation. However, it will be considered only a single violation for purposes of determining the level of penalty that may be imposed for a subsequent violation.

A staffing firm that engages in a pattern or practice of unlawfully hiring or continuing to employ unauthorized aliens may be subject to criminal penalties, including fines of not more than $3,000 for each unauthorized worker, or imprisonment for not more than six months for the entire pattern or practice, or both.

If a staffing firm is composed of distinct, physically separated facilities, each facility will be considered a separate employer for the purpose of determining how many prior orders, if any, an employer has been subject to, so long as each facility is responsible for hiring its own personnel without reference to the hiring practices of another facility, and not under the control or common control of another facility.

b. Employment Verification System

A staffing firm that fails to properly complete, retain, or present for inspection the Forms I-9 as mandated by IRCA may be required to pay a penalty in an amount of not less than $224 and not more than $2,236 for each employee for whom the verification procedures were not completed after November 2, 2015, even if the employee was a citizen or otherwise authorized to work in the U.S. Penalties will be moderately lower for offenses that occurred between September 29, 1999, and November 2, 2015, and even lower for offenses that occurred before September 29, 1999. Note that these penalty figures are adjusted annually for inflation. IRCA provides that the following factors will be considered when determining the amount of the penalty: size of the employer, good faith of the employer to comply, seriousness of the violation, whether the employee was an unauthorized alien, and the employer’s history of previous violations. An employer can be fined more than once for the same paperwork violation if it fails to make necessary corrections within a “reasonable time.” In one case, 60 days was considered “more than reasonable.” Tip 59

Tip 59—Reverification, Temporary Employees

Staffing firms should not be tempted to neglect the IRCA requirements because of administrative inconvenience. Staffing firms must comply diligently with IRCA because of the large numbers of employees they hire, and because such employers are likely targets for compliance audits. Penalties imposed for violating IRCA, particularly verification requirements, may be substantial. Also, companies once found to be in violation of IRCA are likely targets for additional audits, with their attendant costs, inconvenience, and risk of liability.

c. Effective Date of Penalties

After initial education and warning periods, IRCA’s penalty provisions became fully applicable on June 1, 1988.

d. Enforcement Proceedings

ICE has been extremely active in imposing penalties against employers for violation of IRCA’s employer-sanctions provisions. A comprehensive listing of ICE’s work site enforcement activities is accessible at ice.gov under “News Releases,” using the topic filter, “worksite enforcement.” Tip 60

Tip 60—Investigations of Staffing Firms

Employers that are contacted by ICE and presented with a Notice of Inspection are advised to consult counsel experienced in IRCA matters as quickly as possible. ICE may be willing to extend the three-day response period provided in the USCIS regulations, audit I-9s before their handover to ICE, propose corrections, and negotiate the intended fines, but the attorney must be engaged as quickly as possible.

C. IRCA’s Antidiscrimination Provisions

IRCA’s antidiscrimination provisions protect U.S. citizens and certain work-authorized individuals (lawful permanent residents, refugees, and asylees) from employment discrimination based upon citizenship or immigration status. They are enforced by the IER, which also enforces IRCA’s protection of all work-authorized individuals from national origin discrimination, unfair documentary practices relating to the employment eligibility verification process, and retaliation. The prohibited unfair documentary practices, also known as “document abuse” violations, involve acts of an employer in specifying which documents it will accept for purposes of I-9 verification or demanding more or different documents than minimally required of an employee when completing Section 1 of the I-9. The IER’s jurisdiction to enforce violations of the protections against national origin discrimination extends to employers with four to 14 employees. The Equal Employment Opportunity Commission has jurisdiction to enforce the national origin protections as to businesses employing 15 or more workers.

1. National Origin Discrimination

IRCA prohibits discrimination on the basis of an individual’s national origin. National origin discrimination occurs when the individual’s place of birth, country of origin, ethnicity, ancestry, native language, accent, or the perception that they look or sound “foreign” is made the basis for an employment decision. National origin discrimination is also prohibited under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991. (See Chapter 1.) However, the coverage and remedies afforded by IRCA against discrimination do not duplicate those of Title VII.

a. Coverage

Title VII applies only to employers who employ 15 or more employees in any 20-week period, while IRCA’s prohibition against national origin discrimination only applies to employers who employ between four and 14 employees.

b. Scope of Protection

IRCA’s protection is narrower than that of Title VII. IRCA only prohibits an employer from making decisions regarding hiring, recruiting, referring for a fee, or dismissal on the basis of national origin. Title VII, on the other hand, prohibits discrimination on the basis of national origin with respect to all employment decisions. (See Chapter 1.)

c. Incorrectly Filed Charges

The Equal Employment Opportunity Commission, which handles Title VII cases, and the IER, which handles IRCA discrimination cases, have reached an agreement to prevent the loss of rights if a discrimination complaint is mistakenly filed with the wrong agency. Under the agreement, each agency will refer incorrectly filed charges to the correct agency, and the date of filing with the first agency will be used for purposes of statutory time limits. However, an employee may not file a charge with both the EEOC under Title VII and the IER under IRCA for the same allegedly unlawful practice.

2. Citizenship Status Discrimination

a. Coverage

IRCA also prohibits employers of four or more employees from discriminating against individuals with respect to hiring or discharging because of their citizenship or noncitizen status. No other federal law prohibits citizenship discrimination.

b. Scope of Protection

IRCA prohibits discrimination against protected individuals. A protected individual means an individual who is a citizen or national of the U.S., an alien who is lawfully admitted for permanent residence, or an alien who is admitted as a refugee or is granted asylum.

c. Declaration of Intention

As amended, IRCA does not require an alien to have completed a written declaration of intention of citizenship prior to filing an antidiscrimination complaint.

3. Preference for Nationals and Citizens

IRCA permits employers to prefer to hire a U.S. citizen or national over a legal alien if the individuals are equally qualified. However, a Justice Department administrative law judge has ruled unlawful a policy of hiring noncitizens only if no qualified citizen applicant is available.

Employers covered by Title VII (i.e., employers of 15 or more employees) should exercise caution if availing themselves of IRCA’s citizen preference exception. With respect to national origin discrimination, Title VII does not permit a preference for U.S. nationals over other nationals, even when candidates are equally qualified. Furthermore, the EEOC takes the position that citizenship preferences may also violate Title VII if they have either the purpose or effect of discriminating against individuals on the basis of national origin. (See EEOC Policy Statement below.)

4. Retaliation or Intimidation Prohibited

Employers may not intimidate, threaten, coerce, or retaliate against any individual who intends to or has in fact pursued his or her rights under IRCA’s antidiscrimination provisions; because the individual has testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under the act; or to interfere with any right or privilege afforded by the unfair immigration-related employment provisions of the act. An individual who has been intimidated, threatened, coerced, or retaliated against shall be considered to have been discriminated against.

5. EEOC Policy Statements

The EEOC has cautioned employers not to mistakenly conclude that they can avoid violating IRCA by ceasing to employ individuals of a particular national origin. IRCA does not sanction less than full equal opportunity for employees of all ethnic backgrounds. In December 2002, the EEOC issued an updated guidance, in the form of a new Compliance Manual Section, on the prohibition against national origin discrimination under Title VII. The EEOC has stated that particular attention should be paid to the following employment practices, which may violate Title VII:

a. Refusal to Hire

It is unlawful to refuse to hire an individual because of the individual’s, or his or her ancestor’s, place of origin or because the individual has the physical, cultural, or linguistic characteristics of a particular national origin group. It is also unlawful to refuse to hire an individual because of the individual’s marriage to or association with any member of a national origin group, or because the individual’s name or spouse’s name is associated with a particular national origin. Tip 61

Tip 61—Title VII

Title VII applies to staffing firms with respect to referrals and the treatment of employees on the job. Thus, a staffing firm must not honor a client request to exclude employees of a particular national origin or ethnic group (e.g., Arab Americans).

b. Accent

It is unlawful to discriminate against an individual because of the individual’s accent or manner of speaking unless the employer can show a legitimate, nondiscriminatory reason for its action. When an employer claims that the individual’s accent interferes with job performance, the EEOC will carefully investigate the kinds of communication required by the job and the individual’s ability to engage in those communications successfully.

c. Harassment

Harassment of employees on the basis of their national origin is unlawful under Title VII. Ethnic slurs and other verbal or physical conduct relating to an individual’s national origin constitute harassment when this conduct has the purpose or effect of creating an intimidating, hostile, or offensive work environment; has the purpose or effect of unreasonably interfering with an individual’s work performance; or otherwise adversely affects an individual’s employment opportunities.

d. Speak-English-Only Rules

Rules that require employees to speak only English at all times are presumptively unlawful because they unduly burden individuals whose primary language is one other than English and tend to create a hostile or discriminatory work environment based on national origin. An employer may have a more limited rule requiring that employees speak only in English at certain times, if the employer can show that the rule is justified by business necessity.

e. Height or Weight Requirements

Height or weight requirements are unlawful if they disproportionately disqualify individuals of a particular national origin and are not related to successful job performance.

f. English Fluency Requirements

English fluency requirements may violate Title VII if they are adopted for discriminatory reasons or are not applied equally to all employees or applicants. Such requirements may also be unlawful if they disproportionately disqualify individuals of a particular national origin and are not shown to be job-related.

g. Aptitude or Other Employment Tests

Under existing law and applicable guidelines, aptitude or other employment tests may violate Title VII if they are not applied equally to all applicants, or if they disproportionately disqualify applicants of a particular national origin and are not shown to be related to successful job performance.

6. Enforcement of EEO Laws Against Undocumented Workers

The EEOC takes the position that undocumented workers are covered by Title VII (and other federal EEO laws) at least to the extent that such protection does not conflict with IRCA. For example, employers that discriminate unlawfully against undocumented workers may be liable for back pay but would not be required to reinstate a worker not eligible to work in the U.S. Similarly, an employer that paid unauthorized workers less than citizens might be required to pay make- whole back pay under Title VII for the time worked, even though the employment was unlawful under IRCA, and the employer could be fined for employing the worker and required to discharge him or her under IRCA.

7. Local Laws

Some local governments in areas with significant immigrant populations, such as New York City, have become concerned that IRCA provides insufficient protection against discrimination against aliens, and have enacted local laws to further protect immigrants against employment discrimination. It remains for courts to resolve the legality of these local laws, especially where they conflict with IRCA. Tip 62

Tip 62—Local Laws

Staffing firms—especially those in cities with significant immigrant populations—are advised to check with legal counsel to determine if there are any local laws regarding employment discrimination on the basis of alien status or national origin, and, if so, what the laws require.

8. Penalties for Discrimination Under IRCA

A staffing firm may be ordered to cease and desist from unlawful discrimination under the act, to comply with the antidiscrimination provisions, and to hire individuals directly and adversely affected, with or without back pay. In addition, a staffing firm may be required to post notices advising employees of the employer’s obligations, to educate all personnel involved in hiring and complying with the act as to the requirements of the law, and/or to pay a penalty as follows:

■   $461–$3,695 for each individual discriminated against if it received no previous order

■   $3,695–$9,239 for each individual discriminated against if it was previously subject to a single order; distinct facilities of a staffing firm will probably be treated separately for the purpose of determining whether a company has been previously subject to an order

■   $5,543–$18,477 for each individual discriminated against if it was previously subject to more than one order

These penalty figures are adjusted annually for inflation. Attorneys’ fees also may be assessed in favor of any prevailing party other than the U.S. government if the losing party’s argument is “without reasonable foundation in law and fact.”

6

Substance Abuse and Drug Testing in the Workplace

A. Nature of the Problem and Purposes of This Chapter

The existence of drug and alcohol abuse in the workplace is widely recognized as a severe problem for employers. The National Institute on Drug Abuse has reported that between 10% and 23% of all employees abuse drugs on the job, and it concluded that drug abuse is the most common health hazard in the workplace. The financial drain on employers has been measured at over $100 billion annually, including all direct and indirect costs. The adverse consequences of substance abuse in the workplace are myriad:

■   Increased accidents and injuries with resultant increased workers’ compensation claims

■   Increased theft of company or client property

■   Increased absenteeism and tardiness

■   Increased use of and ultimate cost of medical and health benefits

■   Adverse effect on the emotional well-being of employees, their interpersonal relationships, and employee morale

■   Increased risk for injuries to client’s employees or property

■   Increased potential for liability by employers who employ persons with known substance abuse problems

The staffing industry is not immune from increasing concern with and adoption of policies to prevent or cure the problem of substance abuse in the workplace. Indeed, although many staffing firms have little or no interest in testing their employees, an increasing number of companies that test their own employees are beginning to require temporary employees assigned to them to be screened as well.

The primary purpose of this chapter is to provide legal and practical information to those staffing firms that are attempting to respond to client requests for drug testing, or that anticipate receiving such requests in the future.

B. Legal Implications of Drug Testing

1. General

At present, no state or federal statute completely prohibits a private employer from utilizing drug testing to address the problem of substance abuse in the workplace. The implementation of drug testing is therefore not per se illegal.

This does not mean that drug testing presents no legal issues or that employers have no fear of liability if they do drug-test. On the contrary, many states have enacted legislation regulating drug testing, and there are numerous constitutional provisions, statutes, and other legal rights that may be relied upon by employees or applicants who seek to challenge drug testing or decisions based on the results of a drug test. In short, drug testing of employees or applicants presents real risks of potential liability, and it is vital that care be taken to comply with applicable legal provisions and constraints before embarking on a drug-testing program.

Legal challenges to drug and/or alcohol testing are likely to be made on one or more of the following bases: federal and state constitutional provisions; federal and state antidiscrimination laws; state and local drug-testing laws; and state common law claims such as invasion of privacy, defamation, or wrongful discharge.

2. Federal and State Constitutional Provisions

a. Search and Seizure Prohibitions

The Fourth Amendment to the U.S. Constitution prohibits public-sector employers from conducting unreasonable searches and seizures. Public employees have utilized the Fourth Amendment to challenge drug tests on the grounds that they constitute an unreasonable search and seizure.

Crucial point: The Fourth Amendment does not apply to or regulate the conduct of private-sector employers such as a staffing firm. However, because courts confronted with private-sector drug-testing issues are likely to seek general guidance from cases involving the Fourth Amendment, it is helpful for staffing firms to have at least a general familiarity with these cases.

As a general rule, most courts have concluded that a drug-testing program that relies on blood tests or urinalyses does not violate the Fourth Amendment if the program requires that the employer have a reasonable suspicion that the employee is using drugs before requiring him or her to submit to testing. Conversely, a policy of random testing of employees has generally been found to be unreasonable and in violation of the Fourth Amendment. Some courts have created limited exceptions to the “reasonable suspicion” requirement for sensitive positions or where public safety is a legitimate concern. The U.S. Supreme Court has issued two key decisions addressing the constitutionality of drug-testing plans for public employees. In one case, the Court found that post-accident drug and alcohol testing by the Federal Railroad Administration did not violate the Fourth Amendment rights of rail employees, even though the regulations did not require any “individualized” suspicion of drug or alcohol use prior to testing. The government’s compelling public safety interest in ensuring that rail employees are not impaired on the job outweighed the “minimal” intrusion on employee rights.

In another decision, the Court held that drug and alcohol testing of U.S. Customs Service employees who seek sensitive employment positions was reasonable because the agency’s mission involves the interdiction of illegal drugs, and the government’s compelling interest in ensuring that agency employees are drug-free outweighed any privacy interests of the employees.

Many state constitutions have provisions similar to the Fourth Amendment’s prohibitions on unreasonable searches and seizures. Like the Fourth Amendment, most search and seizure provisions in state constitutions apply to governmental activity and therefore restrict the activities of only public-sector employers.

b. Due Process and Equal Protection Challenges

Another possible constitutional challenge to drug testing is for an employee to claim that such testing violates the employee’s right to equal protection of the law and due process of law guaranteed by the Fourteenth Amendment to the Constitution. Like the Fourth Amendment, the due process and equal protection clauses of the Fourteenth Amendment apply only to public employers.

Public employees terminated as a result of a drug test have utilized the Fourteenth Amendment to challenge their termination by claiming that the tests were inaccurate and that they were not afforded an opportunity to contest positive test results. These challenges have been defeated where the public employer confirmed an initial positive test result with a second, more reliable drug test and provided the employee with notice of the charges against him or her and an opportunity for the employee to respond. Tip 63

Tip 63—Fourth Amendment Challenges

While the Fourth and Fourteenth amendments directly apply only to public employers, courts dealing with challenges to drug testing by private-sector employees are likely to be influenced by the reasonable suspicion standard set forth in Fourth Amendment cases and the notions of basic fairness and evenhanded treatment expressed in the due process and equal protection cases. Accordingly, consideration of those standards would be in order for any staffing firm considering developing a drug- testing program.

c. Constitutional Privacy Rights

Another constitutional challenge that may be asserted is that drug tests violate the employee’s constitutional “right to privacy.” The right to privacy implied in the U.S. Constitution protects only against government intrusions and thus does not apply to or govern actions by private employers.

However, the constitutions of at least 14 states—Alaska, Arizona, California, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Montana, New Hampshire, Rhode Island, South Carolina, Washington, Wisconsin—and Puerto Rico contain provisions protecting citizens’ right to be free from unreasonable intrusions into their privacy. Some state courts have held that the state constitutional right to privacy applies to the actions of private employers as well.

In California, courts have held that the state constitution’s right-to-privacy provision applies to private employees, and several trial courts have ordered private employers to cease using random drug tests of employees. However, in an important 1989 decision, the California Court of Appeals held that an employer’s pre-employment test of applicants for drug and alcohol use as a condition of a job offer did not violate the constitution because an employer can reasonably determine that results of a drug test are directly related to job fitness.

3. Federal and State Antidiscrimination Laws

Another source of legal challenges to drug testing may be derived from federal and state antidiscrimination laws, which prohibit employment discrimination.

a. Disability Discrimination Laws

Most states prohibit employers from discriminating against individuals because of their handicap or disability. (See Chapter 1.) Federal law also prohibits discrimination based on a handicap or disability. The Americans With Disabilities Act, enacted in July 1990 and applicable to employers with 15 or more employees, makes it unlawful for a private employer to discriminate against an individual based on that individual’s disability. The ADA not only protects those who are actually and currently disabled under the ADA, but also those individuals who have a record of disability, those who are regarded as being disabled, and those who are known to have a relationship or association with another who is known to have a disability. An employee or applicant “who is currently engaging in the illegal use of drugs” is not protected under the ADA; however, when an employee or applicant is no longer engaging in illegal drug use and is participating in or has participated in a supervised drug rehabilitation program, he or she will be protected under the act. (See Chapter 1, Section A.3.f.) The federal Rehabilitation Act of 1973 also prohibits disability discrimination by federal contractors and subcontractors and recipients of federal financial assistance. (See Chapter 1, Section B.2.)

i. Addiction as a Disability. Users of illegal drugs who have been successfully rehabilitated or who are participating in a supervised rehabilitation program and are no longer using drugs will be protected against discrimination in private employment by both the ADA and the Rehabilitation Act. People who are “erroneously regarded as engaging” in illegal drug use are also covered by both laws, as are alcoholics who are adequately performing their jobs. However, the ADA specifically excludes, and amended the Rehabilitation Act to also exclude from coverage, alcoholics who are engaging in “unsatisfactory performance or behavior,” as well as “any employee or applicant who is currently engaging in the illegal use of drugs.” In many states, an individual who is addicted to drugs or alcohol is considered disabled and is entitled to protection under the disability discrimination laws. The Court of Appeals for the Ninth Circuit has held that an employer violated the ADA when it refused to hire an employee who had previously worked for the employer but had been terminated two years earlier after failing a drug test. When the employee reapplied, he presented evidence that he had been successfully rehabilitated. The court held that the employer’s policy or practice of not rehiring an employee who had previously tested positive for drugs violated the ADA. Recreational or casual users of drugs or alcohol are unlikely to be found “disabled” or protected by either federal or state disability discrimination laws. In addition, many states protect an individual who is “perceived” to be disabled, regardless of whether he or she really is. For instance, the New York State Appellate Division has held that an applicant who was denied employment after testing positive for drug use on a pre-employment drug test could maintain a proceeding under the state’s human rights law as an individual who was “perceived” as being disabled.

A staffing firm should consider state laws against discrimination, as well as the ADA. Most states have laws that protect employees against discrimination on the basis of a disability, and some states specifically include as a protected disability alcoholism, drug addiction, or both.

ii. Disabled Employees Must Be Able to Perform. An employee who is disabled (by drug addiction or otherwise) must be able to perform his or her essential job functions, with or without accommodation, as well as comply with the employer’s policies and rules. (See Chapter 1, Section A.3.f.) As a general proposition, even if an individual is addicted to drugs or alcohol, he or she will not be protected by the disability discrimination laws if he or she is unable to perform satisfactorily the position sought, and that includes performing the essential functions of the job, gaining access to the work site, and following punctuality and attendance rules and other rules relating to employee conduct.

iii. Accommodation. The ADA, the Rehabilitation Act of 1973, and the laws of many states require an employer to make reasonable accommodations for an employee’s disability or handicap, unless doing so would impose undue hardship on the employer. Reasonable accommodations may include leave for treatment, a reduced schedule or alternative schedule related to treatment, etc. In a case interpreting the Rehabilitation Act, a court found that an employee who had undergone treatment for alcoholism was improperly discharged for absenteeism. The employer had considered the employee’s absences before the treatment as well as those after the treatment, which were unrelated to his alcoholism. The court held that by utilizing the employee’s alcohol-induced transgressions as a factor, the employer failed to reasonably accommodate his condition.

In 2002, an employee filed suit against a staffing firm alleging that it had discriminated against the employee on account of his disability. The employee applied for a temporary assignment as a commercial truck driver but tested positive for THC (an indicator of marijuana use). The employee stated that he was HIV positive and was taking various medications, including Marinol or synthetic marijuana. The staffing firm required the employee to provide a medical certification to determine whether he could drive a commercial truck while taking Marinol without posing a direct threat to himself or others. In the meantime the client canceled the temporary staffing order. The court held that the employer had not violated the ADA and that it was within its rights to request the medical certification. In addition, the staffing firm had no control over the cancellation of the order, and there was no evidence that the order was canceled to avoid hiring the employee. Tip 64

Tip 64—Discrimination

If an employee who is addicted to drugs or alcohol engages in misconduct or performs in an unacceptable manner, a staffing firm may impose discipline on that employee consistent with its normal policies. However, when considering what, if any, disciplinary action to take against the addicted employee, the disciplinary action should be based on the employee’s inability to perform the job or to comply with the company’s rules, not the underlying suspected reason (e.g., drug use) for the performance problems. The disability discrimination laws prohibit an employer from treating protected disabled employees differently than other similarly situated employees. Any discipline imposed on an employee with a drug or alcohol problem should be in accordance with company policy and consistent with discipline imposed upon other employees who engage in similar misconduct or suffer from similar performance failures.

b. Other Discrimination Laws

Existing federal and state discrimination laws that prohibit discrimination in employment because of an individual’s race, sex, age, national origin, or religion (see Chapter 1, Sections A and C) may also be used to challenge a drug-testing program. These laws apply to existing employees as well as applicants for employment.

i. Disparate Impact. Under the antidiscrimination laws, employers may not use a drug test that disproportionately excludes minorities or women from consideration for employment, unless that drug test is job-related. (See Chapter 1, Section A.) If a drug test has this type of “disparate impact” on minorities or women, it is likely to be struck down unless the employer can establish that there is a business necessity for the test.

ii. Disparate Treatment. Discrimination claims may also be asserted if an employer decides to drug-test only certain applicants or employees whom it believes are likely to be substance abusers (e.g., only young people, only men, only Hispanics, etc.). A staffing firm is not obligated to drug-test all employees, but it cannot decide which ones to test on the basis of race, sex, age, religion, or national origin. Tip 65

Tip 65—Applicants

If a staffing firm decides to drug-test only certain applicants, it should carefully consider the criteria used to select the applicants to be tested, because the criteria might be challenged as discriminatory. For example, a decision to drug-test based on the applicant’s race, national origin, sex, or age would be impermissible. In addition, a decision to drug-test based on some racially neutral factor (e.g., the applicant lives in the inner city) could be challenged as having a disparate impact on minorities.

On the other hand, it is not necessary to drug-test all employees.

For example, it is lawful to test only those employees who wish to be eligible for a particular assignment or reassignment, or only employees assigned to a particular client, or only those who perform certain sensitive jobs (e.g., handle securities, come in contact with pharmaceutical products, or operate heavy equipment and machinery). The key is not to distinguish among employees based on their race, sex, age, or other protected category.

4. State Common Law Theories

In addition to challenging the legality of drug-testing programs on the basis of constitutional or statutory provisions, employees may assert other claims as well. These claims may include: invasion of privacy, negligence, defamation, intentional infliction of emotional distress, wrongful discharge, and breach of contract. Each of these is discussed below.

a. Invasion of Privacy

Most states have recognized a common law right to personal privacy, such that the unreasonable intrusion into another person’s seclusion or into his or her private affairs may give rise to a claim for damages. Generally, an individual must show that his or her private affairs were unnecessarily publicized or that the employer unlawfully intruded into the individual’s private activities, causing the individual mental shame or suffering.

Drug-testing programs could give rise to invasion of privacy claims in a variety of circumstances. For example, if an individual is required to be physically observed while providing a urine sample, he or she may claim that the test was administered in an unduly intrusive manner and thus constitutes an invasion of privacy. A claim for invasion of privacy may also arise when an individual alleges that simply being required to take the test, regardless of the way in which it is administered, invades his or her right to bodily privacy, particularly if the employer had no reasonable basis to suspect the individual of substance abuse. Finally, because drug tests reveal private health information about an individual, such as whether he or she has diabetes or venereal disease, the tests may be challenged as an invasion of privacy if such information is improperly disseminated to individuals who have no legitimate reason to know.

A Connecticut court permitted an employee to proceed with his claim of invasion of privacy against his employer. The employer discharged the employee and told co-workers and others in the trucking industry that he had failed a drug test. In fact, the employee had passed the drug test, and the court held that publicizing this false information about his drug test could constitute an invasion of his privacy.

Damages for invasion of privacy claims can be substantial. One individual was awarded almost $400,000 after a jury concluded that his privacy was invaded by being forced to take a polygraph test regarding alleged drug use.

Although several state courts have allowed suits for invasion of privacy in the drug-testing context, most have found that the employees in those particular cases failed to show that the manner or reason for the drug test was unreasonable. Another state appellate court held that an employer’s mandatory urinalysis drug-testing program was not an invasion of the employee’s common law right to privacy, because the employee consented to the testing and thereby forfeited his right to privacy in the workplace by remaining on the job after receiving notice that compliance with the test policy was a condition of employment. Similarly, a federal court decision held that a private employer’s requirement for pre-employment drug screening was not an invasion of the applicant’s common law right to privacy because the applicant consented on two occasions to submit to the test.

b. Negligence

Various kinds of negligence claims may be brought against an employer in connection with a drug-testing program. For example, an employee could sue the employer for negligence when a drug test that mistakenly produces a “false-positive” (i.e., it indicates that a person has used drugs when he or she has not) leads to an employee’s discharge or other disciplinary action. Conversely, if a test is negligently administered and produces a “false negative” (i.e., it indicates that an employee has not taken any drugs when he or she really has), the employer may be subject to liability if the employee injures another while working under the influence of drugs. An employer may also be liable for an employee’s injuries to another person or another person’s property if the employer knew that the employee used drugs.

Employers are not alone in facing the prospect of liability for negligence in connection with a drug-testing program. Drug-testing laboratories have been sued for failing to confirm “false-positive” results that in one case caused the employer to discharge an employee and in another case caused the employer to reject an applicant. Tip 66

Tip 66—Choosing a Laboratory

A staffing firm that adopts a drug-testing program will be relying upon the drug-testing laboratory for the accuracy of the results. It is therefore advisable to exercise great care in the selection of a laboratory. Section D.4 of this chapter sets forth suggested criteria for selecting a suitable laboratory.

c. Defamation

Claims for defamation (i.e., libel and slander) generally involve an employee’s assertion that the employer made a false statement to others about the employee, thus injuring the employee’s reputation. Stating that an employee is a substance abuser or that the employee tested positive for drugs would tend to harm the employee’s reputation and may be defamatory.

The need to exercise extreme care to ensure that the results of a drug test are not disseminated to anyone but those who have a genuine need to know is illustrated by two cases. One Texas employer settled a lawsuit by paying one of its former employees $200,000 after the employer circulated a letter—within the company—based on inaccurate test results, stating that the employee was a narcotics user. On the other hand, a South Carolina court held that where an employee—not the employer—disseminated the results of a drug test, the employer was not liable. Tip 67

Tip 67—Defamation

Given the substantial potential liability for employers that accuse employees of substance abuse, it would be advisable for a staffing firm to adopt these precautionary measures:

■   Restrict information regarding the results of drug and alcohol tests to those individuals within the company who need to know (e.g., people who will make the decision to assign, hire, or discharge an individual)

■   Develop and adhere to appropriate procedures for maintaining the confidentiality of the test results

■   Refuse to disclose, either orally or in writing, any allegation of substance abuse or the results of drug and alcohol tests to anyone outside the company, including clients

d. Intentional Infliction of Emotional Distress

To establish a claim of intentional infliction of emotional distress, an individual usually must prove that an employer’s actions were outrageous and beyond the bounds of human decency. In most cases, a termination or suspension of employment is unlikely to be viewed as conduct that is beyond the bounds of human decency.

It is possible that employers may face claims for intentional infliction of emotional distress with regard to drug-testing programs if the test is conducted in an intrusive way or if the results are indiscriminately publicized or used to pressure the employee. An employer was found to have negligently inflicted emotional distress on employees through a drug-testing program that included direct observation of the act of urination.

e. Violation of Public Policy

Courts are increasingly concluding that employers may not discharge employees for reasons that violate public policy. (See Chapter 2, Section A.1.)

Employees discharged for refusing to take a drug test or after testing positive may claim that a drug-testing requirement violates a public policy of the state (e.g., the right to privacy or a state statute regulating drug testing). The cases are very fact-intensive, and the law varies from state to state. For example, courts in California and Nebraska have held that under certain circumstances, terminating an employee for refusing to submit to a drug test was a violation of public policy. Courts in other states, including Pennsylvania and North Carolina, have rejected such claims.

A New Jersey court has held that terminating an employee who tested positive on a random drug test violated the public policy of that state.

In addition, the West Virginia Supreme Court of Appeals held that it was contrary to public policy in West Virginia for an employer to require an employee to submit to drug testing except when the employer had a good faith objective suspicion that the employee was under the influence of drugs or alcohol.

Courts are much less likely to find that drug testing of applicants, if performed in accordance with the law (if any) of that state and in a reasonable manner, constitutes a violation of public policy.

An employer may be liable for wrongful discharge if an employee is discharged in accordance with a drug-testing program in violation of a particular state’s drug-testing statute.

f. Breach of Contract

More and more courts are concluding that employer promises of job security, whether oral or contained in employee handbooks or manuals, create contracts of employment terminable only for good cause or only after certain procedures (e.g., warnings or suspensions) have been followed.

An employee discharged for testing positive or refusing to be tested might assert a breach-of-contract claim on the grounds that the termination was not for good cause, or was not in accordance with the termination procedures outlined in the employment handbook or manual. Tip 68

Tip 68—Disclosure

Before a staffing firm implements a substance abuse policy or begins to drug-test employees, employment manuals should be carefully reviewed and modified appropriately. Similarly, other employment documents (e.g., application forms, employee handbooks) should be reviewed and appropriate changes made before a drug-testing program is implemented to minimize the risk that a drug-testing program may be viewed as contrary to the company’s employment policies.

5. State and Local Drug-Testing Laws

The following states have enacted legislation that directly regulates how a private employer may test its employees and applicants for drugs. In general, these laws set forth the circumstances under which employers may require employees and applicants to submit to drug testing, and they prescribe certain procedures that must be followed in administering drug-testing programs. Employers who drug-test or take personnel action based on the results of a drug test must do so in compliance with the applicable laws in their jurisdiction.

Alabama

An employer may require a current employee and applicant to submit to a substance abuse test as part of a drug-free workplace program that includes notice, education, and testing for drugs and alcohol pursuant to the Alabama Workers’ Compensation Laws. Such a program is voluntary; employers are not required to implement a drug-free workplace program.

If an employer implements a drug-free workplace program, it is required to conduct the following types of tests:

■   Pre-employment applicant screening. Employers must require that job applicants submit to a substance abuse test after receiving an offer of employment.

■   Reasonable-suspicion testing. Reasonable suspicion may be based upon the following criteria: direct observation of drug use or manifestations of being under the influence of a drug; abnormal conduct or significant deterioration in work performance; report of drug use, independently corroborated; evidence of tampering with a drug test; information that the employee has caused an accident at work; and evidence of drug possession or selling at work.

■   Routine fitness-for-duty testing. A test conducted as part of a regularly scheduled medical exam that is part of the employer’s established policy or that is scheduled routinely for all members of an employment classification or group.

■   Post-rehabilitation testing. After an employee has been in rehabilitation or an employee assistance program (EAP), the employee may be required to submit to testing for up to two years after such a program on a quarterly, semiannual, or annual basis.

An employer must give employees and applicants written policy statements as follows:

■   A statement of the employer’s policy on employee drug use that identifies the type of testing to be done

■   A statement describing the adverse action that may be taken against employees and applicants for a positive confirmed test result or for refusing to submit to a test

■   A statement regarding the existence of the drug-free workplace program

■   The consequences of refusing to submit to a drug test

■   A general statement concerning confidentiality

■   An assurance of the confidentiality of test results

■   A statement advising an employee of the employee assistance program, if the employer offers one, or advising the employee of the employer’s resource file of assistance programs and other persons, entities, or organizations designed to assist employees with personal or behavioral problems

■   A statement that an employee or job applicant who receives a positive confirmed test result may contest or explain the result to the employer within five working days after written notification of the positive test result

■   A statement informing an employee of the provisions of the federal Drug-Free Workplace Act, if applicable to the employer

An employer must provide a general one-time notice to all employees at least 60 days prior to implementing a substance abuse testing program that such a program is being implemented.

Employers are also required to include a notice of substance abuse testing on vacancy announcements for those positions for which testing is required. A notice must also be posted in an appropriate and conspicuous location on the employer’s premises, and copies of the policy must be made available for inspection by the employees or job applicants of the employer during regular business hours in the employer’s personnel office or other suitable location.

Alabama requires that all positive test results be confirmed. A confirmation means a second analytical procedure different from the initial test procedure; the method must be different in scientific principle from the first test in accordance with the law. The law also has specific rules covering drug-testing standards and laboratories.

Alaska

In Alaska, an employer may test an employee or prospective employee for the presence of drugs for any job-related purpose consistent with business necessity. An employer may also test employees for alcohol impairment.

However, an employer may only conduct such tests after adopting a written policy for testing and retesting and informing employees of the policy.

The employer’s written policy on drug and alcohol testing must include the following information:

■   A statement of the employer’s policy regarding drug and alcohol use by employees

■   A description of those employees or prospective employees who are subjected to testing

■   The circumstances under which testing may be required

■   The substances as to which testing may be required

■   A description of the testing methods and collection procedures to be used, including an employee’s right to a confirmatory drug test

■   The consequence of a refusal to participate in the testing

■   Any adverse personnel action that may be taken based on the testing procedure or results

■   The right of an employee, on the employee’s request, to obtain the written test results, and the obligation of the employer to provide written test results to the employee within five working days after a written request to do so

■   The right of an employee, on the employee’s request, to explain in a confidential setting a positive test result

■   A statement of the employer’s policy regarding the confidentiality of the test results

The law provides that a drug or alcohol impairment test will normally be conducted during or immediately before or after a regular work period. It also provides that samples be collected in a manner that guarantees the individual’s privacy to the maximum extent consistent with ensuring that the sample is not contaminated, adulterated, or misidentified. An employer may take an adverse employment action based on a positive drug or alcohol impairment test result that indicates a violation of the employer’s written policy, or when an employee or prospective employee refuses to provide a drug or alcohol-testing sample. Adverse employment actions may include suspension or termination of employment, or the requirement that the employee enroll in an employer-provided or employer-approved rehabilitation, treatment, or counseling program. In the case of drug testing, an employer may refuse to hire a prospective employee.

A communication received by an employer relevant to drug or alcohol impairment test results and received through the employer’s testing program is a confidential and privileged communication that may not be disclosed except to the tested employee or prospective employee or another person designated in writing by the employee or prospective employee, to individuals designated by an employer to receive and evaluate test results or hear the explanation of the employee or prospective employee, or as ordered by a court or governmental agency.

If an employer has acted in good faith, it will generally not be liable for actions stemming from the employer’s drug or alcohol impairment testing. A person may not bring an action against an employer based on the employer’s failure to establish a drug-testing program or policy on substance abuse prevention.

Both recreational and medical marijuana are legal under state law. With an employer policy restricting drug use, an employer may refuse to hire or terminate someone who uses or tests positive for offsite marijuana use (even if they do not present as currently impaired by marijuana) without facing liability under state law.

Arizona

Arizona permits drug testing for any “job-related purposes consistent with business necessity,” including the following:

■   Pre-employment applicant screening

■   Random testing

■   Investigation of possible individual employee impairment

■   Reasonable suspicion that an employee may be affected and that drug use may affect job performance or the work environment

■   Investigation of workplace accidents

■   As part of a post-rehabilitation program

■   For maintenance of safety, productivity, quality of work, or security of property or information

The law contains specific rules regarding the scheduling of tests, including testing as part of compensable work time, payment for testing, labs that may be used, and confirmation of positive test results with a gas chromatography and mass spectrometry test or another comparable method.

Testing must be carried out within the terms of a written drug and alcohol policy that is distributed to all employees. The policy must contain the following information:

■   A statement of the employer’s drug and alcohol policy

■   Which employees are subject to testing

■   When testing will be required and what drugs will be tested for

■   A description of the testing methods and collection methods to be used

■   Any adverse personnel actions that may be taken for refusing to take the test or based on a positive result

■   The right of an employee to obtain the written test results upon request

■   The right of an employee to explain a positive test result in a confidential setting

■   The confidentiality of test results

If the employer institutes a drug-testing policy, all compensated employees, including officers, directors, and supervisors, must be drug-tested.

The employer is protected from litigation so long as the employer acts in good faith and according to state law.

Employers whose drug policy and testing program comports with Arizona law may refuse to place medical marijuana users in safety-sensitive jobs and may discipline an employee when the employer has a good faith belief that the employee is impaired by, or improperly possessed, marijuana at work or during work hours.

Arkansas

If an employer implements a drug-free workplace program in accordance with Arkansas law, which includes notice, education, and procedural requirements for testing for drugs and alcohol, the employer must require employees to submit to a test for the presence of drugs or alcohol after a conditional offer of employment, upon reasonable suspicion of drug or alcohol use, after injury-producing workplace accidents, and if required as part of a routine fitness-for-duty policy. The employer may also require any other drug testing beyond the minimum as permitted by law. A covered employer may not require applicants or employees to take a physical, medical examination, or drug test unless such test and copy of the results are provided at no cost to the employee or applicant.

If a drug or alcohol is found to be present in the employee’s system at a level proscribed by statute or by rule approved pursuant to Arkansas law, the employee may be terminated and forfeits eligibility for workers’ compensation benefits.

However, the employer must notify all employees that it is a condition of employment for an employee to refrain from reporting to work or working with the presence of drugs or alcohol in the employee’s body. If an injured employee refuses to submit to a test for drugs or alcohol, the employee forfeits eligibility for workers’ compensation benefits. Before testing, and one time only, an employer that implements a drug-free workplace program in accordance with state law must give all employees and job applicants for employment a written policy statement regarding the employer’s testing procedures. The policy must contain the information that follows:

■   A general statement of the employer’s policy on employee drug or alcohol use, which must identify the types of drug or alcohol testing an employee or job applicant may be required to submit to, and the actions the employer may take against an employee or job applicant on the basis of a positive confirmed drug or alcohol test result

■   A general statement concerning confidentiality

■   Procedures for employees and job applicants to confidentially report the use of prescription or nonprescription medications to a drug-testing review officer after being tested, but only if the testing process has revealed a positive result for the presence of alcohol or drug use

■   The consequences of refusing to submit to a drug or alcohol test

■   A representative sampling of names, addresses, and telephone numbers of employee assistance programs and local drug or alcohol rehabilitation programs

■   A statement that an employee or job applicant who receives a positive confirmed test result may contest or explain the result to a drug-testing review officer

■   A list of all drug classes for which the employer may test

■   A statement informing the employee or job applicant of the employee’s responsibility to notify the laboratory of any administrative or civil action brought that is related to the employer’s drug testing

■   A statement regarding any applicable collective bargaining agreement or contract and any right to appeal to the applicable court

■   A statement notifying employees and job applicants of their right to consult with a drug-testing review officer for technical information regarding prescription or nonprescription medication

Employers are not required to test employees for drug or alcohol use. However, an employer who voluntarily chooses to establish a drug-free workplace in compliance with Arkansas law, a so-called “covered employer,” gets certain benefits but is sometimes required to conduct drug or alcohol tests. For example, after making a conditional offer of employment, a covered employer must test job applicants for drugs, and may use a positive confirmed drug test or the applicant’s refusal to be tested as a basis for not hiring the applicant. Limited testing of applicants, only if it is based on a reasonable classification basis, is also permissible. A covered employer also may be required to test employees for drugs or alcohol when there is observed behavior that gives rise to a reasonable suspicion that the employee is using a controlled substance. In addition, if employees are routinely scheduled for fitness-for-duty medical examinations, a covered employer must require employees to undergo drug and alcohol testing as part of the medical examination.

All information, reports, and drug or alcohol test results, written or otherwise, received by the employer through a drug or alcohol-testing program are considered confidential communications. Employers, laboratories, employee assistance programs, and their agents who receive or have access to information concerning drug or alcohol test results must keep all information confidential. The release of such information under any other circumstance is authorized solely pursuant to a written consent form signed voluntarily by the person tested, unless such release is compelled by a hearing officer or a court of competent jurisdiction pursuant to an appeal, or is relevant to a legal claim asserted by the employee. Arkansas law also sets out the licensing criteria for testing laboratories.

An employer can exclude a qualifying medical marijuana patient from being employed in or performing a safety sensitive position based on the employer’s good faith belief that the qualifying patient was engaged in current marijuana use. A positive test result for marijuana cannot provide the sole basis for an employer’s good faith belief.

California

California allows for drug testing with some limitations. Pre-employment testing is permissible for current illegal drug testing. An employer or other covered entity also may maintain and enforce rules prohibiting employees from being under the influence of alcohol or drugs in the workplace, and may conduct alcohol or drug testing for this purpose, if they have a reasonable belief that an employee may be under the influence of alcohol or drugs at work. Case law also generally supports a drug or alcohol test whenever the employer has a reasonable suspicion that the employee may be under the influence of drugs or alcohol at work.

While no California statute prohibits post-accident drug testing, case law suggests that post-accident drug testing is permissible if the employer shows some indicia of causation by the employee and a threshold level of personal injury (immediate off-site medical treatment) and/or property damage (at least $5,000). Similarly, case law holds that random testing should be limited to employees in safety or security-sensitive positions.

State contractors and grantees must certify that they have published and distributed to their employees a statement that the unlawful manufacture, sale, distribution, dispensation, possession or use of controlled substances is prohibited and list the action(s) that will be taken against employees who violate such prohibition, and establish a drug-free awareness program.

An EAP counselor may ask an employee seeking help for personal problems about any physical or mental condition(s) the employee may have if the counselor: (1) does not act for or on behalf of the employer; (2) is obligated to shield any information the employee reveals from decision makers; (3) has no power to affect employment decisions; and (4) discusses these provisions to the employee.

Both recreational and medical marijuana are legal under California law. With an employer policy restricting drug use, an employer may refuse to hire or terminate someone who uses or tests positive for offsite marijuana use (even if they do not present as currently impaired by marijuana) without facing liability under state law.

The city of San Francisco also regulates drug and alcohol testing. However, the ordinance applies only to employer testing of blood and urine specimens. San Francisco permits “for cause” or reasonable suspicion testing if: (1) an employer has reasonable grounds to believe an employee’s faculties are impaired on the job; (2) such impairment presents a clear and present danger to the physical safety of the employee, another employee, or the public; and (3) the employer provides the employee, at the employer’s expense, the opportunity to have his or her sample tested or evaluated by a state-licensed laboratory and a reasonable opportunity to explain or rebut the results. Unless causation exists, post-accident is prohibited. Random drug testing, return-to-duty testing, and follow-up testing are also prohibited. A San Francisco employer must provide employees with the opportunity to have their specimens tested or evaluated by a state-licensed, independent laboratory and a reasonable opportunity to explain or rebut their test results.

Colorado

Both recreational and medical marijuana are legal under Colorado law. With an employer policy restricting drug use, an employer may refuse to hire or terminate someone who uses or tests positive for offsite marijuana use (even if they do not present as currently impaired by marijuana) without facing liability under state law.

Unlike the state, the city of Boulder regulates drug and alcohol testing. In Boulder, pre-employment is permitted, but only if: (1) the employer includes notice of such testing in its application for employment, or if no application is required, in all advertisements soliciting applicants; (2) all applicants are personally informed of the testing during their first formal interview; and (3) the testing is required of Colorado residents who are the single finalist for a position or of out-of-state resident finalists for the position who come to Colorado for an interview (if the testing is required of all finalists). While reasonable suspicion testing is permitted, such reasonable suspicion must be based on specific, objective, clearly expressed facts that an employee is under the influence of drugs or alcohol on the job or his or her performance is currently adversely affected by the use of drugs or alcohol. Random testing is prohibited, and post-accident testing is similarly prohibited without reasonable suspicion. An employer may conduct return-to-duty and follow-up testing, but only if an employee agrees to such testing as part of an employee assistance program after a determination by the employer or an admission by the employee of prior drug use or alcohol abuse.

In Boulder, applicants and employees, upon request to an employer’s custodian, must be provided with copies of their positive test results (and may submit information in writing to the employer’s Medical Review Officer explaining such results). Applicants and employees, upon request and at their expense, may have a second confirmatory test conducted on the untested portion of their original specimen by a SAMHSA-certified laboratory. An employer’s written testing policy must be made available freely for inspection by employees at any reasonable time during working hours. The policy must contain a copy of the Boulder ordinance and information regarding: (1) the employees subject to testing; (2) the circumstances under which testing may be required; (3) the right of applicants and employees to refuse to undergo testing and the consequences of refusal; (4) any disciplinary or other personnel action that may be taken based on a positive confirmatory test result; (5) the right of applicants and employees to obtain copies of records of their positive confirmatory test results, and to submit information explaining such results; and (6) any other appeal procedure available. There are no restrictions on an employer’s ability to discipline employees who test positive as long as the employer sets forth in its policy the disciplinary or other personnel action that it will take based on a positive confirmatory test result. Test results may not be disclosed to anyone except the applicant or employee or a third party designated by the applicant or employee, the employer’s employees on a need-to-know basis, or as required by a court.

Connecticut

Connecticut’s drug testing statute applies only to employer urinalysis testing. Connecticut allows for testing under the following circumstances:

■   Pre-employment applicant screening. Applicants for employment may be required to submit to testing, provided they are notified in writing at the time they apply that the employer plans to require a drug test, the test is in accordance with the statutory procedures, the results of the test are kept strictly confidential and not disclosed to anyone except the applicant, and the applicant is provided with a copy of any positive test results.

■   Reasonable-suspicion testing. Current employees may be tested only if the employer has a reasonable suspicion that an employee is under the influence of alcohol or drugs that could adversely affect the employee’s job performance. Individualized reasonable suspicion is required. Connecticut courts have found that mandatory postaccident drug testing is prohibited by the statute.

■   Random testing of safety-sensitive employees. Employers may conduct random drug tests only if authorized by federal law, if the employee works in a “high-risk or safety-sensitive occupation,” or if the test is part of an employee assistance program in which the employee voluntarily participates. The state commissioner of labor is required to determine whether a job is considered high risk or safety-sensitive at the request of an employer or employee.

No employer may take any adverse personnel action against an employee unless the employee has tested positive on a test utilizing a reliable methodology and that positive result is then confirmed by a second test, separate and independent from the first test, that utilizes a gas chromatography and mass spectrometry methodology, or a methodology that has been determined by the state commissioner of health services to be as reliable or even more reliable.

The law also provides for privacy protections, such as prohibiting observation of the employee during specimen collection and confidentiality of results.

Despite the lawfulness of medical marijuana under state law, an employer may prohibit the use of intoxicating substances during work hours and discipline an employee for being under the influence of intoxicating substances during work hours.

Delaware

Delaware does not regulate drug testing. However, despite the lawfulness of medical marijuana under state law, an employer may prohibit the ingestion, possession, or impairment of marijuana in any workplace. However, a registered qualifying patient will not be considered under the influence solely because of the presence of metabolites or components of marijuana.

District of Columbia

Both recreational and medical marijuana are legal under state law. With an employer policy restricting drug use, an employer may refuse to hire or terminate someone who uses or tests positive for offsite marijuana use (even if they do not present as currently impaired by marijuana) without facing liability under state law. Under the D.C. Prohibition of Pre-Employment Marijuana Testing Act, an employer can test prospective employees for marijuana only after a conditional offer of employment, unless otherwise required by law.

Florida

An employer may require a current employee and applicant to submit to a substance abuse test as part of a drug-free workplace program that includes notice, education, and testing for drugs and alcohol pursuant to rules developed by the Division of Workers’ Compensation of the Department of Labor and Employment Security. Such a program is voluntary; employers are not required to implement a drug-free workplace program.

Employees who implement such a program are entitled to certain benefits (described in ASA Tip 69).

If an employer implements a drug-free workplace program, it may conduct the following types of tests:

■   Pre-employment applicant screening. Employers may refuse to hire applicants who either refuse to submit to a drug test or test positive.

■   Reasonable-suspicion testing. Reasonable suspicion may be based upon the following criteria: direct observation of drug use or manifestations of being under the influence of a drug; abnormal conduct or significant deterioration in work performance; report of drug use, independently corroborated; evidence of tampering with a drug test; information that the employee has caused an accident at work; and evidence of drug possession or selling at work. The employer must document, in writing, the circumstances that formed the basis of the reasonable suspicion and provide the documentation to the employee at the employee’s request.

■   Routine fitness-for-duty testing. A test conducted as part of a regularly scheduled medical exam and applicable to all members of the same employment classification is allowable.

■   Post-rehabilitation testing. After an employee has been in rehabilitation or an employee assistance program, the employee may be required to submit to testing for up to two years after such a program on a quarterly, semiannual, or annual basis.

An employer must give employees and applicants a written policy statement containing the following:

■   A statement of the employer’s policy on employee drug use that identifies the type of testing to be done

■   A statement describing the adverse action that may be taken against employees and applicants for a positive confirmed test result or for refusing to submit to a test

■   A statement regarding the existence of the Drug-Free Workplace Act

■   An assurance of the confidentiality of test results

■   A list of procedures for employees and applicants to report the use of prescription or nonprescription medications confidentially both before and after being tested

■   A list of the most common medications, by brand or common name, as well as by chemical name, which may alter or affect a drug test

■   The consequences of refusing to submit to a drug test

■   The names, addresses, and telephone numbers of employee assistance programs and local rehabilitation programs

■   An explanation of their right to contest or explain a positive, confirmed drug test result to a medical review officer within five days after receiving written notification of the result

■   The employer’s responsibility to notify the laboratory of any administrative or civil action brought pursuant to the statute

■   A list of all drugs for which the employer will test

■   A statement regarding any applicable collective bargaining agreement

■   A statement notifying employees and applicants of their right to consult a testing laboratory for technical information regarding prescription and nonprescription medications

If an employee’s or applicant’s explanation or challenge to a confirmed test result is unsatisfactory, a written explanation as to why it is unsatisfactory and the test results should be sent to the employee.

No employer may discharge an employee or take disciplinary action on the basis of an employee’s test result that has not been verified by a confirmation test and by a medical review officer.

If an employee in a safety-sensitive position enters a rehabilitation program or EAP, the employee should be placed in a non-safety-sensitive position or leave status while undergoing treatment. Upon completion of a rehabilitation program or EAP, all employees must be reinstated to the same or equivalent position they held prior to the program.

Florida requires that all positive test results be confirmed. A confirmation means a second analytical procedure different from the initial test procedure; the method must be different in scientific principle from the first test in accordance with the law. The law also requires confirmation tests to be conducted by licensed or certified laboratories.

Although medical marijuana is legal under state law, employers may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage (even if they do not present as currently impaired by marijuana) without facing liability under state law. Tip 69

Tip 69—Florida: Drug-Free Workplace Act

An employer who has implemented a drug-free workplace program in compliance with the Florida Drug-Free Workplace Act and the state’s Workers’ Compensation Drug Testing Rules derives certain advantages if an employee injures himself or herself within the scope of employment and has a positive confirmation of drug use or refuses to take a drug test:

■   The employee forfeits his or her eligibility for benefits under the Workers’ Compensation Act.

■   The employee may be terminated from employment.

■   The employer qualifies for reduced rates under the Workers’ Compensation Law.

Georgia

If an employer implements a drug-free workplace program in accordance with Georgia law, the employer qualifies for certification for a premium discount under the employer’s workers’ compensation insurance policy. Such a program is voluntary, however; employers are not obliged to implement such a program.

An employer that does not choose to implement a drug-free workplace program in accordance with the statute may still implement a drug-testing program.

If the employer chooses to implement a drug-free workplace program, then before testing and one time only, all employees and job applicants for employment must be given notice of testing. In addition, all employees must be given a written policy statement from the employer that contains the information that follows:

■   A general statement of the employer’s policy on employee substance abuse that identifies the types of testing an employee or job applicant may be required to submit to, and the actions the employer may take against an employee or job applicant on the basis of a positive confirmed test result

■   A general statement concerning confidentiality

■   The consequences of refusing to submit to a drug test

■   A statement advising an employee of the employee assistance program, if the employer offers such a program, or advising the employee of the employer’s resource file of assistance programs designed to assist employees with personal or behavioral problems

■   A statement that an employee or job applicant who receives a positive confirmed test result may contest or explain the result to the employer

■   A statement informing an employee of the provisions of the federal Drug-Free Workplace Act

In order to qualify for the workers’ compensation insurance premium discounts, an employer is required to conduct a substance abuse test after extending an offer of employment, upon reasonable suspicion, or when a routinely scheduled employee fitness-for-duty medical examination is part of the employer’s established policy. An employer must also conduct substance abuse testing when an employee has caused or contributed to an on-the-job injury that resulted in a loss of work time. In addition, when an employee in the course of employment enters an employee assistance program or a rehabilitation program as the result of a positive test, the employer must then require the employee to submit to a substance abuse test as a follow-up to such a program. However, if an employee voluntarily entered the program, follow-up testing is not required. Georgia law does not prohibit a private employer from conducting random testing or other lawful testing of employees.

Due regard must be given to the privacy of the individual employee providing a specimen, and the collection must be in a manner reasonably calculated to prevent substitution or contamination of the specimen.

The employer shall provide to the employee or job applicant, upon request, a copy of the test results. An initial test having a positive result must be verified by a confirmation test. If testing is conducted based on reasonable suspicion, the employer must promptly detail in writing the circumstances that form the basis of the determination that reasonable suspicion existed to warrant the testing. The law also sets out the requirements for laboratories selected to perform drug testing.

An employer must provide all employees with a semiannual education program on substance abuse in general and its effects on the workplace specifically. In addition, the employer must provide all supervisory personnel with a minimum of two hours of training that should include how to recognize the signs of substance abuse and how to document and corroborate the signs of employee substance abuse, and how to refer substance-abusing employees to proper treatment providers.

All information and reports received by the employer through a substance abuse testing program are considered confidential communications. Employers, laboratories, medical review officers, employee assistance programs, drug or alcohol rehabilitation programs, and their agents who receive or have access to information concerning test results must keep all information confidential. Release of such information under any other circumstances must be solely pursuant to a written consent form signed voluntarily by the person tested, unless such release is compelled by an agency of the state or a court of competent jurisdiction.

The low THC/High CBD—Cannabidiol law does not affect an employer’s ability to have a written zero tolerance policy (1) prohibiting on-duty and off-duty marijuana use; or (2) prohibiting an employee from having a detectable amount of marijuana in his or her system while at work.

Hawaii

Hawaii does not directly regulate substance abuse testing by private employers, but it does place restrictions on the administration of any substance abuse testing by any person.

An individual who is to be tested must receive a written statement from the employer or the laboratory doing the testing as to the specific substances that will be screened and a warning that over-the counter medication or drugs may result in a positive test result.

The operator who administers an on-site screening test must have been trained in the use and administration of the test by the manufacturer or the manufacturer’s designee. An employer may not take adverse action against an applicant or employee who tests positive for the presence of drugs, drug metabolites, or alcohol by an on-site screening test unless the applicant or employee refuses or fails to report to the licensed laboratory for testing (and the employer satisfies other statutory requirements).

The law provides for strict standards governing laboratories conducting substance testing of employees, such as licensing of the laboratory, qualifications of personnel, procedures for taking samples, methods of analysis and procedures to ensure reliable testing results, chain-of-custody procedures, retention and storage procedures, retention of substance abuse testing information by the laboratory, and procedures to ensure strict confidentiality. A confirmatory test utilizing gas chromatography and mass spectrometry or an equally reliable method is required.

Although medical marijuana is legal under state law, employers may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage (even if they do not present as currently impaired by marijuana) without facing liability under state law.

Idaho

Idaho has established voluntary drug- and alcohol-testing guidelines for private employers. If an employer complies with the guidelines, an employee’s testing positive for drugs or alcohol will constitute “misconduct” under state law and result in the denial of unemployment benefits.

It is lawful for a private employer to test employees or prospective employees for the presence of drugs or alcohol as a condition of hiring or continued employment, provided the testing requirements and procedures are in compliance with federal law.

Any drug or alcohol testing by a private employer of current employees is deemed work time for purposes of compensation. Samples must be collected and tested with due regard to the privacy of the individual being tested and in a manner reasonably calculated to prevent substitutions or interference with the collection or testing of reliable samples. Drug testing must include a confirmatory test before the result of any test can be used as a basis for action by an employer. The confirmatory test is to be conducted by a laboratory utilizing a chromatographic technique such as gas chromatography and mass spectrometry or another comparable reliable analytical method.

An employer must have a written policy on drug or alcohol testing that includes a statement that violation of the policy may result in termination due to misconduct. The employer must in a written policy list the types of testing an employee may be subject to, which may include, but are not limited to, pre-employment, post-accident, random, return to duty, follow-up, and reasonable suspicion. The employer’s written policy must be communicated to affected employees and made available for review by prospective employees.

Any employee or prospective employee who tests positive for drugs or alcohol must be given written notice by the employer of that test result, including the type of substance involved. The employee must be given an opportunity to discuss and explain the positive result with a medical review officer or another qualified person.

Upon receipt of a confirmed positive drug or alcohol test, result, or other proof that indicates a violation of the employer’s written policy, or upon the refusal of an employee to provide a test sample, or upon an employee’s alteration of or attempt to alter a test sample, an employer may use that test result or the employee’s conduct as the basis for disciplinary or refusal-to-hire actions. Actions by the employer may include, but are not limited to, a requirement that the employee enroll in an employer-approved rehabilitation, treatment, or counseling program, which may include additional drug or alcohol testing, as a condition of continued employment; suspension of the employee with or without pay for a period; termination of the employee; or other disciplinary methods in conformance with the employer’s usual procedures, including any collective bargaining agreement.

All information, reports, or test results received through a substance abuse testing program must be kept confidential and are intended for an employer’s internal business use only.

An employer that establishes a program of drug or alcohol testing in accordance with Idaho’s guidelines will generally not be liable for actions stemming from the employer’s program. In addition, an employer will not be liable for failing to establish such a program, or for terminating or suspending its program.

Illinois

Although medical marijuana use is lawful in Illinois, a private business can restrict or prohibit the medical use of cannabis on its property and enforce a drug-free policy. However, unless failing to do so would put an employer in violation of federal law or would cause it to lose a monetary or licensing-related benefit under federal law or rules, an employer cannot penalize a person solely for his or her status as a registered qualifying patient or a registered designated caregiver. An employer can consider a registered qualifying patient to be impaired when he or she manifests specific, articulable symptoms while working that decrease or lesson the employee’s performance of the duties or tasks of his or her position. However, if an employer elects to discipline a qualifying patient based on such impairment, it must afford the employee a reasonable opportunity to contest the basis of the determination.

Iowa

Iowa does not preclude an employer from conducting drug or alcohol testing of applicants or employees. However, employers may not require employees to submit to drug testing unless all of the following criteria are met:

■   The employer has “probable cause” to believe the employee is impaired on the job and such impairment presents a safety hazard or violates a published workplace rule.

■   The test is conducted by a laboratory that has been approved by the department of health.

■   Positive results are confirmed by a second alternative test.

■   The employee has a “reasonable opportunity” to explain or rebut test results.

■   The employer provides substance abuse evaluation and treatment.

Drug or alcohol testing of employees normally occurs during, or immediately before or after, a regular work period, and is considered work time for the purposes of compensation and benefits.

Post-accident testing must be limited to situations in which a work-related accident results in a reportable injury to a person under the state’s occupational safety and health statute, or damage to property or equipment that is estimated at the time of the accident to exceed $1,000. With regard to random testing, the selection of employees for random testing must be done by an entity that is independent from the employer and must be made by a computer-based random number generator. The computer program must record each random selection attempt by date, time, and employee identification number.

Employers may not take any disciplinary action based on a positive test result if the employee thereafter successfully completes a treatment program for substance abuse provided by the employer or an employee assistance program.

Employers may drug-test applicants who have been offered employment. Employers may conduct hair testing of prospective employees only. Applicants must be given written and oral notice that submitting to a drug test is required as a condition of employment. Employers may also conduct drug tests on employees as part of a physical examination that is part of a pre-employment physical or regularly scheduled fitness-for-duty physical. An employee tested as part of a fitness-for-duty physical must be given at least 30 days’ notice of the test. If an employee tests positive, a second confirming test using an alternative method of analysis should be conducted with the same test sample, if possible. The employer also must protect the confidentiality of the results. Tip 70

Tip 70—Iowa: Drug Testing

Iowa employers wishing to drug-test employees should promulgate a specific rule prohibiting employees from being under the influence of drugs while at work.

Kansas

Kansas does not preclude an employer from conducting drug or alcohol testing of applicants or employees. However, if an employer implements a drug-testing program, there are state statutes regulating the administration of drug tests.

Louisiana

Louisiana allows employers to conduct drug testing of applicants and employees. However, the law provides strict standards regarding drug-testing laboratories; confidentiality of testing information and results, and in the collection of specimens; review of the results by qualified medical personnel; and payment for drug tests.

The Louisiana Office of Workers’ Compensation also has established separate rules for employers to follow in drug testing.

Louisiana employers may require employees to submit to drug testing for the following purposes:

■   Investigating possible individual employee impairment

■   Investigating workplace accidents or theft

■   Maintaining safety for employees or the public or security of property

■   Maintaining productivity and the quality of products or services

The results of an employee’s drug test must be sent to a qualified medical review officer. The law provides that employees have the opportunity to supply any information that they consider relevant to the test.

On-site testing devices certified by the FDA may be used for screening tests only. Specimens that test positive must subject to confirmation testing at a SAMHSA-certified, CAP-FUDT-certified, or CAP-FDT-certified laboratory.

An employee whose test is confirmed positive has the right to request access within seven days to records relating to the drug test. If an employee’s test is certified positive by the medical review officer, the employer may, but is not required to, allow the employee the opportunity to undergo a rehabilitation program.

For applicant drug testing, the employer may either choose to submit the test to a medical review officer or offer the applicant the opportunity to pay for confirmation of the test and a review by a medical review officer. Louisiana’s law also provides that a current employee may be disqualified from receiving unemployment compensation benefits if he or she is discharged for the use of illegal drugs either on or off the job. Discharge for refusal to submit to a lawfully required drug test also disqualifies the employee for unemployment compensation benefits. Tip 71

Tip 71—Louisiana: Disqualification From Benefits

Louisiana employers should adopt a written substance abuse policy in compliance with the law in order for an employee using drugs to be disqualified from workers’ compensation and unemployment compensation benefits.

Maine

Maine employers may require current employees to submit to drug or alcohol testing in the following situations:

■   Pre-employment testing. Employers may require applicants to submit to drug or alcohol testing if the applicant has been offered employment or placed on a waiting list.

■   Probable-cause testing. Employees may be subject to reasonable suspicion drug and alcohol testing if the employer (the employee’s immediate supervisor, other supervisory personnel, a licensed physician or nurse, or the employer’s security personnel) reasonably believes that an employee may be under the influence of alcohol or illegal drugs. Employees who are subject to reasonable suspicion drug and alcohol testing must be provided with a copy of a written statement that contains the facts upon which the employer’s reasonable suspicion determination was made. Reasonable suspicion determinations must not be based exclusively on information received from an anonymous informant, information tending to indicate that an employee may have possessed or used alcohol or illegal drugs off duty (except when the employee is observed possessing or using alcohol or illegal drugs on or in the proximity of the employer’s premises immediately before or during the employee’s working hours), or a single work-related accident.

■   Random testing. This testing may be done only if the employee is in a safety-sensitive job or pursuant to a collective bargaining agreement.

■   Post-treatment testing. If an employee receives a positive confirmed test, the employer may require the employee to submit to a subsequent drug test at any time from 90 days up to one year after the date of the employee’s positive result.

On-site testing must be limited to initial screens of urine or saliva for pre-employment drug testing. Specimens that test positive must be sent to a certified laboratory for confirmatory testing. Maine employers must develop a written policy before establishing any substance abuse testing program and submit their drug-testing policies to the Department of Labor to be certified. Also, an employer with 20 or more full-time employees must have a functioning employee assistance program, certified by the Department of Human Services, before establishing any substance abuse testing program.

The Maine law also prohibits adverse employment action against an employee with a positive confirmed test result until the employee is provided with an opportunity to participate for at least six months in an EAP or rehabilitation program. If the employee chooses to participate in the employer-sponsored EAP, the employer is responsible for the cost of the program. Except to the extent that costs are covered by a group health plan, the costs of public or private rehabilitation programs should be split between the employee and an employer with more than 20 full-time employees. No reduction in pay or benefits may be made while an employee is participating in such a program.

Maine law also establishes requirements and procedures for testing laboratories. Initial tests may use immunoassay technology or test technology of similar accuracy. If a positive test result appears in the first test, a confirmation test utilizing gas chromatography and mass spectrometry must be performed if personnel action is to be taken with regard to the person tested.

Both recreational and medical marijuana are legal under state law. Under these laws, an employer may not refuse to hire or terminate someone who uses or tests positive for offsite marijuana use without facing liability under state law. Maine prohibits employers from refusing to employ or otherwise take any adverse action against an individual for “consuming marijuana outside the …. employer’s property.” As such, employers may no longer test job applicants for marijuana. However, an employer can enact and enforce workplace policies restricting marijuana use in the workplace by employees or discipline employees who are under the influence of marijuana in the workplace. An employer is not required to permit or accommodate the use, consumption, possession, trade, display, transportation, sale, or growing of recreational cannabis in the workplace.

Moreover, a business owner can prohibit smoking medical marijuana on the business’s premises if it prohibits all smoking on the premises and posts notice to that effect on the premises. An employer does not have to accommodate (1) the ingestion of marijuana in any workplace, or (2) any employee working while under the influence of marijuana. However, unless failing to do so would put the employer in violation of federal law or cause it to lose a federal contract or funding, an employer cannot penalize a person solely for that person’s status as a qualifying patient or primary caregiver.

Maryland

In Maryland, a workers’ compensation insurer may file a rating plan that provides for a premium discount for appropriate classifications (or sub-classifications) of a risk of up to 4% to an insured employer that has an alcohol- and drug-free workplace policy that may include one or more of the following programs: an alcohol and drug testing program; an employee education program on alcohol and drug abuse; a supervisor education program on alcohol and drug abuse; an employee assistance program that includes referrals of employees for appropriate diagnosis, treatment, and assistance; a program requiring an employee who has caused or contributed to an accident while at work to undergo alcohol or drug testing; and any other program that the insurer deems effective to encourage an alcohol- and drug-free workplace. An insurer is not required to provide a premium discount under the state law if the insured is required under federal or state law to test its employees for drugs or otherwise provide an alcohol- and a drug-free workplace.

An employer may not require a current employee or applicant to submit to drug or alcohol testing unless it is for “job-related” reasons, which means a legitimate business purpose. The test must be administered by a laboratory that fulfills the requirements and standards of the law.

If the employee requests, an employer must inform him or her of the name and address of the testing laboratory. The employee may also have an independent test of the same sample by a laboratory that is qualified by the conditions noted above.

On-site screening tests approved by the FDA are permissible for pre-employment testing only. The employer must also establish a program to train individuals to collect specimens and perform tests, and have a MRO review positive test results after confirmation tests are conducted by a certified laboratory. After an employee tests positive and the results are confirmed, the employer must provide the employee with a copy of the laboratory results; the employer’s written policy on the use of controlled substances or alcohol; written notice of the employer’s intent to take disciplinary action against the employee, if applicable; and a statement that the employee may have the sample independently tested. This information must be personally delivered to the employee or sent by certified mail within 30 days from the date of the test. Applicants and employees have the right, at their own expense, to request a retest by an independent certified laboratory.

Maryland law contains specific requirements and standards with which the testing procedures and laboratories must comply.

Although medical marijuana is legal under state law, employers may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage (even if they do not present as currently impaired by marijuana) without facing liability under state law. The Maryland Medical Cannabis Commission (tasked with administering the medical cannabis statute) takes the position that “Maryland law does not prevent an employer from testing for use of cannabis (for any reason) or taking action against an employee who tests positive for use of cannabis (for any reason).” Moreover, the statute does not discuss employment-related issues dealing with medical marijuana use.

Massachusetts

Under Massachusetts case law, employers should limit random testing to employees who are in safety-sensitive positions.

Both recreational and medical marijuana are legal under state law. For recreational marijuana, and with an employer policy restricting drug use, an employer may refuse to hire or terminate someone who uses or tests positive for offsite marijuana use (even if they do not present as currently impaired by marijuana) without facing liability under state law. However, the same is not true for a registered qualifying patient. While employers have no obligation to accommodate on-duty use or impairment, lawful marijuana users cannot be “denied any right or privilege” for such use and have the right to seek a reasonable accommodation for medical use of marijuana.

Michigan

While Michigan permits recreational marijuana, the state does not require an employer to permit or accommodate conduct otherwise allowed in any workplace or on the employer’s property. The state also does not prohibit an employer from disciplining an employee for violation of a workplace drug policy or for working while under the influence of marijuana. Likewise, the state does not prevent an employer from refusing to hire, discharging, disciplining, or otherwise taking an adverse employment action against a person with respect to hire, tenure, terms, conditions, or privileges of employment because of that person’s violation of a workplace drug policy or because that person was working while under the influence of marijuana.

Although medical marijuana is legal under state law, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana use without facing liability under state law. An employer does not have to accommodate the ingestion of marijuana in any workplace or accommodate an employee working while under the influence of marijuana.

Minnesota

An employer may not require applicants or employees to undergo drug testing unless it has a written substance abuse policy. The policy must, at minimum, include notification to employees and applicants that they may be required to submit to testing; the circumstances under which drug testing may be required; the right of refusal and the consequences of refusal; any action that may be taken on the basis of a positive test result; and notification that they are entitled to an opportunity to explain positive test results or request and pay for a confirmatory retest.

An employer may require drug and alcohol testing in the following circumstances:

■   Pre-employment applicant screening. An applicant may be asked to undergo testing only if an offer of employment has been made to the applicant and the test is required of all applicants conditionally offered employment for that position. If the job offer is withdrawn, the employer must inform the applicant of the reason. If a job applicant has received a job offer made contingent on the applicant passing drug and alcohol testing, the employer may not withdraw the offer based on a positive test result from an initial screening test that has not been verified by a confirmatory test.

■   Reasonable-suspicion testing. A test may be requested if there is a reasonable suspicion that the employee is under the influence of drugs or alcohol; has violated the employer’s written policy “prohibiting the use, possession, sale, or transfer of drugs or alcohol”; has been injured or caused injury to another; or has caused a work-related accident.

■   Testing for fitness-for-duty physical. An employer may require employees to submit to drug and alcohol testing as part of a routine physical if at least two weeks’ written notice has been given and the test is not required more than once annually.

■   Post-rehabilitation testing. An employer may require employees to submit to drug and alcohol testing if the employee has been referred by the employer for chemical dependency treatment or evaluation or is participating in a chemical dependency treatment program under an employee benefit plan for a period of up to two years.

■   Random testing. Employees in “safety-sensitive” positions may be required to submit to drug and alcohol testing on a random basis.

Minnesota requires that testing be conducted by a laboratory that fulfills the requirements set out by the statute. The law also contains privacy, confidentiality, and privilege safeguards.

Confirmatory tests must be performed on all positive test results, and the employer may not discharge an employee for a positive confirmatory result for a first positive test unless the employer gives the employee the opportunity to participate in a rehabilitation program.

Although medical marijuana is legal under state law, an employer may not refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana use (assuming they do not present as currently impaired by marijuana) without facing liability under state law. An employer does not have to accommodate the ingestion of marijuana in any workplace or accommodate an employee working while under the influence of marijuana. Unless failing to do so would violate federal law or regulations or cause an employer to lose a monetary or licensing-related benefit under federal law or regulations, an employer cannot discriminate against a person if discrimination is based upon a patient’s positive drug test for cannabis components or metabolites, unless he or she used, possessed, or was impaired by medical cannabis on the employer’s premises during hours of employment. Employers must give employees the opportunity to explain the positive test (and present verification of enrollment in the patient registry) prior to taking any adverse action.

Mississippi

Mississippi law allows for alcohol and drug testing in a variety of situations:

■   Pre-employment applicant screening. An employer may require an applicant to submit to drug and alcohol testing as a condition of employment, but the employer must notify the applicant in writing of the testing. The employer may use a refusal to submit to a test or a positive, confirmed test result as a basis for refusal to hire.

■   Reasonable-suspicion testing.

■   Random testing. This must be done on a neutral-selection basis.

■   Testing subsequent to routine fitness-for-duty physical.

■   Postrehabilitation testing. Random drug tests of employees who entered a rehabilitation program or tested positive within the last 12 months are allowed.

An employer must provide any employee required to submit to drug and alcohol testing a written policy statement at least 30 days prior to implementation of a drug and alcohol testing program. The written policy statement must contain the following:

■   A general statement of the employer’s policy on drug use, including the circumstances under which an employee will be tested and any action to be taken based upon a positive, confirmed test

■   A statement advising the employee of the existence of a state statute regarding drug and alcohol testing

■   A general statement concerning confidentiality

■   Procedures for employee reporting of the use of nonprescription and prescription medication prior to testing

■   The consequences of refusing to submit to drug and alcohol testing

■   A statement that an employee who receives a positive confirmed drug and alcohol test result may contest the accuracy of that result or explain it

■   A list of all drugs for which the employer might test

■   A statement regarding any applicable collective bargaining agreement or contract

The law also provides for strict testing procedures and confidentiality of information relating to testing. Confirmation tests must use a method of equal or greater sensitivity than that used in the initial test.

Missouri

Although medical marijuana is now legal in Missouri, the law does not permit a prospective, current, or former employee to bring a claim against a prospective, current, or former employer for wrongful discharge, discrimination, or any similar cause of action or remedy based on the employer prohibiting the employee from being under the influence of marijuana while at work or disciplining the employee, up to and including termination, for working or attempting to work while under the influence of marijuana. The law also does not mandate health insurance coverage of medical marijuana for qualifying patient use.

Montana

Only applicants for positions involving or employees engaged in the performance, supervision, or management of work in a hazardous work environment, security position, position affecting public safety/health, position in which driving a motor vehicle is necessary for any part of work duties, or position involving a fiduciary responsibility for an employer may be required to submit to drug and alcohol testing.

Employers are permitted to drug-test if they establish a “qualified testing program” in compliance with Montana law. Employers that implement a qualified program may

■   Test any prospective employee as a condition of hire

■   Test randomly, so long as the employer establishes a date when all employees will be required to undergo the testing, and the employer has a third party administer the random testing process, which must meet certain requirements

■   Retest if the employee has had a verified positive test

■   Test if there is reason to suspect that the employee’s faculties are impaired on the job as a result of drug use

■   Test to investigate a work-related accident causing death, personal injury, or property damage in excess of $1,500

The qualified testing program must be conducted according to a written policy that contains the following minimum provisions:

■   A description of the legal sanctions for possession, use, manufacture, or distribution of drugs

■   The employer’s program for educating employees on the perils of drug use

■   The employer’s “standards of conduct” regarding drug use

■   A description of available employee assistance programs, including counseling, rehabilitation, or treatment programs available to employees

■   A description of the sanctions that may be imposed if the employee violates the “standards of conduct” or tests positive for drug use

■   Identification of the tests to be conducted

■   A list of drugs for which the employer intends to test

■   A description of the employer’s policy for applicants who test positive

■   A description of the procedures that will be followed in the testing program

■   A provision that test results are confidential

Before taking any action based on a positive test result, the employer must have the results reviewed and certified by a medical review officer.

An applicant who tests positive must be given the opportunity to give the medical review officer any medical information that is relevant to interpreting test results. The employer also must give the employee who has been tested a copy of the test report and is required to obtain, at the employee’s request, an additional test by an independent laboratory selected by the employee. The employer must pay for the additional test if the results are negative, and the employee must pay if the additional test results are positive. The employee also must be provided with an opportunity to rebut or explain the results of any test.

Although medical marijuana is legal under state law, with an employer policy restricting marijuana use, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana use without facing liability under state law. An employer is not required to accommodate the use of marijuana by a registered cardholder. An employer may include in a contract a provision prohibiting the use of marijuana for a debilitating medical condition.

Nebraska

Nebraska law does not specify the circumstances under which an employer can implement a substance-testing program. However, Nebraska law prohibits employers from discharging or taking disciplinary action against a current employee based on a positive drug test result unless the initial test result was confirmed by gas chromatography and mass spectrometry or other scientific testing technique that has been approved by the department of health.

The law also provides for standards and requirements regarding licensing of laboratories; record keeping for laboratories; chain of custody; and confidentiality of tests. Gas chromatography and mass spectrometry, or another scientific procedure, must be used in confirmatory tests.

An employee who refuses to submit to a lawful drug test may be subject to disciplinary action, including discharge. The Nebraska law does not apply to job applicants.

Nevada

Both recreational and medical usage of marijuana are legal under Nevada law. With an employer policy restricting marijuana use, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite recreational marijuana without facing liability under state law.

The same is not true for medical marijuana. An employer must attempt to make reasonable accommodations for the medical needs of an employee who engaged in the medical use of marijuana if the employee holds a valid registry identification card, provided the reasonable accommodation would not: pose a threat of harm or danger to persons or property or impose an undue hardship on the employer; or prohibit the employee from fulfilling any and all of his or her job responsibilities. However, an employer is not required to allow the medical use of marijuana in the workplace. An employer is also not required to modify the job or working conditions of a person who engaged in the medical use of marijuana that are based on the reasonable business purposes of the employer.

New Hampshire

Although medical marijuana is legal in New Hampshire, an employer can discipline an employee for ingesting cannabis in the workplace or for working while under the influence of cannabis. An employer is not required to accommodate the therapeutic use of cannabis on the property or premises of any place of employment. An individual is subject to arrest if he or she is under the influence of cannabis in his or her place of employment without the employer’s written permission; or if the individual possesses cannabis in his or her place of employment without the employer’s written permission.

New Jersey

Under a New Jersey Supreme Court case, random drug and alcohol testing must be limited to employees in safety-sensitive positions. In addition, an employer should give notice close in time to the beginning of a testing program, but sufficient to provide adequate advance warning, that announces the program, details the method for selecting employees to be tested, warns employees of the lingering effect of certain drugs in the system, explains how the sample will be analyzed, and notifies employees of the consequences of testing positive or refusing to take the text. Testing should be limited to detect for the presence of specified drugs.

Although the use of medical marijuana is legal in New Jersey, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage without facing liability under state law. An employer is not required to accommodate the medical use of marijuana in any workplace.

New Mexico

Although the use of medical marijuana is legal in New Mexico, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage without facing liability under state law. Medical marijuana is not an accommodation that must be provided for by the employer.

New York

Medical marijuana use is legal under state law. As such, an employer may not refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage without facing liability under state law. An employer may not discriminate against a certified patient solely for the certified medical use or manufacture of marijuana. A certified patient is deemed to have a “disability” under New York civil rights laws, and employers must reasonably accommodate the underlying disability associated with the legal marijuana use. However, the medical marijuana law does not prohibit an employer from enforcing a policy prohibiting employees from performing employment duties while impaired by a controlled substance.

North Carolina

North Carolina law does not directly regulate substance abuse testing by employers. It does place restrictions on the administration of any substance abuse testing.

A statute covers laboratory approval requirements, sample collection, chain of custody, and screening requirements. Within 30 days of receiving notice of a confirmed positive test result, the employer must notify applicants and employees of their test results and their rights and responsibilities regarding the retesting of their specimens. In addition, positive substance abuse test results must be confirmed.

Ohio

Ohio, like many other states, has implemented a drug-free workplace discount program that provides for discounted rates for workers’ compensation insurance for employers that implement the program. As part of such a program, employers must provide employees with a written policy statement that includes, among other things, the following:

■   A statement of management’s incentive for creating a substance-free workplace (e.g., concern for employee safety, productivity, accident prevention, etc.)

■   The identity of the employer’s program administrator, indicating the person’s role and/or responsibilities with regard to the drug-free workplace program

■   A statement that the program applies to all employees, including all levels of management

■   Information regarding any applicable collective bargaining agreements and how those agreements are affected by the program

■   The procedures for drug testing and a list of substances for which employees will be tested

■   A statement of the employer’s commitment to rehabilitation and how referrals may be made for testing, assessment, and employee assistance

■   A statement of what is prohibited in the workplace and the consequences for employees in violation of the policy

■   A statement of the consequences for refusing to submit to a drug or alcohol test or for tampering with a drug test

■   A statement that nothing in the policy alters the employment-at-will status as it affects any other employment issues with the employer

■   A statement of confidentiality with regard to records related to drug testing

Employers must also provide employees with an employee education program that includes two hours of training annually for all current employees regarding the drug-free workplace program, that states management’s commitment to the program, and that gives information on the signs and symptoms associated with substance use and abuse. Employers must also provide regular supervisory training. Employers implementing a drug-free workplace program must require applicants and employees to submit to drug testing as follows:

■   Pre-employment or new-hire testing within 90 days of the first day of employment

■   Post-accident testing on any employee who may have caused or contributed to an on-the-job accident

■   Reasonable-suspicion testing

■   Follow-up testing for any employee with a positive test, commencing with a return-to-duty test as the first in a minimum of four tests over a year

Employers that participate in the drug-free workplace program must also provide access to an employee assistance program.

The rules and requirements for Ohio’s drug-free workplace program are complex and should be carefully considered before an employer decides to implement the program.

Although medical marijuana is legal under state law, with an employer policy restricting marijuana use, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage without facing liability under state law. Employers are not required to accommodate an employee’s use, possession, or distribution of medical marijuana.

Oklahoma

Oklahoma law provides for testing under the following circumstances:

■   Pre-employment applicant screening. An applicant may be required to test upon offer of conditional employment and so long as the same test is required of all applicants offered the same position.

■   For-cause testing. An employer may test an employee at any time that the employer reasonably believes that the employee may be under the influence of drugs or alcohol.

■   Postaccident testing. Testing may be conducted after an employee is involved in an accident that caused a work-related injury to the employee or another person, or damaged the employer’s property, but only if the employer has a reasonable suspicion that the injury or damage was a direct result of the employee’s use of drugs or alcohol.

■   Random testing. An employer may require an employee or all members of an employment classification group to undergo random drug and alcohol testing.

■   Testing pursuant to a fitness-for-duty physical examination.

■   Post-rehabilitation testing. Testing may be conducted for up to two years following the return to work of employees who had previously tested positive or entered a rehabilitation program.

In order to test, an employer must have a written drug and alcohol policy that includes:

■   The employer’s policy regarding drug and alcohol use

■   Who is covered by the policy

■   The circumstances under which testing may be requested or required

■   A description of what substances will be the subject of testing

■   A description of the testing procedures

■   An outline of the consequences of a refusal to participate or of a positive test

■   An explanation of the confidentiality of the results and the right of the employee to explain, in confidence, reasons for a positive result

■   An explanation of employee rights and appeal procedures

At least 10 days’ notice must be given for implementation of a substance-testing policy, and the employer must post the policy conspicuously.

The law also has several rules regarding the times and costs of testing, sample collection, testing requirements, record-keeping procedures, and access to records.

An employer that tests must have a policy that includes an employee assistance program and confirmation of positive test results that will be used as the basis for adverse personnel actions. Confirmation tests must be done on the same sample as the first test and utilize gas chromatography and mass spectrometry or its equivalent.

In addition, state law provides that any employee who is discharged on the basis of a refusal to undergo drug or alcohol testing or a confirmed positive test result shall be disqualified from unemployment benefits.

Unless a failure to do so would cause an employer to imminently lose a monetary or licensing related benefit under federal law or regulations, an employer cannot take action against a medical marijuana license holder solely based on the results of a drug test showing positive for marijuana or its components.

Oregon

Oregon does not regulate substance abuse testing by employers; however, it does place restrictions on the administration of any substance abuse testing.

Laboratories conducting drug testing of employees must be licensed by the state health department. In addition, positive drug test results must be confirmed by a method designated by the health department as the best available technology for use to determine whether the substance abuse identified by the first test is present in the specimen.

Oregon also has statutes that prohibit employers from requiring any current or prospective employee to take a breathalyzer test as a condition of employment or continued employment absent the worker’s consent or reasonable grounds to believe the individual is under the influence of alcohol.

Although both recreational and medical marijuana are legal under state law, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage without facing liability under state law. In addition, under Oregon law, an employer is not required to accommodate the medical use of marijuana in the workplace.

Pennsylvania

Medical marijuana is lawful under Pennsylvania law. An employer may not refuse to hire or terminate the employment of a certified user who uses or tests positive for offsite marijuana usage without facing liability under state law. However, employers need not accommodate the use of medical marijuana on the property or premises of any place of employment. The act shall in no way limit an employer’s ability to discipline an employee for being under the influence of medical marijuana in the workplace or for working while under the influence of medical marijuana when the employee’s conduct falls below the standard of care normally accepted for that position.

Rhode Island

Employers may require drug testing as a condition of continued employment only if they have reasonable grounds to believe that an employee is impaired on the job by the use of alcohol or drugs. The observations of an employee’s job performance that suggest that the employee may be under the influence, which are required to allow drug testing, must be documented. A drug-testing program must be conducted in conjunction with a bona fide rehabilitation program and a written drug abuse prevention policy.

All employees must be allowed to provide the test specimen in private and allowed an opportunity to rebut or explain positive results. Positive test results must be confirmed by means of gas chromatography and mass spectrometry or a similarly accurate method, and the employee must have the opportunity to have the sample tested by an independent testing facility at the employer’s expense. Employers also may test applicants who have been given an offer of employment conditioned on receiving a negative test result. The test must be conducted in private and outside the presence of any person, and positive results must be confirmed by a certified laboratory by gas chromatography and mass spectrometry or a similarly accurate method.

Medical marijuana is lawful under Rhode Island law. An employer may not refuse to hire or terminate the employment of a certified user who uses or tests positive for offsite marijuana usage without facing liability under state law.

Tennessee

Applicants may be drug-tested as a condition of employment. If an employer implements a drug-free workplace program in accordance with Tennessee law (which includes notice, education, and procedure requirements for testing for drugs and alcohol), the employer may require an employee to submit to a test for the presence of drugs and alcohol. If the employee tests positive, the employee may be terminated and forfeits eligibility for workers’ compensation medical and indemnity benefits. However, an employer is required to notify all employees that it is a condition of employment for an employee to refrain from reporting to work or working with the presence of drugs or alcohol in the employee’s body. If an injured employee refuses to submit to a test for drugs or alcohol, the employee forfeits eligibility for workers’ compensation benefits.

An employer who chooses to implement a drug-free workplace program in accordance with Tennessee law must give all employees and job applicants, before testing, a written policy that contains the following:

■   A general statement of the covered employer’s policy on employee drug or alcohol use, which must identify the types of drug or alcohol testing an employee or job applicant may be required to submit to, and the action the employer may take against an employee or job applicant on the basis of a positive confirmed drug or alcohol test result

■   A general statement concerning confidentiality

■   Procedures for employees and job applicants to report confidentially to a medical review officer the use of prescription or nonprescription medications after they have tested positive

■   The consequence of refusing to submit to a drug or alcohol test

■   A representative sample of names, addresses, and telephone numbers of employee assistance programs and local drug or alcohol rehabilitation programs

■   A statement that an employee or job applicant who receives a positive confirmed test result may contest or explain the result to the medical review officer

Employers in Tennessee are generally not required to conduct drug or alcohol tests, and temporary staffing firms are specifically exempted from any requirement to establish a drug-free workplace. But an employer who chooses to implement a drug-free workplace program in accordance with Tennessee law may be required to conduct drug or alcohol tests after a conditional offer of employment to a job applicant, or when there is reasonable suspicion of an employee’s drug or alcohol abuse, or when the tests are part of a routinely scheduled fitness-for-duty medical examination. Drug or alcohol testing may also be required after an accident that results in an injury, or as a follow-up when an employee, in the course of employment, enters an employee assistance program for drug or alcohol-related problems.

An employer may not discharge, discipline, or discriminate against an employee solely upon the employee’s voluntarily seeking treatment for a drug-related or alcohol-related problem if the employee has not previously tested positive for drug or alcohol use.

All information, reports, and tests results received by the employer through a substance abuse testing program are confidential communications. Employers, laboratories, employee assistance programs, and their agents who receive or have access to information concerning drug or alcohol test results must keep all such information confidential. Release of such information under any other circumstance is authorized solely pursuant to a written consent form signed voluntarily by the person tested, unless such release is compelled by a hearing officer or a court of competent jurisdiction.

Texas

Employers in Texas are permitted to require applicants and employees to submit to drug testing. Employers in Texas with 15 or more employees that have workers’ compensation insurance coverage are required to adopt a policy designed to eliminate drug abuse and its effects in the workplace. Regulations require that a written policy be given to employees on or before the first day of employment or within 30 days of the adoption of the policy. The drug abuse policy must include

■   A statement of the purpose and scope of the policy, which must include alcohol and illegal drugs

■   A statement of the consequences an employee may suffer for violating the policy

■   A description of available treatment, including how it may be provided by the employer through an employee assistance program

■   A description of the availability and requirements for drug and alcohol abuse addiction

■   A description of any drug-testing program the employer has in force

Utah

Utah employers may require current employees and applicants to submit to drug testing only if employers and management “submit to testing themselves on a periodic basis,” if it is within the terms of a written, established drug-testing policy, and if it is for one of the following purposes:

■   To investigate employee impairment on the job

■   To investigate workplace accidents or theft

■   To maintain employee safety

■   To maintain productivity, quality of products or services, or security

All positive results must be confirmed by gas chromatography and mass spectroscopy or other comparable analytical method. An employer may use the results of a positive confirmed test or a refusal to submit to a test as the basis for disciplinary action.

Utah law also contains requirements regarding identification and collection of samples, timing, cost of and transportation to testing, requirements for collection of specimens and testing of specimens, bases for causes of action for defamation, and confidentiality of information.

Vermont

Employers may require employees to submit to drug testing only if the employer has probable cause to believe the employee is using or under the influence of drugs on the job, and the employer has an employee assistance or rehabilitation program available.

Random testing is not permitted unless required by federal statute.

An employee may not be terminated if the result is positive and he or she agrees to participate in, and successfully completes, an employee assistance program. However, an employee may be suspended pending successful completion of the program.

Employers may require applicants to submit to testing only under the following circumstances:

■   The applicant has received an offer of employment conditioned on his or her passing a drug test.

■   The applicant receives written notice listing the drugs to be tested.

■   The test is given at least 10 days from the date the applicant is notified of the test.

■   The drug test is part of, or in conjunction with, a comprehensive physical examination, although the test and the examination need not be at the same time.

Employers must provide employees and applicants with a written policy that outlines the circumstances under which an individual may be tested and the specific test procedures. Employers may not use blood samples for the purpose of conducting a drug test. Additionally, any information obtained during the drug-testing procedure must be kept confidential.

Only laboratories that fulfill the requirements of the statute and that are designated by the commissioner of health may be used to conduct drug testing. The law also contains standards regarding the administration of tests and confidentiality. Positive test results must be confirmed by gas chromatography and mass spectrometry or an equivalent scientifically accepted method.

Employers should be aware that the burden of proving compliance with Vermont law, when the testing is challenged, lies with the employer.

Although both recreational and medical usage of marijuana is legal under Vermont law, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite recreational marijuana without facing liability under state law. An employer is not required to accommodate the ingestion of marijuana in the workplace. Likewise, an employer is not required to accommodate an employee working while under the influence of marijuana.

Virginia

Virginia has a program that provides for a 5% reduction in premiums for workers’ compensation insurance for employers that implement a drug-free workplace program. The law provides that the specific criteria for such programs will be determined by each insurance carrier.

Washington

Although both recreational and medical usage of marijuana is legal under Washington law, if an employer policy restricts marijuana use, an employer may refuse to hire or terminate the employment of someone who uses or tests positive for offsite recreational marijuana without facing liability under state law. The medical marijuana laws do not require accommodation of any on-site medical use of marijuana in any place of employment. Employers can establish drug-free work policies.

Employers in Washington may receive a 5% discount in workers’ compensation insurance premiums if they maintain an alcohol and drug-free workplace program in accordance with the law. Such a program established under Washington law must contain all of the following elements:

■   A written policy statement

■   Substance abuse testing

■   An employee assistance program

■   Employee education and supervisory training

■   Policies and procedures in place to protect confidentiality

To qualify for the discounted workers’ compensation insurance premiums, the employer must require job applicants to submit to a drug test after a conditional offer of employment.

In addition, drug testing must be made a part of the investigation of each workplace injury that results in an employee needing off-site medical attention.

West Virginia

West Virginia’s Supreme Court has held that random testing should be limited to employees who hold safety or security-sensitive positions.

Under West Virginia’s medical marijuana law, an employer may not refuse to hire or terminate the employment of someone who uses or tests positive for offsite marijuana usage without facing liability under state law. Employers need not accommodate the use of medical cannabis on the property or premises of any place of employment. Employers may discipline an employee for being under the influence of medical cannabis in the workplace or for working while under the influence of medical cannabis when the employee’s conduct falls below the standard of care normally accepted for that position. In addition, a patient may be prohibited by an employer from performing any duty which could result in a public health or safety risk while under the influence of medical cannabis. Tip 72

Tip 72—State Laws

Drug-testing legislation is frequently introduced in many states.

Staffing firms would be well advised to ascertain the current status of such legislation before implementing a drug-testing program.

Two cities (San Francisco and Boulder), as noted above, have enacted ordinances regulating drug testing for private employers. Other cities have enacted ordinances regulating public sector drug testing. Staffing firms planning to implement a drug-testing program should consult local as well as state laws.

C. The Drug-Free Workplace Act of 1988

The Drug-Free Workplace Act of 1988 was enacted by Congress, and it became effective in March 1989.

1. Requirements

The act provides that no person or organization will be considered as a responsible source to provide goods and services to the federal government, or to be a recipient of a federal grant, unless it can certify that it has taken the following steps to provide a drug-free workplace:

■   Published a statement notifying employees that the unlawful manufacture, distribution, dispensation, possession, or use of controlled substances will not be permitted in the workplace, and specifying the actions that will be taken against employees for violating such a prohibition

■   Established a drug awareness program to inform its employees about the dangers of drug use in the workplace; the employer’s policy of maintaining a drug-free workplace; any available drug counseling, rehabilitation, and employee assistance programs; and the penalties that may be imposed upon employees for drug abuse violations

■   Provided employees with copies of the company’s policy on controlled substances, and required each employee assigned to work on the contract to agree to abide by the policy and to notify the company of a criminal conviction for substance violations in the workplace within five days of the conviction

■   Notified the relevant granting or contracting federal agency within 10 days of receipt of the above notice of a conviction

■   Disciplined an employee convicted of a drug offense or required his or her participation in a drug abuse assistance or rehabilitation program within 30 days after receiving notice of a conviction

■   Demonstrated a continuing good faith effort to maintain a drug-free workplace

2. Coverage

a. Covered Employers

The act applies only to companies that have contracts with federal agencies of at least $25,000 and to individual recipients of federal grants. The act and its regulations do not require drug testing, but they do require covered employers to take specific steps to ensure a drug-free workplace.

The act does not apply to subcontractors. A staffing firm that provides employees to a federal contractor is not required to comply with the act, whereas a staffing firm that provides employees to a federal agency would be required to comply if its contract was at least $25,000.

A staffing firm may come within the coverage of the act in one of several ways:

■   By entering into a contract with a federal agency to provide the services of temporary employees valued at $25,000 or more, a staffing firm will be required to comply with the act.

■   An individual purchase order for $25,000 or more will require compliance. Individual purchase orders from a federal agency for less than $25,000 will not bring the staffing firm under the act. In addition, the Office of Management and Budget has advised that individual purchase orders will not be aggregated. Therefore, a staffing firm may provide more than $25,000 of services to a single federal agency but will not be required to comply with the act as long as each individual purchase order is less than $25,000.

■   A blanket purchase order or a contract with an indefinite or maximum amount will require the staffing firm to comply with the act because of the potential to reach the $25,000 amount.

b. Workplace

“Workplace” refers to the site where work related to the government contract is being performed. If a staffing firm provides temporary employees to a federal agency, the workplace would be the location where the temporary employees are actually working. The Office of Management and Budget has advised that a contracting federal agency may also consider the office of the staffing firm to be a workplace that must be drug-free because the staffing firm’s in-house staff will be administering the contract.

c. Covered Offices and Employees

The act only applies to the individual staffing firm office that is contracting with the federal agency. In addition, the act applies only to those staffing firm employees performing services for the federal agency, not those performing services for nongovernmental clients; the employees of the staffing firm who administer the contract may also be covered. The DOL has stated that “any person who works on any activity under grant or contract, and who is on the payroll, is considered to be a covered employee, even if not paid from grant or contract funds.” A temporary employee is covered if he or she meets these criteria.

3. Penalties

A contracting agency may penalize an employer for noncompliance with any of the requirements set forth above. Noncompliance includes submitting false certification that the requirements of the act have been complied with, failing to comply with the certification requirements, and having a large number of workplace convictions. After determining that a contractor has failed to comply with the requirements under the act, the agency may suspend contract payments, terminate the contract for default, suspend the contractor from existing contracts, or debar the contractor from future contracts for a period not to exceed five years.

In order to impose any one of the above penalties, a contracting officer must determine, in writing, that cause for suspension of payments, termination, suspension, or debarment exists. The contracting officer of the agency must initiate the proceedings to be conducted by the agency, which include notice to the contractor, opportunity to respond in writing or in person, and such other procedures as may be necessary to provide a full and fair proceeding.

4. Enforcement

Although many of the federal laws discussed throughout this guide have a specific agency assigned to ensure that employers comply with those laws, there is no enforcement agency for the Drug-Free Workplace Act. Instead, each individual contracting agency is to ensure compliance with the act under its own contracts. Tip 73

Tip 73—Government Contracts

Since each contracting agency has broad discretion in the enforcement of the act, it would be advisable for any staffing firm with a government contract to consult the contracting agency regarding the particular requirements for complying with the act.

D. Responding to Client Requests for Drug Testing

As more employers begin to insist on drug testing, it is virtually inevitable that pressure to drug-test temporary employees will continue to increase. Staffing firms would be well advised to develop a policy of how to respond to drug test requests before clients begin to request such testing. A staffing firm that has not developed a policy will likely end up making decisions on an ad hoc basis, without the benefit of careful consideration; as a result, actions may be taken that violate a state or local law regulating drug testing and/or unnecessarily expose the staffing firm to litigation and increased liability. Tip 74

Tip 74—Client Response for Drug Testing

Staffing firms and their clients both can have liability for improper or wrongful drug testing or for damages arising from the inappropriate disclosure or use of the results of the drug test.

In most situations, however, liability arising from improper drug testing will fall primarily on the entity that makes the “mistake.” For example, if a client uses a noncertified laboratory to test temporary employees, the client (and maybe the laboratory) will be primarily responsible. On the other hand, if the staffing firm discloses erroneous information about the results of the drug test to a client, the staffing firm will be liable for any reputational injury suffered by the employee.

1. General Considerations

a. Know the Clients

In order to develop a successful strategy for responding to client requests for drug testing, the cardinal rule is for staffing firms to know in advance which clients require drug testing, and equally important, under what circumstances.

b. Control the Testing

One issue to be considered is who should control the drug testing, the staffing firm or the client. Sometimes, the client will demand to control the testing, so the issue does not arise. If you have a choice, consider the following factors in deciding whether to seek to control the testing or to allow the client to do so:

■   If the client controls the drug testing, the staffing firm saves the money, time, and inconvenience involved in establishing a drug-testing program. On the other hand, drug testing is not yet prohibitively expensive, in part because not every client will require it. In any event, at least some of the costs may be passed on to the client either directly or indirectly.

■   To the extent that drug testing gives rise to legal claims, or just animosity, by the temporary employee, having the client do the testing tends to shift the focus of the employee’s ire to the client.

■   The possibility of defamation, invasion of privacy, and related lawsuits against the staffing firm is minimized if the client does the drug testing and the results are not shared with the staffing firm. However, as a practical matter, it is likely that the staffing firm will learn that an employee has tested positive. In addition, an employee who sues will likely name the staffing firm as a defendant regardless of who controls the drug tests.

■   If the staffing firm does not know that a particular employee tested positive, the staffing firm will not be faced with the tough question of whether, knowing the employee uses drugs, it should send the employee to other assignments.

■   If a client controls the testing and learns that a temporary employee assigned to it tested positive, this knowledge may create an incentive for that client to stop doing business with the staffing firm for fear that other temporary employees may also test positive. On the other hand, if the staffing firm controls the testing, it can avoid sending persons who test positive to clients that require employees to pass a drug test.

■   Drug testing by the staffing firm may enable it to refer those who test positive to appropriate rehabilitation services before they cause harm to a client’s employees or property for which the staffing firm is likely to be liable, and may minimize absenteeism, lateness, employee theft, and similar problems that substance abusers often cause.

■   Drug testing of employees by a staffing firm may be used affirmatively in marketing strategies (i.e., “we only send drug-tested employees”).

c. Plan in Advance

Staffing firms likely to be confronted with requests for drug testing should plan in advance. One element of such planning is to become familiar with the drug-testing laws of your particular state. A second important element of advance planning is to develop and implement a substance abuse policy before you begin to drug-test or allow clients to drug-test your employees. Tip 75

Tip 75—Disclosure to Temporary Employees

Any drug-testing requirement for a temporary employee should be disclosed to the employee before he or she is assigned to that client. If possible, such notice should be in writing. Applicants who decline to be tested can be denied temporary assignment to the client that requires it.

2. Why Should a Staffing Firm Have a Substance Abuse Policy?

There are several reasons why a staffing firm should develop a substance abuse policy before drug testing or responding to client requests for drug testing.

First, employers are more likely to be able to defend drug testing—and adverse employment decisions based on drug testing—if drug testing is part of a comprehensive substance abuse policy.

Second, most of the newer state laws regulating drug testing require employers to adopt a substance abuse policy and to communicate that policy to their employees before drug testing, and this appears to be a trend.

Third, the problem facing employers is drug and alcohol abuse. Drug testing is only part of the solution to that problem. To be effective, a substance abuse policy should combine testing with education and some type of rehabilitation assistance or referral.

Fourth, a staffing firm that has developed a substance abuse policy will likely be in a better position than other staffing firms to respond to client requests that employees be tested.

Finally, developing a substance abuse policy requires the staffing firm to address drug testing itself, plus all of the peripheral issues (e.g., disclosure of positive results, confidentiality, etc.) that often cause employers to be liable even where the drug testing itself is lawful, and to develop appropriate procedures and forms for conducting tests. Tip 76

Tip 76—Disclosure of Results

Considerable care should be taken in the establishment of a drug-testing program. Issues such as disclosure of results, types of drugs to test for, who pays for the testing, privacy, maintaining records, and similar matters should be discussed and agreed upon between the staffing firm and the client before testing is begun.

3. Form and Components of a Substance Abuse Policy

a. Written Policy

The policy should be written in clear and concise language and distributed to all persons who may be affected by it. All supervisors should familiarize themselves with the policy. It may be appropriate to distribute the policy to clients. A sample policy is included in Appendix E. Note that, as described in this chapter, some states require that policies include specific provisions.

b. Defined Intent

The policy should state the intent and purpose of the company’s views regarding substance abuse, and clearly define the conduct that is prohibited. The policy should also specifically describe the controlled substances that are covered, and should include illegal drugs, alcohol, and the unauthorized use of legal drugs. Tip 77

Tip 77—Substance Abuse Policy

A substance abuse policy could include prohibitions against the following conduct:

■   Use, possession, solicitation for, or sale of narcotics or other illegal drugs, alcohol, or prescription medications without a prescription on company or client premises or while performing an assignment

■   Being impaired or under the influence of illegal drugs or alcohol on company or client premises or while performing an assignment. Improper use or abuse of prescription drugs should also be prohibited.

■   Possession, use, solicitation for, or sale of legal or illegal drugs or alcohol off the company or client premises that adversely affects the employee’s work performance, his or her own or others’ safety at the workplace, or the employer’s reputation

c. Drug-Testing Goal

If you intend to respond to client requests for drug testing, the policy should state that drug testing is one of the means whereby the company intends to seek to achieve its goal of a drug-free and alcohol-free work force. The specific considerations involved in the drug testing itself are discussed throughout this chapter.

d. Substance Abuse Education

The policy should provide for education of employees about the dangers and consequences of substance abuse. Booklets or other printed materials are often available for distribution to employees from local drug abuse programs, drug-testing laboratories, companies that sell drug-testing kits and equipment, and local health departments; or the employer may wish to develop its own materials.

e. Detection Training

Supervisors and counselors should be trained to recognize the physical, emotional, and behavioral manifestations of substance abuse to help them identify those who appear impaired.

f. Rehabilitation

The best substance abuse policies provide for some form of rehabilitation program for those persons who admit to substance abuse or who test positive. While it may be impractical for staffing firms to offer formal employee assistance programs similar to those offered by many large employers, a staffing firm’s substance abuse policy could include the following:

■   Referrals to the name, address, and telephone number of local private or public agencies that provide rehabilitation services

■   Informal counseling to the employee on the need to obtain professional help

■   Leaves of absence for employees who test positive so that the employee who does obtain rehabilitation services may return after being treated (with appropriate safeguards, including periodic random retests and the like)

g. Authorization and Release From Liability Forms

Applicants or employees asked to be drug-tested should execute appropriate authorization and release from liability forms. There are state law compliance considerations. A sample form is included as part of Appendix E. Tip 78

Tip 78—Requirements for Temporary Employees

A staffing firm should not force employees to be tested. If they are unwilling to consent to be drug-tested, the staffing firm can refuse to employ them or declare them ineligible to receive assignments from clients that insist upon drug testing.

Moreover, employees should not be assigned to a client that is known to request drug testing for temporary employees after a certain length of time or as a condition of permanent employment by the client, unless the temporary employee consents in writing to be tested before beginning the assignment. Indeed, alerting the temporary employee to the prospect of drug testing may serve as a screening device, and is likely to decrease the risk that a temporary employee actually assigned to the client will test positive.

A staffing firm should be careful to ensure that the release signed by the employee protects the staffing firm as well as the laboratory and the client.

h. Confidentiality

The substance abuse policy should state that the results of the drug testing will be treated confidentially and for no purpose other than for the staffing firm to make employment-related decisions regarding that employee.

i. Procedures. It is particularly important to establish a procedure whereby the testing laboratory communicates its results only with a specific representative of the staffing firm. The laboratory should agree not to disclose the results to the employee, the client, or anyone with the staffing firm, except the specifically designated individual.

ii. Recording Results. All results should be stored in confidential files, separate from any employee’s personnel file.

iii. Scope of Disclosure. Only managerial employees who have a genuine need to know the results of the drug test should be told. A defamation suit could be based on even a communication from the president to his or her secretary. If you decide not to assign the employee who tests positively, staffing firm coordinators can simply be told that the particular employee is no longer available; the company is not likely to be responsible for speculation or gossip by employees.

iv. Clients. For legal and practical reasons, it is probably imprudent to tell a client that a specific employee failed a drug test. If a client asks why a particular employee is no longer assigned to it, you may simply state that the employee is no longer available. Tip 79

Tip 79—On-Site Testing

Staffing firms that administer drug testing on site using commercially available quick tests should ensure that the use of such kits is in accordance with state law and that appropriate consent and authorization forms are obtained from the testees. Written procedures designed to protect against any invasion of privacy should be implemented and enforced. Where lawful, employer-administered, on-site drug tests may be useful for preliminary screening of applicants who test negative for drug use. However, any positive test result should be confirmed by a reliable laboratory before an adverse employment decision is made based on such result.

4. Selection of a Laboratory

Because most staffing firms are neither inclined nor equipped to conduct substance screening themselves, it is important to identify and to select a suitable laboratory to do the drug test, and many laboratories that do employment-related drug testing have arrangements with physicians for this purpose. As noted in this chapter, some states have particular requirements that must be considered in selecting a laboratory.

Factors to take into account in selecting a laboratory include:

a. Certification

The laboratory should be certified by the state or local health department. The National Institute of Drug Abuse certifies laboratories that are eligible to test federal government applicants, and it may be prudent to ascertain whether the laboratory you are considering has been so certified.

b. Recommendations

Recommendations from experts in the field or from other employers that have enacted drug-testing programs should be obtained.

c. Litigation Support

Although a drug-testing program should be designed to avoid the potential for litigation, such potential cannot be ignored. If an applicant or employee challenges the drug test results, the laboratory should be willing to provide an expert witness to testify regarding the custody and analysis of that sample. It is advisable to ask the laboratory how often its experts have testified, if at all, and in what types of legal proceedings.

d. Laboratory Staff

The director of the laboratory should be a physician, pathologist, toxicologist, or doctorate-level laboratory scientist who has extensive experience and background in analytical chemistry, clinical pharmacology, and/or forensic toxicology. The director should be qualified to interpret the results of the test procedures. It would also be prudent for the employer to obtain written documentation of operator training and qualifications to ensure that the laboratory uses only qualified and trained medical technicians or professionals.

e. Collection Sites

Some laboratories only do testing on urine samples that are obtained at other “collection sites.” It is generally safer and more convenient if the laboratory is a collection site itself.

f. How Samples Are Collected

If the laboratory is responsible for collecting the sample, an employer should ensure that the collection is conducted in a way that minimizes the possibility of adulteration by the employee but at the same time does not demean or embarrass the employee. Actual physical inspection of the location where the employees will provide the sample should be considered. If you find the location demeaning or humiliating, your temporary employees are likely to feel the same.

g. The Accuracy of the Sample (‘Chain of Custody’)

A chain of custody refers to the process of getting the sample from actual collection to the lab where it is analyzed, without tampering or loss of identification. Because the staffing firm will be making decisions based on the results of the test, it is essential that the sample be properly identified and accurate. In addition, a properly documented chain of custody, showing that the test results offered in evidence are from the actual urine taken from the employee in question and that the sample was not altered or contaminated, is necessary to satisfy the legal requirements for the use of chemical test results as evidence in adversarial proceedings. Therefore, it is advisable for a staffing firm, in cooperation with the testing laboratory and the company responsible for the collection, to establish a rigorous chain of custody to ensure that the identity and integrity of the sample are preserved throughout the collection, shipping, testing, and storage process.

h. Laboratory Procedures

The laboratory should have state-of-the-art internal quality control procedures and scrupulously follow them. It would be prudent for an employer to examine the laboratory’s operating manual to determine the procedures it follows for testing specimens. Among other things, it is important to learn what methods of screening the laboratory uses, which drugs the laboratory’s analysis detects, how positive results are confirmed, and how specimens are stored and for how long. The laboratory should provide the staffing firm with a written record that proper test procedures are followed for each test.

i. Checking for Accuracy

The laboratory should be subject to periodic testing for accuracy. An employer should ask the laboratory whether it participates in any accreditation and proficiency-testing program and obtain the laboratory’s proficiency-testing results. Some accreditation and testing programs include the Interlaboratory Comparison Program sponsored by the College of American Pathologists, the College of American Pathologists Laboratory Accreditation Program, state accreditation programs, and the Centers for Disease Control. In addition, most of the employers that have drug-testing programs periodically check the laboratory’s results themselves. Such a check is done in a variety of ways, including submitting known positive or “spiked samples” or submitting a batch of confirmed clean samples.

j. Test Results

A staffing firm would be advised to determine how the laboratory will inform it of test results. The preferred practice is to have results mailed to the proper individual in an envelope clearly marked “personal and confidential.” It is not advisable to have results revealed over the telephone. A staffing firm should also ascertain how long it will take to get the test results. Generally, a laboratory can report negative results within 24 to 48 hours. The laboratory should be able to report confirmed positive results within three to four days.

k. Contact With the Testee

The laboratory should have written instructions to communicate the results of the test only to the staffing firm, not to the applicant or employee who is tested, unless otherwise required by applicable law.

E. Must All Applicants and Employees Be Drug-Tested?

The answer to this question is “no,” provided the guidelines set forth in this section are adhered to and provided further that your state has not adopted a law that imposes such a restriction.

Unless prohibited by an applicable state law, it is permissible to differentiate among different categories of employees as to who will be drug-tested. For example, no state law currently prohibits testing only those employees a client requests, only temporary employees who will be given long-term assignments, or only those who are assigned to certain types of jobs. However, there may be limitations on when and under what circumstances such individuals may be tested.

Caution: You may not differentiate among applicants or employees on the basis of their age, race, color, religion, sex, national origin, disability, genetic information, or other protected category.

This section discusses the different considerations that come into play depending on who is drug-tested.

1. Applicants

Employers generally have more discretion to test applicants than existing employees, and this is true for applicants for temporary assignments as well. Subject to the provisions of state laws, it is lawful to drug-test all applicants. It is also generally lawful to test only applicants who have particular skills or abilities, or only those who are likely to be assigned to certain clients that require drug tests.

It is not lawful to drug-test only applicants you believe may use drugs because of their membership in a protected category (e.g., minorities, young people, etc.). If you test only certain applicants, the distinction must be based on valid job-related criteria, not stereotypical notions of which group of persons is more likely to use drugs.

Those applicants whom you decide to drug-test should execute appropriate release from liability and authorization forms. While such forms may not be legally required, they are likely to be helpful in defending lawsuits based on the drug testing.

2. Existing Employees

Subject to the state laws discussed above, you may lawfully decide to drug-test only regular employees or only temporary employees, or only certain categories of existing employees whose skills or abilities make them likely candidates for assignments to clients that require drug testing. The kinds of drug testing most commonly used for existing employees are as follows:

■   For-cause testing means that the employer tests only when it has reason to believe that a drug problem exists (e.g., evidence of drugs, accidents, fights or other incidents, behavioral symptoms of drug abuse, negative performance patterns, excessive absenteeism, or tardiness). Most employers that have adopted a drug-testing program for their current employees utilize for-cause testing.

■   Scheduled testing is done of all employees on a regular basis at specific times, such as an employee’s anniversary date, during an annual physical, or upon return from a leave of absence.

■   Random testing is the random selection of some employees for testing and is usually unannounced. A small percentage of employers utilize random testing.

3. Authorization and Release Forms

It is lawful to request all applicants (or all applicants with certain skills) to execute authorization and release forms to be drug-tested as a condition for being eligible for assignments, without actually requiring them to be drug-tested. In this way, an authorization form would be on file in the event that an employee is subsequently considered for the kind of assignment (e.g., long-term or indefinite) for which clients require drug testing.

4. Volunteers

Another option to consider is the creation of a “pool” of applicants or employees who volunteer to be drug-tested. Then, when a client requests a temporary employee for an assignment that is likely to require drug testing, an employee from this pool may be assigned.

1. Some consideration may be tendered (e.g., a bonus, priority for higher-paying assignments, etc.) in order to induce people to volunteer for drug testing.

2. Authorization and release-from-liability forms should still be obtained and signed.

3. By using volunteers, you avoid forcing applicants or employees to submit to drug testing.

4. If you assign only employees from this pool to clients that drug-test, you minimize the risk of having the client learn that one of your temporary employees tested positive for drugs. Such a result might well cast a shadow over the relationship between the temporary employee and the client that extends beyond this one employee to the staffing firm. Tip 80

Tip 80—Disclosure to Clients

It is highly ill-advised (and unlawful in some states) to disclose to clients the test results of specific applicants or employees without the explicit written consent of the person tested. The staffing firm should simply inform a client that it will send someone who has tested negative. Finally, it would be prudent for a firm to explain its drug-testing policy to the client so that there will be no misunderstanding regarding when and under what circumstances employees are tested.

F. Dealing With the Employee Who Tests Positive

Regardless of which applicants or employees are tested, or what method is used, there will almost certainly come a time when someone tests positive, and a staffing firm will need to deal with this issue. The staffing firm should thoughtfully plan its response in advance and incorporate it into the substance abuse policy. This section sets forth factors to consider in deciding how to handle this sensitive subject.

1. Limitations on Drug Testing

In determining what action to take if an employee tests positive for drugs, one factor to bear in mind is the limitation of drug testing. (See Section H.3 of this chapter.) Drug tests do not show whether the person is or was actually impaired or intoxicated, the pattern of drug use, or whether the individual is dependent on drugs. Drug tests only demonstrate that someone has taken drugs in the recent past.

On the other hand, employees who test positive for drugs pose a substantial risk for employers. The human and economic costs of substance abuse have been discussed earlier. (See Section A of this chapter.) Moreover, a staffing firm should be particularly careful in its handling of employees who test positive, because a staffing firm is rarely in a position to directly observe the employee while on duty to detect behavior or performance problems. Also, there is significant potential liability for a staffing firm that continues to assign an employee who tested positive, especially if that employee should cause any injury to the client’s regular employees or property.

2. Dissemination of Test Results

It is important that a staffing firm establish procedures to ensure that the results of a drug test are kept confidential and are disclosed only to those supervisory employees who have a need to know. (See Sections B.4.a and c, and Section D.3.h of this chapter.) A staffing firm can tell clients, employees, applicants, and anyone else who inquires that it is the company’s policy to not disclose the results of drug tests.

3. Common Employee Responses

Employees who test positive may deny drug use on one of two grounds: “passive inhalation” or that the drug was used “years ago.” Neither of these contentions is persuasive.

a. Passive Inhalation Theory

A person who tests positive for marijuana may seek to explain the positive result by claiming that he or she accidentally or unknowingly inhaled the smoke of someone else who was using marijuana. This can also be a problem with PCP and, to a lesser extent, cocaine. Studies have shown that this passive inhalation, while theoretically possible, is highly unlikely to yield a positive test result. Someone in close proximity to marijuana smoke over an extended period may develop minute traces of marijuana metabolites. However, it is almost impossible that a nonsmoker could inhale sufficient smoke by passive inhalation to generate a level that would exceed the cutoff of the analytical methods currently in use.

b. Detection Time Theory

Some employees contend they only used the drugs many years or months before the drug test. While detection time for certain drugs varies depending on the individual, the frequency of use, and the amount consumed, the following chart summarizes the generally accepted maximum detection time for drugs in the urine.

Drugs

Detection Time
(Up to Number of Days)

Amphetamine/Methamphetamine

7

Barbiturate

4-45

Cocaine

4

Heroin/Morphine (Codeine)

4

Marijuana/Hashish (THC)

30

Methaqualone

5

Phencyclidine (PCP)

8

c. Legalization Under State Law

A person may claim that he or she has a prescription for marijuana or that marijuana was used in a state where it is legal. While state laws regarding the legalization of marijuana vary from state to state, marijuana use remains illegal under federal law. Therefore, if an employer’s policy prohibits the use of illegal drugs, then the employer will generally be able to take appropriate action.

Like federal law, most states have taken the position that an employer is not required to accommodate an employee’s medical marijuana use and may terminate an employee on the basis of positive drug test results. However, the legal landscape may be shifting (See state laws under Section B.5 of this chapter.) In 2017, the Massachusetts Supreme Court held that employers may have a duty to accommodate medical marijuana use under Massachusetts state law because an exception to the employer’s drug policy to permit marijuana use may be a reasonable accommodation given that medical marijuana was the most effective means of treating the employee’s debilitating condition. Similarly, in 2017, a Connecticut federal district court ruled that Connecticut’s medical marijuana act explicitly prohibited employers from discriminating against applicants or employees who utilize medical marijuana pursuant to state law, and that this explicit protection was not preempted by federal law.

4. Retesting

Per your discretion—or as required by state law—the employee may be retested or have confirmatory testing done.

5. Dealing With the Confirmed Positive Test Result

When confronted with an employee who has tested positive, a staffing firm has a variety of options in terms of how to proceed:

■   Counsel the employee that drug use or possession is not permitted in the workplace, and caution the employee that he or she will be tested again and that another positive test will lead to termination.

■   Disqualify the employee from future assignments for a period (e.g., two weeks) and then retest. If the employee tests negative, he or she could be reassigned, provided the employee agrees to periodic unannounced retests.

■   Disqualify the employee from future assignments until he or she successfully completes a rehabilitation program. Many states that have enacted drug-testing legislation require the employer to provide some type of rehabilitation assistance and may not allow automatic disqualifications for a first offense. While few staffing firms have the resources to have an in-house rehabilitation or employee assistance program, the company could refer employees who have substance abuse problems to one or more public or private alcohol or drug rehabilitation programs. Once the employee successfully completes the program and tests negative for drugs, the employee could be reassigned. In such a situation, most prudent employers would condition the re-employment on the employee’s consent to random drug testing thereafter.

■   Refuse to assign the employee to any clients that require drug testing.

■   Refuse to assign the employee (i.e., discharge him or her).

Deciding which of these options, or combination of them, a staffing firm should elect depends on the circumstances of each situation.

6. Deciding How to Treat an Employee Who Has Tested Positive

A staffing firm would be advised to consider the following factors in deciding how to treat an employee who has tested positive:

■   The existence and terms of a state statute or local ordinance

■   The existence and provisions of the employer’s substance abuse policy

■   The employee’s prior work record and criminal conviction record

■   The nature of the employee’s skills (e.g., a school bus driver presents different questions than a warehouse worker)

■   The employee’s previous substance abuse problems

■   The nature and amount of drug found in the employee’s system (e.g., a result demonstrating prolonged heroin use is different from a result showing microscopic traces of marijuana)

■   The employee’s explanation, if any

■   The employee’s willingness to be retested or retested periodically

■   The company’s overall philosophy regarding substance abuse

Once the decision is made, it should be documented and retained in the employee’s confidential personnel file. Tip 81

Tip 81—Discrimination

The antidiscrimination laws prohibit employers from making employment decisions on the basis of protected categories (e.g., race, age, sex, etc.). Employers cannot single out specific groups for testing based on their membership in a protected category, and cannot impose more serious sanctions against employees in protected categories than they do against other groups of employees (e.g., white males).

The preference of one client not to have a person assigned who tested positive should not automatically lead you to disqualify that employee from any other assignment. These decisions should be made on a case-by-case basis.

7. Unemployment Compensation Issues

Whether an employee who is terminated for misconduct after testing positive on an employer’s drug test can receive unemployment compensation benefits depends upon the state. Many states have statutes concerning drug use and unemployment compensation.

These laws vary, and it is important for the staffing firm to be familiar with the laws in its jurisdiction. (See Section B.5 of this chapter.) For example, many states, such as Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Michigan, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, and Virginia have enacted legislation disqualifying employees from receiving unemployment benefits because they were discharged for misconduct on account of the use of alcohol or drugs, failed a drug or alcohol test, or refused to take such a test. Other states, such as South Dakota, do not permit the disqualification of unemployment benefits for reasons such as refusal to take a drug test.

In addition to legislation, courts in some states have held that testing positive for drugs may constitute disqualifying misconduct (e.g., Georgia, Nevada, Pennsylvania, Utah, Wisconsin, and California). The California Unemployment Insurance Appeals Board denied unemployment benefits to an employee who was terminated for refusing to take a mandatory test, holding that the refusal constituted misconduct because he was employed in a hazardous work environment, knew he was subject to annual testing, and had a reduced expectation of privacy.

In addition, the U.S. Supreme Court overturned an Oregon Supreme Court decision by holding that Oregon’s Department of Human Resources may deny unemployment compensation benefits to two drug counselors who were fired for using peyote as part of religious rituals in violation of a work rule prohibiting the use of alcohol and nonprescription controlled drugs. In another case, the Mississippi Supreme Court ruled that a Mississippi employee fired for alcoholism was not eligible for unemployment benefits because under state law alcoholism is “misconduct” and not a “disease.” The employee was fired after repeated, unapproved absences to attend an alcohol rehabilitation program, and his absences were considered misconduct. The Virginia Court of Appeals held that an employee’s admission of drug use satisfies the employer’s burden to prove misconduct in an unemployment compensation case, even without entering the employee’s drug test results or establishing chain of custody for the specimen. Prior to the enactment of legislation addressing the same issue, Louisiana Second Circuit Court of Appeals denied unemployment benefits to an employee for reporting to work while intoxicated, ruling that the dismissal was for job-related misconduct. The Georgia Court of Appeals held that, where an employer has a written substance abuse policy that includes random drug tests and an employee tests positive for drugs, the employee may be disqualified for unemployment benefits because he or she was discharged for violating the employer’s work rules.

On the other hand, the Kansas Supreme Court found that positive drug tests did not fall within the realm of “disqualifying misconduct” because no on-the-job impairment was shown. The New Jersey Appellate Division ruled that an employee fired for failing to stay off drugs according to the terms of a “last chance agreement” did not voluntarily quit his job, and was therefore entitled to unemployment benefits.

8. Workers’ Compensation Issues

Significant reductions in workers’ compensation claims and costs are being attributed to effective drug and alcohol testing in the workplace. As a result, limitations or denial of workers’ compensation benefits for injured employees who test positive for drugs or alcohol have been enacted in numerous states. A majority of states and Puerto Rico have statutes that limit workers’ compensation for employees who are injured as a result of alcohol or drug-related behavior. In some of these states, such as Florida, Georgia, Louisiana, and Virginia, a positive drug test performed under designated standards (or, in some cases, refusal to submit to a drug test) establishes a presumption of impairment.

G. Current Drugs of Abuse

By definition, a drug is any chemical substance that produces a physical, mental, or behavioral change in an individual. Alcohol and drugs, both legal and illegal, are subject to abuse and become a problem in the workplace when they interfere with the employee’s ability to perform the job. This section discusses the most commonly abused drugs.

1. Alcohol

A clear liquid produced from fermentation, alcohol acts as a sedative on the nervous system and results in heightened activity and lack of inhibition. Chronic alcohol use may lead to psychological and physical dependence, as well as various liver disorders, such as cirrhosis and alcoholic hepatitis. The acceptance and extensive use of alcohol make its abuse potential very high. Alcohol may be detectable in the urine for three to four hours after use.

Every study on the effect of drugs in the workplace has shown alcohol to be the largest problem. These studies estimate that alcohol accounts for $30 billion to $90 billion in lost productivity. A report of the Bureau of National Affairs found that absenteeism among problem drinkers is 2.8 to 8.3 times greater than normal. Alcoholics have two to three times greater risk of being involved in an industrial accident. And up to 40 percent of industrial injuries can be linked to alcohol abuse.

2. Amphetamines

Generally found in capsule or tablet forms, the short-term effects of amphetamines include restlessness, overstimulation, euphoria, a sense of well-being, palpitations, and increased heart rate. Prolonged use of amphetamines may also result in irritability, paranoid thinking, and, in extreme cases, coma, cerebral hemorrhage, and death. Because amphetamines can produce a powerful euphoria, the potential for their abuse is high. Amphetamines may be detectable in the urine for approximately one to two days.

3. Ice

A crystallized, smokeable form of methamphetamine (“speed”), ice is a synthetic stimulant produced from a derivative of amphetamine. Smoking ice produces an even more intense reaction than injecting speed, producing a 24-hour euphoria followed by 48 hours of severe psychosis. In addition to the prolonged euphoria, signs of increased alertness, a reduced sense of fatigue, mood elevation, increased motor and speech activity, and an increased feeling of power occur. The severe psychosis is characterized by confused and disorganized behavior, compulsive repetition of meaningless acts, irritability, fear, suspicion of everything and everyone, hallucinations, and delusions. The user may also become aggressive and extremely antisocial. Techniques have been developed to detect methamphetamine in urine 24 to 48 hours after drug use.

4. Barbiturates

Used as a sedative, well-known barbiturates include Seconal and Nembutal. In moderate doses barbiturates produce tranquility, relaxation, and mild euphoria. The regular use of barbiturates leads to intense and extreme emotions and impaired thinking and motor functions. The long-term effects include depression, chronic mood swings, reduced attention span, and impaired judgment and thinking. The abuse potential for barbiturates is very high because tolerance to the pleasurable and sleep-inducing effects develops rapidly, and greater doses are required to produce the same effects. Barbiturate overdose is a factor in nearly one-third of all reported drug-related deaths. Some varieties of barbiturates are detectable in the urine for one day; others for as long as two to three weeks.

5. Cannabis

Normally referred to as marijuana and hashish, the short-term effects of cannabis are a general feeling of well-being, relaxation, and emotional lack of inhibition. Regular or occasional use of cannabis does not appear to produce harmful physiological effects in healthy adults, although a mild psychological dependence may develop. Very high regular use may cause psychological adjustment problems in some people, leading to apathy and decreased ambition. For moderate users, cannabis is detectable in the urine for two to three days. For more frequent or chronic users, it may be detected for up to two weeks.

6. Cocaine

Cocaine is a powerful stimulant of the central nervous system, and moderate usage causes euphoria, heightened alertness, loss of appetite, sleeplessness, elevation of self-confidence, and increased speed of performance for simple physical and mental tasks. Chronic use of cocaine leads to nervousness, paranoid thinking, memory disturbances, and depression. Cocaine may be detected in urine for approximately two to four days after use.

The powerful euphoria produced by cocaine and the multiple means of administration (nasal, oral, and intravenous) make it highly popular. Indeed, the use of a very cheap form of cocaine, crack, has approached epidemic proportions in some large cities. Moreover, cocaine is highly addictive, and the withdrawal symptoms make discontinuing cocaine extremely difficult. Some researchers predict that 50% of all social users of cocaine become addicted.

Cocaine is a problem in the workplace because the immediate, short-term effect is enhancement of the ability to perform simple tasks, particularly in fatigued persons, and a feeling of great self-confidence. Over time, cocaine becomes a necessary prelude to work because confidence is lost in one’s ability to perform without it. It is estimated that 90% of cocaine users use it at work.

7. Crack

Crack is a smokeable form of cocaine extracted in alkaline water, which increases its effect and potency. Crack produces intense euphoria, frequently excitable behavior, and then severe depression. The incidence of acute panic states, toxic psychosis, and paranoid schizophrenia produced by cocaine is greatly magnified when smoked in the form of crack.

8. Heroin

A powerful drug produced from opium poppies, heroin may be injected, sniffed, smoked, or swallowed. Moderate use of heroin may lead to mental cloudiness, euphoria, suppression of pain, a feeling of well-being, and a mild dozing state. Higher use may lead to impaired concentration and decreased sensitivity to powerful stimuli. Regular use of heroin rapidly produces a tolerance to its desired effects, and at some point a plateau is reached where no amount of the drug is sufficient, and the user will inject the drug just to avoid or delay withdrawal sickness. Because of the withdrawal symptoms and the prolonged psychological effects following withdrawal, recidivism is highest among those who have tried to terminate heroin use. Heroin use may show up in urine for up to two days after use.

9. Prescription Opiates

According to the National Institute of Drug Abuse, misuse of prescription opioids, CNS depressants, and stimulants is a serious public health problem in the United States. Although most people take prescription medications responsibly, in 2017, an estimated 18 million people (more than 6 percent of those aged 12 and older) have misused such medications at least once in the past year. According to results from the 2017 National Survey on Drug Use and Health, an estimated 2 million Americans misused prescription pain relievers for the first time within the past year, which averages to approximately 5,480 initiates per day. Additionally, more than one million misused prescription stimulants, 1.5 million misused tranquilizers, and 271,000 misused sedatives for the first time. Among the drugs that fall within this class—sometimes referred to as narcotics—are morphine, codeine, OxyContin, Demerol, and Vicodin. In addition to relieving pain, these drugs can affect regions of the brain that mediate what is perceived as pleasure, resulting in an initial euphoria. However, depending upon the amount of the drug taken, they can cause drowsiness and depress breathing, and can also be fatal.

Long-term use can lead to physical dependence on the drugs. Over time, those who misuse these drugs may develop a tolerance and require higher doses to obtain the initial euphoria. Treating addiction is similar to the treatment of heroin addiction, including the use of Methadone to relieve drug cravings.

H. Drug-Testing Methods

Various screening devices currently exist to detect the presence of drugs or alcohol in the body, including blood tests, urinalysis, and hair analysis. Most employers utilize urinalysis because it is considered less intrusive and easier to administer than blood tests. Urinalysis methods vary substantially in cost, accuracy, the number of different drugs detected, and the amount of expertise required to perform them.

Regardless of the test chosen for initial screening, all test manufacturers recommend that a positive result be confirmed by a second test using a more sensitive and specific method.

This section discusses the most common methods used by employers to test for drugs, and the limitations of the tests.

1. Initial Screening Methods

a. Enzyme Multiplied Immunoassay Technique

The EMIT is a widely used drug test. It can be used on the employer’s site or in a laboratory, is relatively easy to administer, and is inexpensive. The EMIT can detect the presence of any of the following drugs: cannabinoids or hashish, cocaine, barbiturates, benzodiazepines, methaqualone, methadone, phencyclidine, proxyphene, amphetamines, and opiates (including heroin). However, a separate analysis must be done for each drug. In addition, the EMIT, like other screening methods, can identify the correct drug group but not necessarily the specific substance used, except for marijuana.

If administered properly, the EMIT has a fairly high accuracy rate—approximately 95%. The test has been criticized, however, for yielding a significant rate of false positives, a result that indicates a person has used drugs when he or she has not. False positives may result from a number of factors, including the fact that certain foods or other products may appear as drugs. Occasionally, nasal spray has been detected as amphetamines and poppy seeds as opiates.

b. Radio-Immunoassay

The RIA is similar to the EMIT; it can detect the same drug classes, using a separate analysis for each, and has approximately the same specificity and accuracy.

Some employers and laboratories believe that it is more accurate than the EMIT. However, unlike the EMIT, it cannot be used outside of a laboratory setting. It is generally the preferred test when there are a large number of samples because it is very compatible with high-volume equipment.

c. Fluorescence Polarization Immunoassay

The FPIA was introduced in 1981 for therapeutic drug monitoring and is the test most widely used in hospitals that conduct such tests. Currently, the FPIA is available to test for ethanol, cocaine, opiates, amphetamines, cannabinoids, benzodiazepines, methadone, phencyclidine, and barbiturates. Unlike the EMIT and RIA, which use a single yes or no cutoff, the FPIA can be programmed to establish the threshold for positive results at any point between established minimum and maximum concentrations. However, like both the EMIT and RIA, when using the FPIA, a separate analysis must be done for each drug.

d. Thin-Layer Chromatography

TLC is more specific and is generally more reliable than the EMIT or the RIA. It is also able to screen simultaneously for the presence of several drugs. However, the test is more costly than the EMIT and requires substantial skill and judgment by the technician. In addition, the need for independent confirmation of the TLC is critical.

e. EZ-Screen

The EZ-Screen is a cannabinoid enzyme immunoassay test. It is a small (credit card sized) test that produces results in less than five minutes. Drops of urine indicate whether the sample contains levels of cannabis metabolites at certain concentrations. The kit includes all the material needed for testing, except absorbent tissues. There is no laboratory equipment needed to utilize the test. EZ-Screen has clear cost advantages over other immunoassay tests. This test can be used for a variety of drugs and has been approved by the Food and Drug Administration.

f. Color or Spot Tests

This test, introduced in 1987, applies urine to a test paper. A blue-gray coloration is supposed to indicate the presence of a variety of drugs. These drugs include cocaine, morphine, opiates, methadone, phencyclidine, or amphetamines. Color or spot tests are quick and inexpensive; however, the test is not capable of telling which drug is present. Because of this limitation and its potential for cross-reactions, the test is considered unreliable and virtually useless.

2. Confirmation

a. Gas Chromatography and Mass Spectrometry

The GC/MS is the state-of-the-art analytic technique to test for a wide spectrum of drugs, including heroin, barbiturates, methadone, tranquilizers, and marijuana. It is highly accurate and is the preferred method to confirm initial positive results produced by any of the screening methods. It is not generally recommended as a screening test because it is expensive, requires sophisticated equipment, and must be performed by trained technicians.

b. High-Performance Liquid Chromatography

HPLC is generally used as a confirmation test and not as a screening test because analysis needs to be selective and optimized for a specific drug class. HPLC is an efficient method of separation for liquids or substances dissolved in liquids. Its disadvantages are similar to those of GC/MS.

3. Limitations of Drug Tests

Urine screens have been reported to cause both false-positive and false-negative test results. There are several major causes of inaccuracies of urine screens, including interfering substances, cross-reaction between illicit substances and other substances, human error, inadequate or improper handling of urine samples, and the use of inadequate testing procedures.

a. Accuracy

i. Interfering Substances. A number of substances can be added to a urine sample that will interfere with a test and cause a false-negative result. For example, large quantities of fluid, such as water, may be added to the sample. This dilution of the sample may cause a negative reading. The same result can be achieved if the individual being tested drinks a large amount of a variety of fluids before giving the urine sample. A third way to falsify the test result is to avoid giving the first urine of the day. A variety of substances, including liquid soap, quinine, and table salt, can also cause a false-negative test result.

ii. Specificity. The standard screening tests, except those for marijuana, identify only the class of drugs present in the urine, not the specific substance. Positive test results can occasionally be produced by standard prescription drugs. For example, because codeine is an opiate, a positive test for opiates on a screening test could mean only that the person had used a prescription drug containing codeine.

iii. Cross-Reactivity. Certain over-the-counter, nonprescription drugs contain compounds that are similar in chemical structure to the drug being tested for, and the screening test misreads the compound as being an abused drug. This situation is referred to as cross-reactivity. For example, the EMIT assay for amphetamines will produce positive results if certain over-the-counter cold medications have been used, and the painkiller ibuprofen, available over the counter under the brand name Advil, may produce a positive result on the EMIT marijuana test.

iv. Human Error. In addition to inaccurate test results due to the limitations in the various testing methods, human error is an area of concern. All tests require the involvement of human beings in gathering the urine, sending it to the lab, taking proper care of the sample, and conducting the tests. If care is not taken, samples may be confused and test results will be inaccurate. It is, therefore, very important to review each step of the chain of custody. There is also potential for operator error; for example, failing to clean the machinery properly can cause problems with testing. Tip 82

Tip 82—Methods

Because of the lack of specificity and the cross-reactivity of screening tests, a staffing firm would be wise to ensure that the laboratory doing the testing followed these procedures:

■   Before administering any test, ask persons taking the test if they have taken any prescription or nonprescription drugs in the last two weeks

■   Confirm initial positive test results with a more sophisticated test, like the GC/MS, which can clearly differentiate among each substance in a class and can positively identify every substance of abuse.

A staffing firm should also consider providing employees, and possibly applicants, the opportunity to explain or challenge positive test results, or to have the sample retested at their own cost. Some states require that employers do so.

b. Inability to Measure Current Impairment

Because the concentrations of drugs in the urine do not correlate with degrees of impairment, a positive drug test does not mean that the individual is impaired by drugs or alcohol at the time the test is taken. A positive test result does not establish intoxication or impaired performance; it only demonstrates that someone has taken drugs in the recent past.

Moreover, current tests do not measure how recently an individual has used drugs. A positive drug test does not establish whether an employee is using drugs in the workplace or immediately before coming in, or whether he or she may have used drugs days before with no effect on his or her ability to do the job. An employer is advised to consider these limitations in determining what, if any, action should be taken with respect to an employee who tests positive for drugs. Tip 83

Tip 83—Sources of Information

A staffing firm with questions regarding substance abuse testing may wish to contact these expert organizations:

■   Center for Substance Abuse Prevention Workplace Helpline 800-967-5752

■   National Clearinghouse for Alcohol and Drug Information 800-729-6686

7

The Pre-Employment Process

Employment law begins even before anyone is on the payroll. Most of the laws that protect employees also protect job applicants. Indeed, a principal purpose in enacting the equal employment opportunity laws discussed in Chapter 1 was to open doors for various classes and groups that Congress (and numerous state legislatures) concluded were being denied access to job opportunities. While much of the litigation brought under these laws involves individuals who have been terminated from a job, it is important to remember that every rejected applicant is also a potential litigant.

This issue is particularly important for staffing firms. The screening of job candidates and the selection of employees are central to the business.

When widespread lay-offs occur, added emphasis must be given to this issue. The displaced employee with a strong résumé who applies but is not interviewed for an advertised position is often more disgruntled over a rejection, more confident of his or her abilities, and more inclined to believe that his or her age, gender, or minority status was the real reason for the rejection. Similarly, the disabled applicant who is interviewed but not hired poses a significant risk of litigation. The enactment of the Americans With Disabilities Act of 1990 imposed specific restrictions on the hiring process and resulted in an increase in the number of challenges to employer hiring practices.

Failure-to-hire suits can entail a searching examination of an employer’s hiring process, including its advertisements, application forms, the tests that it administers to applicants, and the questions posed during interviews. It is essential that the persons involved in the hiring process understand the restrictions imposed on employers, both to minimize the possibility of claims of discriminatory or illegal hiring practices, and to bolster the employer’s ability to defend itself if such claims are made.

This undertaking is complicated by the expansive nature of the rights that are protected under various statutes. Inquiries that are permissible under one statute may violate another. For example, while the ADA may permit an employer to administer pre-employment physical agility and fitness tests, these same tests may violate Title VII of the Civil Rights Act if they have an adverse impact on a protected class (e.g., women) and are not shown to be job-related and consistent with business necessity. In many instances, employers must comply with state and local statutes in addition to the federal laws that protect job applicants. An inquiry that is permissible under federal law may be prohibited by a state or local statute.

While investigating job applicants has its limitations and risks of liability, the failure to adequately evaluate temporary employees, some of whom the staffing firm may meet only once (if at all), exposes the company to potential liability. Lawsuits against employers whose employees engaged in violence or other wrongful conduct, such as assault and theft, highlight the importance of careful applicant screening, particularly for temporary employees who are not directly supervised or observed by the staffing firm when they are on assignment.

When the staffing firm knows or should know that an employee it has placed on a client’s premises poses a risk of harming the client or its employees, the staffing firm may be liable for damages under the expanding theory of negligent hiring or negligent retention—even though the employee clearly is acting outside the scope of his or her employment. Given the volume of applicants screened by staffing firms, the odds are high that a few will pose such risks.

This chapter is intended to offer general guidance on procedures for screening job candidates and making decisions on whom to offer employment. It includes a discussion of the types of information that can and cannot be elicited from applicants, the administration of medical exams, the content of application forms, and the use of references. The reader is also referred to Chapter 8, Measures Designed to Reduce the Likelihood of Employment-Related Claims, for a review of practices aimed at reducing the risk of potential liability in the pre-employment process. Because of the recent and ongoing proliferation of state and local laws governing pre-employment practices, counsel familiar with laws applicable in jurisdictions where a staffing firm operates should be consulted to help ensure compliance and mitigate risks.

A. Recruitment

An employer’s recruitment efforts cannot, either by design or effect, be limited in such a way that members of protected classes are systematically denied access to job opportunities. This requirement affects staffing firms in at least three key ways.

1. Word-of-Mouth Recruiting

When an employer’s existing workforce does not include members of protected classes, an employer who relies solely on word-of-mouth referrals by current employees to fill job vacancies runs a substantial risk of violating discrimination laws. Discrimination may occur because protected persons will not have the personal contacts necessary to learn about job openings and, thus, will be excluded from an opportunity to apply for the jobs.

2. Job Advertisements

Staffing firms may also expose themselves to a substantial risk of violating discrimination laws in connection with job advertisements. Employers must take care to select publications and websites that are likely to reach a diverse group of applicants when placing job advertisements. Staffing firms that are federal contractors may be required to take affirmative steps to recruit members of protected classes and/or groups.

In addition, employers must pay particular attention to the content of job advertisements. Such advertisements should always include an appropriate equal employment opportunity (EEO) caption (e.g., “an equal opportunity employer”). Employers are prohibited from indicating in their job advertisements any preference, limitation, or specification for a particular protected class. An advertisement reflecting a preference for a “young” applicant or a “female” applicant (unless a bona fide occupational qualification is present) is unlawful. Tip 84

Tip 84—Job Advertisements

The following references in job advertisements have been declared discriminatory:

■   Attractive lady

■   Career-minded men

■   Real sharp girl

■   College student

■   Ages 25 to 35

■   Retiree

■   Gal Friday

Employers seeking to minimize the risk of violating EEO laws should use neutral job titles in their advertisements, such as “sales representative” in place of “salesman,” or “server” instead of “waitress.” Words or phrases such as “recent graduate,” which tend to deter members of protected categories from applying, should also be avoided.

All advertising and recruiting materials must be free of any language that would explicitly or implicitly deter members of a protected class (e.g., older workers, women, racial minorities, persons with disabilities, etc.) from applying. Language that might be construed as creating such a deterrent can sometimes be offset by the inclusion of language encouraging persons within the protected class to apply for the position.

Example. An advertisement for a cashier at a supermarket specifies that “applicant must be young, energetic, and possess excellent client relations skills.” Such a listing would violate the federal age discrimination statute because it indicates a preference or limitation based on age. The ad would probably be acceptable, however, if the word “young” were deleted. An advertisement seeking an “energetic” candidate would be acceptable as persons of all ages can be energetic.

3. Walk-In Hiring

While walk-in hiring is generally lawful, if the practice produces a workforce that disproportionately excludes members of minority groups, exclusive reliance on that practice may be viewed as evidence of discriminatory intent.

B. Pre-Employment Inquiries

1. General Considerations

After potential employees have been identified, the employer must learn some basic information to determine whether the individual is suitable for hire. A prospective employer should elicit from a job candidate only information that is necessary to evaluate that person’s qualifications for the job being filled. With temporary employees, this may not always be clear because the applicant may be suitable for many types of jobs. Moreover, application forms and interviewers should not pose questions that seek information about an applicant’s age, marital status, religion, disabilities, or any other characteristic that is protected by an employment discrimination statute. Such questions give rise to a suggestion of possible discrimination, because it is reasonable to assume that all questions asked on an application form or during an interview are for some purpose and that the answers given have a bearing on the selection process. Tip 85

Tip 85—Application Forms and Interviews Questions

Staffing firms should review their application forms and “standard” interview questions and determine why each piece of information is being sought. Any question that does not elicit information that will assist in determining the candidate’s suitability for the job should be altered or eliminated.

In general, employers should observe three overall principles in seeking information from job applicants:

■   Determine that all areas of inquiry and information sought serve a legitimate business purpose in enabling employers to evaluate the candidate’s suitability for the position(s) at issue.

■   Avoid selective questioning or testing. Interview questions and job tests should be administered to all applicants for similar positions who reach the stage of the hiring process at which those questions are asked or tests are conducted. For example, an employer should not ask only female candidates who appear to be in their 20s and 30s (commonly thought of as childbearing age) about their attendance record at their former job or about caring for their children. If questions about attendance are related to the job(s) at issue, they should be asked neutrally and of all candidates.

■   Distinguish between information that is needed to evaluate candidates and information that is required only from those who actually become employees.

Employers often require information from employees regarding their ages, marital status, and number and ages of children in order to enroll them in insurance and pension programs and for other legitimate business purposes. Generally, however, employers need to obtain this information only from employees—not from job applicants. It is generally acceptable to ask newly hired employees to furnish this information provided there is a legitimate business purpose for doing so. Tip 86

Tip 86—Permissible Pre-Employment Inquiries

Rather than ask for such information on the application form, consider having successful applicants provide that information after they are hired. To avoid any misunderstanding, the employee should be told exactly why the information is needed. In addition, the information should not be contained in the employee’s personnel file.

Many states have enacted rules regarding permissible pre-employment inquiries, and these rules should be consulted before making written or oral requests for information from applicants.

2. Americans With Disabilities Act

Unlike most of the other federal statutes that prohibit employment discrimination, the Americans With Disabilities Act of 1990 contains explicit restrictions on the questions an employer can ask and the tests an employer can require an applicant to take during the pre-employment process. These restrictions have been amplified through regulations and enforcement guidance issued by the Equal Employment Opportunities Commission. (See Chapter 1 for a substantive discussion of the ADA.)

The ADA divides the hiring process between the “pre-offer” stage and the “post-offer” stage. An employer may ask certain disability-related questions and require medical examinations of an applicant only after the applicant has been given a conditional job offer, and only if such questions or examinations are posed or administered to all applicants who have received an offer of conditional employment for any job in the same category.

The purpose of these rules is to isolate an employer’s consideration of an applicant’s nonmedical qualifications from any consideration of the applicant’s medical condition. The prohibition against asking disability-related questions or administering medical examinations until after the employer makes a conditional job offer is intended to prevent the employer from considering an applicant’s disability until after the employer has evaluated the applicant’s nonmedical qualifications.

a. Disability-Related Questions

A disability-related question is one that is likely to elicit information about a disability. An employer cannot directly ask whether an applicant has a particular disability, nor can an employer ask questions that are closely related to disability. If, however, there are many possible answers to a question, only some of which would contain disability-related information, the question is not “disability-related.”

b. Questions an Employer Can Ask During the Pre-Offer Stage

The EEOC has issued numerous enforcement guidelines to assist employers in understanding their obligations under the ADA during the hiring process. According to the EEOC, an employer may make all of the following inquiries of job applicants:

i. An employer may ask whether applicants can perform the essential functions of the job.

ii. An employer may ask applicants to describe how they would perform any or all job functions as long as all applicants in the job category are asked to do so.

iii. An employer may state its attendance requirements and ask whether an applicant can meet them. An employer may also ask about an applicant’s prior attendance record, provided this question is asked of all applicants for the position. Tip 87

Tip 87—Attendance Rate

In posing such a question, it is important to remember that the employer’s legitimate interest lies in determining the candidate’s attendance rate, not the reason for absenteeism (e.g., “sick days,” workers’ compensation leave). For example, it is permissible to ask, “How many Mondays or Fridays were you absent last year on leave other than approved vacation leave?” It is not acceptable to ask, “How many days were you sick?”

iv. An employer may ask whether an applicant has the certifications or licenses required for the particular job duties, whether the applicant intends to get a particular job-related certification or license, and why the applicant does not currently have the certification or license.

v. The ADA does not prohibit questions about an applicant’s arrest or conviction records. Such questions may, however, lead to claims of discrimination under Title VII of the Civil Rights Act. In addition, a number of states prohibit inquiries related to arrest records or convictions unrelated to jobs for which the candidate is applying. (See Section F of this chapter.)

vi. An employer may ask an applicant about an “impairment” that does not constitute a disability (i.e., an impairment that does not substantially limit a major life activity). For example, an employer may ask an applicant with a visibly broken leg how she broke her leg but may not ask whether the applicant expects the leg to heal normally or whether the applicant’s bones break easily. Tip 88

Tip 88—Interview Questions

In view of the difficulties in drawing the line between an “impairment” and a “disability,” it is advisable to avoid such questions. The questions are unlikely to provide meaningful information but may engender disputes as to whether the question is permissible under the ADA.

vii. An employer may ask an applicant about current illegal use of drugs. An individual who currently uses illegal drugs is not protected under the ADA. Most questions about current or prior lawful drug use are likely to elicit information about a disability and are therefore improper questions at the pre-offer stage. An employer may not ask what medication an applicant is currently taking or ask whether the applicant has ever taken a particular drug. Employers are permitted to ask about prior illegal drug use but cannot ask questions that are likely to reveal past addiction, because past addiction to illegal drugs or controlled substances is a covered disability under the ADA as long as the person is not currently using drugs illegally. An employer may ask, “Have you ever used illegal drugs?” or “When is the last time you used illegal drugs?” But an employer cannot ask “How often” the applicant used illegal drugs in the past because doing so may elicit information about prior addiction. The legalization of recreational marijuana use in several states (including Alaska, California, Colorado, Massachusetts, Maine, Michigan, Nevada, Oregon, Vermont, and Washington), and of medicinal marijuana use in several more, further complicates this area of inquiry. Furthermore, questions about legal off-duty marijuana use may run afoul of some states’ privacy laws, as discussed below. Advice of counsel knowledgeable about this rapidly evolving area of law should be sought in structuring pre-employment inquiries in relevant jurisdictions. See also Chapter 6 above for a discussion of pre-employment drug testing.

viii. An employer may ask applicants about their drinking habits unless the particular question is likely to reveal information about alcoholism, which is a protected disability. Accordingly, an employer may ask whether an applicant drinks alcohol and whether the applicant has been convicted of driving under the influence of alcohol. This inquiry may be job-related when the applicant is applying for a safety-sensitive position, such as a bus driver or an operator of heavy machinery. Employers cannot ask how much alcohol the applicant drinks or whether the applicant is participating in an alcohol rehabilitation program; these questions are likely to reveal information about whether the applicant has alcoholism. Even though certain questions about drinking habits may be permissible under the ADA, as outlined above, they should be avoided. Several jurisdictions prohibit employers from making employment decisions based upon an employee’s off-duty, lawful activity, such as alcohol consumption. Additionally, inquiries into criminal history may not be appropriate until after a conditional offer of employment has been made, as discussed in parts B.3.d and F below.

c. Questions an Employer Cannot Ask During the Pre-Employment Stage

During the pre-employment stage, an employer may not ask questions regarding the following:

i. Whether an applicant is disabled or handicapped

ii. In general, on an application form or during an interview, whether an applicant will need a reasonable accommodation to perform the job for which he or she is being considered (there are limited exceptions to this rule, which are described below)

iii. An applicant’s ability to perform major life activities unless they specifically relate to the applicant’s ability to perform essential job functions

iv. An applicant’s job-related injuries, illnesses, or workers’ compensation history

v. A third party (such as the applicant’s references or former employers) any questions that it could not pose directly to the applicant

d. Limited Ability to Inquire Regarding an Applicant’s Need for Reasonable Accommodation During the Pre-Offer Stage

There are very limited circumstances in which an employer may make inquiries during the pre-offer stage regarding an applicant’s possible need for a reasonable accommodation in performing the essential functions of the job being sought. It is important to note that even when these circumstances arise, the extent to which an employer can then make inquiry is still very limited.

i. Affirmative Action Programs. An employer may invite applicants to voluntarily self-identify themselves as disabled persons requiring reasonable accommodation for purposes of the employer’s affirmative action program if the employer has undertaken such a program because of a federal, state, or local law requiring it to do so or if the employer is voluntarily using the information to benefit individuals with disabilities. If an employer institutes such a program and invites applicants to voluntarily identify themselves, the employer must state clearly on any written questionnaire (or state orally if such questions are posed during an interview) that the information is requested and will be used solely in connection with the employer’s affirmative action obligations or efforts, that the information is being requested on a voluntary basis, that it will be kept confidential, that refusal to provide it will not subject the applicant to any adverse treatment, and that the information will be used only in accordance with the ADA. Employers who ask applicants to self-identify should maintain this information separately from the application, and it should not be shared with a hiring manager or client prior to the hiring of the applicant.

ii. When the Disability Is Obvious or When the Applicant Volunteers Information About the Disability. Sometimes the applicant’s disability is obvious (e.g., use of a wheelchair or white cane). Some applicants may also voluntarily disclose information about a hidden disability. In such instances, the employer may then ask that particular applicant to describe or demonstrate how he or she would perform the essential functions of the job being sought even if other applicants are not asked this question. An employer may also ask whether such an applicant will require a reasonable accommodation to perform the functions of the job and, if so, the type of reasonable accommodation that will be required. If an applicant applying for a receptionist position voluntarily discloses that she has diabetes and will need periodic breaks to take medication, the employer may ask how often she will need breaks and how long the breaks will be. Remember, however, that the employer may not ask any question about the underlying physical condition even in situations where the disability is obvious or the applicant has voluntarily disclosed the condition. Tip 89

Tip 89—Essential Job Functions

In those limited instances when such interactive dialogue is permitted under the ADA, the purpose is to help evaluate the applicant’s ability to perform the essential functions of the job with or without a reasonable accommodation—not to screen out a disabled candidate.

e. Medical Examinations and Other Employment Tests Under the ADA

An employer cannot require medical examinations during the pre-offer stage. A medical examination is one designed to reveal information about physical or mental impairments or about an applicant’s physical or mental health.

Despite these restrictions, applicants may be required to take the following tests:

i. An employer may require applicants to take physical agility tests designed to demonstrate the applicant’s ability to perform actual or simulated job tasks. Such a test is not considered a medical examination. While such tests are permitted, an employer cannot take the applicant’s blood pressure or heart rate during or at the conclusion of the physical agility test. Measuring physiological responses in this fashion would constitute a medical examination.

ii. A physical fitness test that determines an applicant’s ability to perform physical tasks related to the job, such as running or lifting, is not a medical examination.

iii. An employer may ask an applicant to provide medical certification of his or her ability to safely perform a physical agility or physical fitness test.

iv. An employer may ask an applicant to assume responsibility and release the employer of liability for injuries incurred in performing a physical agility or fitness test.

v. An employer may administer psychological examinations provided they do not reveal information that would lead to identifying a mental disorder or impairment. A test that reflects whether applicants have characteristics that might indicate whether the individual has excessive anxiety, depression, or compulsive disorders would be a medical examination. A test designed and used to measure only such characteristics as aptitude, honesty, or reliability is not a medical examination. Note that potential employers are required to offer reasonable accommodations to disabled applicants to permit them to complete a written test (such as offering the test in a different format or manner (for example, orally)) that does not measure the disabled person’s impaired skill, unless the test is designed to measure that skill because the skill (e.g., reading) is an essential function of the job.

vi. An employer may administer drug tests to determine current illegal use of controlled substances. Such tests are not considered medical examinations under the ADA. On the other hand, tests to determine whether or how much alcohol an applicant has consumed are considered medical examinations and therefore are not permitted under the ADA at the pre-offer stage.

f. The Post-Offer Stage Under the ADA

After making a job offer to an applicant for an actual work assignment with a client but before the candidate has started the work assignment, an employer may ask disability-related questions and perform medical examinations. The offer of a work assignment may be conditioned on the employer’s evaluation of the applicant’s answers to these post-offer, disability-related questions or the results of a medical examination.

At the post-offer stage, an employer may ask about an individual’s workers’ compensation history, prior sick leave usage, illness, diseases, impairments, and general physical and mental health. EEOC regulations state that disability-related questions and medical examinations at the post-offer stage do not have to be related to the job, but if decisions based on information from post-offer questions or medical exams is used to screen out applicants, such criteria must be job-related and consistent with business necessity. The EEOC recently negotiated a $4.4 million settlement with a company that administered a post-conditional offer carpal tunnel syndrome test to all applicants, then disqualified anyone who tested positive without individualized assessments of ability to perform the relevant job duties with or without a reasonable accommodation. Tip 90

Tip 90—Post-Offer Requirements

If the employer chooses to ask such questions or require such examinations during the post-offer stage, these questions and tests must be required of all entering employees in the same job category, regardless of disability. It is also important to realize that a rejection of a candidate based on information obtained at the post-offer stage of the hiring process will be subjected to careful scrutiny if the hiring decision is subsequently challenged.

After obtaining basic medical information from all individuals who have been given conditional offers of employment in a given job category, the employer may ask specific individuals for more medical information if the follow-up questions are related to the medical information already obtained from the applicant. If an individual to whom a work assignment has been offered has stated in response to the post-offer medical questions that he or she suffers from back injuries, the employer may ask follow-up questions or require a medical examination of that individual (even though these follow-up questions and medical examinations are not administered to all offerees), provided that these follow-up questions and procedures relate specifically to the information the offeree has already given regarding his or her back injuries.

At the post-offer stage, an employer may ask all individuals whether they need reasonable accommodation to perform the job. If, at this stage, someone requests a reasonable accommodation to perform the essential functions of the job, the employer may ask the individual for documentation of the disability that causes the need for the accommodation.

3. Other Restrictions on Pre-Employment Inquiries

a. Race, Color, Religion, Sex, or National Origin

Pre-employment inquiries concerning race, color, religion, sex, or national origin do not constitute violations of Title VII in and of themselves. Some state laws, however, expressly prohibit such inquiries and may also deem it improper to seek related information that could indirectly reveal the answers to these questions. Even under Title VII, moreover, posing such questions often leads to the inference that the employer used the information obtained for illegal purposes. For this reason, these inquiries should clearly be avoided as they are not job-related.

b. Marital Status and Child Care

An employer should not ask questions about marital status, pregnancy, future childbearing plans, the numbers and ages of children, or child-care arrangements. The use of such information may constitute a violation of Title VII or state laws, particularly if it is used to deny or limit employment opportunities for female applicants. The EEOC has filed suits against staffing firms in the past for failing to assign a pregnant employee to clients. Employers often tend to seek pre-employment information about child-care arrangements only from female applicants. Such inquiries constitute sex discrimination. It is best to avoid such questions altogether.

c. Age

An employer should not ask questions of an applicant that tend to establish the applicant’s age or approximate age. Application forms should not ask for birth dates or for the dates of attendance or graduation from elementary or high school. If there are legal age requirements for the job position, it is acceptable to ask a candidate whether he or she will be able to show proof of age or to produce necessary work permits if hired.

d. Arrest Records

Making personnel decisions on the basis of arrest records may have a disproportionate effect on the employment opportunities of members of some minority groups. Without proof of business necessity, an employer’s use of arrest records to disqualify job applicants is unlawful discrimination. The mere request for such information tends to discourage minority applicants and has therefore been held to be illegal. In addition, a number of states prohibit employers from inquiring about arrests. In some circumstances, however, the conduct underlying an arrest may be the basis for an employment decision if that conduct, as opposed to the arrest, makes the individual unfit for the position in question.

e. Conviction Records

Subject to the requirements of individual state law, an employer generally may give fair consideration to the relationship between a conviction and an applicant’s fitness for a particular job. Conviction records (or guilty pleas) should not generally be automatic bars to employment. It is preferable for an employer to make case-by-case decisions, taking into account such factors as the nature and severity of the crime, when it was committed, the person’s overall record, any rehabilitation efforts, and the nature of the position the applicant is seeking, and then making a reasoned business judgment as to the risks entailed in employing this particular applicant. To encourage candor, some employers advise applicants that a conviction record is not necessarily a bar to employment. As discussed in greater detail below, a growing number of jurisdictions prohibit inquiries into conviction records until after a conditional offer of employment has been made (and prohibit any “check box” on an employment application regarding criminal history).

f. Nature of Military Discharge

Employers should not ask questions regarding the type of discharge an applicant received from military service unless a “business necessity” can be shown. Such inquiries should be accompanied by a statement that a dishonorable or general discharge is not an absolute bar to employment and that other, individualized factors will affect the final hiring decision. According to a Department of Defense study, minority service members receive a higher proportion of general and undesirable discharges than nonminority members of similar aptitude and education. Accordingly, a requirement that applicants have received an honorable discharge may have a disparate impact upon minority applicants and thus violate Title VII.

g. State Law Variances

Many state and local laws protect categories of persons not covered by federal law. For example, sexual orientation, gender identity, gender expression, marital status, and off-premises smoking are protected in some jurisdictions. Other lawful, off-duty conduct is also protected in some jurisdictions, such as alcohol use or gun ownership, among others. Questions about any protected category should be avoided.

h. Genetic Information

Federal law protects against discrimination on the basis of genetic information in making hiring and other employment decisions. Employers therefore should not require applicants to answer questions about family medical history during an employment-related medical exam, except under very narrow circumstances after a conditional offer of employment has been made. When an employer lawfully asks for information related to disability status (e.g., to support a request for reasonable accommodation), it should caution the employee (or his/her health care provider) not to provide genetic information. Employers must tell their own health care providers not to collect genetic information as part of post-conditional offer medical exams.

i. Prior Salary Information

Some jurisdictions, including California, prohibit prospective employers or their agents (such as staffing firms) from asking job applicants about their salary/pay history (including benefits) or relying on such information in making hiring decisions. The purpose of such laws is to help prevent continuation of unjustified gender- or race-based pay inequities. However, the California law permits asking applicants about their “salary expectations.” Staffing firms should base hiring and initial pay decisions on applicants’ qualifications and experience relative to the specific job in question, and not on prior rates of pay. Laws in this area are developing at the state and local level, so staffing firms should seek legal counsel regarding acceptable pre-employment pay inquiries in their jurisdictions.

4. Legitimate Areas of Inquiry

Despite all of the restrictions described in this section, there are still numerous areas of legitimate inquiry that may be pursued in interviewing job applicants. These areas include the applicant’s education, previous and current employment, and other relevant experience, skills, and outside activities.

a. Education

It is acceptable to ask an applicant detailed questions about his or her educational experience. It is acceptable to ask a candidate which academic subjects he or she enjoyed the most and the least, and in which subjects he or she did well or poorly. It is also acceptable to ask why the candidate chose a particular major or other course of study, how the applicant’s education has prepared the applicant for the job being sought, whether the applicant has any plans to continue his or her education, and whether the applicant participated in extracurricular activities or worked at a part-time job while attending school.

b. Prior Employment

A prospective employer may ask an applicant to

■   Describe prior and current jobs

■   Discuss major job responsibilities

■   Identify areas of accomplishment and difficulty

■   Indicate whether the applicant’s previous job experience will be of assistance in performing the job for which the candidate is applying

■   Indicate whether he or she has ever been suspended, disciplined, or discharged from a job, and explain why

■   Explain any gaps in employment history. Note that some jurisdictions, including the District of Columbia, Madison, Wisconsin, New Jersey, New York City, and Oregon, prohibit discrimination based on unemployment status. Furthermore, even under federal law, if an employer bases hiring decisions on unemployed status, it must do so without regard to membership in a protected class, and if reliance on unemployed status disproportionately screens out members of a protected group, the employer must be prepared to show that reliance on that criterion is job-related and consistent with business necessity.

■   Indicate whether he or she writes or speaks any foreign language, and the level of proficiency (Note: These questions should only be asked if such knowledge is helpful or required in the position you are seeking to fill, or if you occasionally have positions where knowledge of another language is helpful or required.)

■   Indicate whether he or she accepted temporary work assignments from another staffing firm (If so, you may ask for the name of the other firm, the clients to whom the applicant was assigned, the type of assignments performed, the typical length of assignments, and the name of the supervisors at these assignments.)

■   Describe other previous temporary work: when, why, and what

■   Indicate problems getting to work on time

■   Indicate problems completing projects when due

■   Indicate ability to work with difficult people

■   Indicate ability to adapt to changes in priority and unclear directions

■   Indicate ability to handle pressure and stress

■   Indicate familiarity with the terminology used in the industry (It is permissible to ask an applicant to define job-related words.)

■   Indicate familiarity with which types of office machinery and computer software programs

■   Explain why no longer employed by previous employers

■   Provide references

c. Skills and Relevant Nonvocational Activities

An employer may ask an applicant about skills or activities that may be job related:

■   Special knowledge or skills that the applicant has obtained that are relevant to the job sought

■   Community or other activities that have provided the candidate with relevant experience, training, or skills

■   Job-related organizations, clubs, professional societies, or other associations in which the applicant participates. Inquiries should not be made about involvement with civic or cultural organizations (such as religious affiliations or heritage-based groups) that are not job-related; such questions may raise a suggestion of decision-making based on protected status revealed by the applicant’s answers. In addition, some states, such as California, protect employees against adverse employment actions based on political involvement during employment, so employers should exercise caution in inquiring about political activities at the hiring stage to avoid raising a later suggestion that knowledge of such activities was the basis for an adverse employment action.

■   Whether the applicant is bonded—if not, has a bonding company ever declined to bond the applicant?

■   Whether he or she is a notary public

■   Whether he or she is currently enrolled in any training or educational program related to the position for which the applicant is seeking employment

■   About his or her career interests

■   About the number of years of experience he or she has and level of proficiency for job-related skills

d. General Information

An employer may also ask an applicant the following questions:

■   Why are you applying for this job?

■   What kind of work do you most enjoy doing?

■   What aspects of this job do you think you will enjoy the most?

■   What aspects will you enjoy the least?

■   What are your strongest and weakest personal qualities?

■   Why do you want to change jobs?

■   What goals do you hope to accomplish in your next job?

■   What aspects of a job are most important to you?

■   If the position at issue requires driving, do you have a valid driver’s license? (Provide the state and license number.) If the position at issue does not require driving, asking questions about possessing a driver’s license risks an inference of disability-based discrimination or, potentially, a hiring decision based on criminal record unrelated to the position’s requirements.

■   Are you willing to work for clients that require you to take a drug test?

■   Do any of your friends or relatives work for this company?

■   Do you have a legal right to work in this country? (Note: If this question is to be posed, it should either be asked of all applicants or only in those situations where the applicant has volunteered some specific information that would cause you to reasonably believe that this might be an issue. You should not ask the question simply because an applicant appears to be foreign-born or has an accent, and you should not ask about an applicant’s heritage.) Of course, for those applicants who accept an offer of employment, employers must comply with the I-9 employment authorization verification process discussed in Chapter 5 above.

■   You may request an applicant to furnish the name and telephone number of a person to contact in case of an emergency but should not ask the applicant’s relation to that person. Emergency contact information requests are better reserved for the post-hiring onboarding process.

■   How did you hear about this company?

■   Why are you considering temporary employment?

■   Are you currently conducting a permanent job search? If so, in what industry? What type of position? How far along are you in the process?

■   How does temporary work fit into your career plans?

■   Describe your short-term goals.

■   Describe your long-term goals.

■   Are you available to work before or after normal work hours or on weekends?

■   Is there anything else you would like us to know that we haven’t asked about?

C. Polygraph Tests

The Employee Polygraph Protection Act of 1988 prohibits most private employers from using lie-detector tests to evaluate job applicants. (The statute also prohibits the administration of polygraph tests to current employees unless the employer reasonably suspects that the employee was involved in a workplace theft or other incident causing economic loss to the employer.)

The law contains an exception that allows certain private security firms and pharmaceutical companies to require job applicants to submit to polygraph tests. As interpreted by the U.S. Department of Labor, this exception applies to employers in the business of providing security services to such institutions as casinos, racetracks, lotteries, and other business activities where large amounts of cash are acquired from or dispensed to clients. The exception also applies to companies that provide protection to businesses that sell or exchange precious commodities, such as gold, silver, or diamonds.

Even in those limited industries where employers are permitted to administer polygraph tests to job applicants, the statute imposes significant restrictions on the types of questions that can be asked, the qualifications of the examiner, the advance notice that must be given to job applicants, and the rights of the job applicants before, during, and after the administration of the polygraph test.

Moreover, the federal statute does not pre-empt state or local laws that are more restrictive. A number of states have enacted legislation that imposes even tighter restrictions than the federal law or that simply ban the use of polygraph tests outright even in the industries exempted under the federal legislation. As a practical matter, polygraph examinations are of very limited utility during the pre-employment process.

D. Employment References

In order to protect against defamation claims by former employees, many employers have adopted a policy of giving only neutral references in which the employer confirms only dates of employment and positions held. Employers have adopted this position to avoid claims by former employees who are dissatisfied with the nature of the job reference they receive.

A possible solution to this problem is to ask job applicants to execute a written request and waiver that the prospective employer can then deliver to the former employer. In executing such a document, the job applicant specifically requests his or her former employer to provide a qualitative job reference and expressly absolves the former employer from any liability for the statements that it then makes to the prospective employer. Such a document does not compel the former employer to give a qualitative job reference, but it may eliminate concerns that would otherwise prevent the prospective employer from obtaining information about the job applicant. A sample authorization form is included in Appendix E. Tip 91

Tip 91—Reference Checks

In those instances where a former employer is willing to give a job reference, the prospective employer should ask only questions that are “job-related”—questions that will enable the prospective employer to evaluate the candidate’s ability to perform the job and function effectively with co-workers. Questions that cannot be posed directly to the applicant should not be asked of third parties to avoid the appearance that impermissible information is affecting decisions regarding whether or not to extend a job offer.

Because of the increasing problems in obtaining qualitative job references, most states have passed laws intended to protect employers that provide good faith job references regarding former and current employees. The precise requirements, limitations, and other details of these laws vary. For instance, some apply only to particular industries or to particular types of information provided. The general purpose of these statutes, however, is to make it easier for employers to give and receive information that will enable them to meaningfully evaluate job applicants.

For example, the Florida statute states that an employer that discloses information about a former employee’s job performance to a prospective employer of the former employee upon request of either the prospective employer or of the former employee is immune from civil liability for such disclosure or its consequences unless it is shown by clear and convincing evidence that the information disclosed by the former employer was knowingly false or violated any civil right of the former employee protected under Florida law.

Because most such statutes are relatively new, there is as yet limited guidance from the courts as to how well they will protect employers from claims that negative references were given in bad faith. At a minimum, however, staffing firms should be familiar with the reference-checking laws of the states in which they do business. Tip 92

Tip 92—Reference Check Results

Staffing firms that intend to communicate the results of reference checks to their clients are subject to special requirements under the Fair Credit Reporting Act. (See Section G of this chapter.)

E. Protecting Against Negligent Hiring or Assignment Claims

A claim for negligent hiring or negligent assignment can arise if a temporary employee (or even a staff employee) commits a wrongful act that causes harm or injury to a client, co-worker, or other person while that employee is employed by a staffing firm. For example, a home health care attendant may rob an infirm patient, a temporary security guard may assault a co-worker, a temporary accountant may sexually harass a secretary, or a technician may cause a lab explosion. An employer has a duty to exercise reasonable care to protect its employees and clients from harm inflicted by employees that the employer knew or should have known were likely to cause such harm. To state a claim for negligent hiring, the individual must show that the employee who caused the injury was unfit for the job, the hiring of the employee caused the injury, and the employer knew or should have known of the employee’s unfitness.

While it is the employee’s wrongful conduct that is the primary cause of the damage, rarely will that employee be financially capable of redressing the injury. Therefore, the staffing firm, with its perceived “deeper pockets,” is likely to find itself as a defendant in a lawsuit charged with failing to adequately investigate the background and qualifications of its employee. In such cases, it will be alleged that the staffing firm knew or should have known that the employee was a potential risk to others. In this respect, the company’s hiring practices are likely to be subjected to exacting scrutiny. For a discussion of preventive measures aimed at reducing the risk of negligent hiring claims, see Chapter 8.

F. Arrest and Conviction Records

An employer generally may not make employment-related decisions based on an applicant or employee’s arrest record. An arrest is simply an accusation. Therefore, pre-employment inquiries regarding arrests should be avoided. Some states prohibit employers from inquiring about an applicant or an employee’s arrest record.

Convictions or guilty pleas are treated differently. In most jurisdictions, an employer can lawfully take into account a criminal conviction in making employment-related decisions and may lawfully make pre-employment inquiries about criminal convictions. Employers are generally permitted to weigh the criminal conviction as one factor in making the employment decision, rather than use any criminal conviction as an automatic bar to employment. In assessing whether the conviction should preclude the employment, employers should normally take into account factors such as the nature and seriousness of the crime, the position applied for, how long ago the crime occurred, the person’s age then and at the time of application, and any rehabilitation efforts.

Many states have legislation regulating either the inquiries that may be made into an applicant’s criminal history or to what extent the employer may base decisions on that history. States that have enacted such laws include California, Colorado, Connecticut, Georgia, Hawaii, Illinois, Indiana, Kansas, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, as well as the District of Columbia. Most of these states prohibit employers from inquiring about an applicant’s criminal history other than convictions and limit the basis upon which employers may consider a criminal conviction as a bar to employment. Additional states have more limited protections against considering expunged criminal convictions in making employment decisions. Several states including California, Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Rhode Island, Vermont, and Washington, as well as the District of Columbia and multiple cities, recently have enacted specific statutory provisions (so-called “Ban the Box” laws) applicable to private employers which, generally speaking, prohibit them from asking about arrests and most types of criminal convictions on employment applications and permit consideration of convictions only after a conditional offer of employment has been made. The details of these laws vary and additional new laws are likely to emerge, so experienced employment counsel should be consulted for the limitations of a particular state or local jurisdiction in which a staffing firm operates.

G. Credit and Background Reports

The federal Consumer Credit Reporting Reform Act of 1996 amended the Fair Credit Reporting Act (hereinafter collectively referred to as “FCRA”) and became effective Oct. 1, 1997. The amendment significantly changed the procedures employers must follow in connection with credit reports, criminal history checks, and similar background reports that are used for any employment-related purpose. Tip 93

Tip 93—Credit Checks and Background Reports

Many states have enacted laws either limiting the availability of credit checks or other background reports or limiting an employer’s right to make decisions based on such reports. These states include California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington, as well as he District of Columbia. So long as such state law requirements do not conflict with the federal Fair Credit Reporting Act, they must be complied with as well. Experienced counsel should be consulted for the limitations of a particular state in this highly litigated area of law.

1. Reports Prepared by Consumer Reporting Agencies

The FCRA permits staffing firms to request and obtain consumer credit reports to evaluate persons for employment, promotion, reassignment, or retention as an employee. There are two types of reports governed by the FCRA: “consumer reports” and “investigative consumer reports.” Consumer reports are communications received from a “consumer reporting agency” bearing on a person’s credit worthiness, credit standing, character, general reputation, personal characteristics, or mode of living. Investigative consumer reports encompass similar information, but they are obtained through personal interviews of friends, neighbors, and associates as well as from written records.

Because most staffing firms will generally not require investigative consumer reports, this discussion will focus on consumer reports. A consumer report typically would include criminal history, credit history, motor vehicle records, Social Security identification, license verification, and military records, obtained from a consumer reporting agency. A consumer reporting agency includes any firm or organization that obtains information on an applicant or employee and charges a fee to the user of the report (e.g., credit checking firms, detective agencies, private investigators, online database companies, etc.).

The FCRA requires an employer to disclose clearly and conspicuously to an employee or prospective employee, in writing and before a consumer report is requested, the fact that such a report may be obtained for the purpose of evaluating an individual for employment, retention, promotion, or reassignment. The written disclosure must be provided to the employee or prospective employee through a separate document consisting solely of the FCRA disclosure. (Note that effective September 21, 2018, the federal Consumer Financial Protection Bureau amended the disclosure form that employers and credit check agencies must provide. The proper form should be used to avoid claims under the FCRA.) Indeed, one federal appeals court recently emphasized that the FCRA disclosure form must not even include information about any state law that is similar to the FCRA (such as California’s Investigative Consumer Reporting Agencies Act), because doing so includes information that is extraneous and potentially confusing. To avoid liability for improper disclosure under the FCRA and similar state laws, employers should provide applicants with separate, stand-alone disclosure forms for the FCRA and the applicable state that are distinct from other application documents.

Moreover, the employee must obtain the employee’s or prospective employee’s written authorization to obtain such a report. The written authorization form should notify the employee that he or she is authorizing the staffing firm to obtain a consumer report at any time during the employee’s employment with the staffing firm for the purpose of evaluating the employee for employment, retention, promotion, or reassignment. In California, a new disclosure should be provided and authorization should be obtained each time a report is obtained, unless the report is obtained due to an employee investigation. Furthermore, whereas the FCRA’s rules apply only when a third-party conducts a background check, California’s law includes notice and other requirements that also apply when a background check is conducted by the employer itself.

The FCRA requires the employer requesting the report to sign and file with the consumer reporting agency a certification as to the permissible purpose intended (e.g., for employment purposes), and that it will comply with the law’s disclosure and adverse action requirements. The FCRA requires clear and conspicuous written notice to and written consent from the “consumer” before a consumer report may be obtained. Before taking any adverse action based on the report (e.g., refusal to hire), employers must provide the applicant or employee with a copy of the report and a description of the person’s rights under the FCRA. The employer must wait for a “reasonable” period after furnishing the report and statement of rights before taking any adverse action based on the report. Five days would probably be adequate. Several states require specific forms or notices to be included with a pre-adverse action letter, including Massachusetts, New York, New Jersey, and Washington. Again, counsel familiar with such laws in states where staffing firms operate should be consulted to ensure compliance with these detailed technical requirements.

After taking adverse action based on the consumer report, the affected individual must be notified (verbally or in writing). This notification must include

■   Nature of the adverse action

■   Name, address, and toll-free telephone number of the consumer reporting agency

■   A statement that the agency did not make the adverse decision and cannot explain it

■   A statement setting forth the person’s right to obtain a copy of the report from the reporting agency upon request within 60 days

■   A statement setting forth the person’s right to dispute the accuracy or completeness of the report directly with the reporting agency

Sample forms and letters can be found in Appendix E.

The Fair and Accurate Credit Transactions Act of 2003 amended the FCRA by removing from the definition of consumer report any third-party investigations of employee misconduct. Excluded from the definition of “consumer report” are communications made to employers in connection with an investigation of (1) suspected misconduct relating to employment; and (2) compliance with federal, state, or local laws and regulations, the rules of a self-regulatory organization, or any pre-existing written policies of the employer. As a result, employers are now free to hire outside consultants, investigators, or law firms to investigate and report on a variety of workplace issues without having to first notify the target of the investigation or obtain his or her consent. The amendment covers not only investigations regarding suspected violations of the law, but also violations of written company policies and procedures. If an investigation gathers information related to an individual’s credit worthiness, credit standing, or credit capacity, however, the notice and consent provisions of the FCRA (and applicable state law) still apply.

The amendment also addresses the right to privacy of both the target of the investigation as well as potential victims and witnesses. First, any workplace investigation report cannot be disclosed to anyone other than the employer; federal, state or local officers, agencies or departments; any organization with regulatory authority over the employer; or as otherwise required by law. Second, if an employer takes adverse action based in whole or in part on the report, it must disclose to the target of the investigation a summary of the communications upon which the adverse action is based. The summary must include the nature and substance of the communications but need not include sources of information (such as the identity of individuals who have been interviewed), and the disclosure is not required until after the adverse decision has been made.

2. Reference Checks Conducted by Staffing Firm Personnel

Fair Credit Reporting Act

Special rules apply to staffing firms that communicate the results of reference checks to their clients. Under the Fair Credit Reporting Act, staffing firms can communicate such information to their clients if they take the following actions:

■   Get consent (oral or written) from an applicant prior to making a reference check or communicating such information to clients

■   Confirm any oral authorization in writing within three business days

■   Notify the applicant in writing of the right to request the nature and substance of information in the applicant’s file at the time of the request

■   Disclose in writing within five days of a request from the applicant the nature and substance of information in the file (Note: Sources of information need not be revealed.)

Staffing firms that undertake additional checks such as criminal record checks (subject to applicable laws) and other background checks may still be subject to FCRA (and state law) requirements if such information is communicated to a third party, such as a client.

H. Social Media-Based Background Checks

With the proliferation of social media and other internet sites potentially containing information of all sorts about job applicants, some employers have found it useful to “Google” applicants’ names for publically available information. Some took this practice a step further and required applicants to provide access to private social media web sites such as Facebook, Instagram, WhatsApp, Twitter, LinkedIn, Pinterest, and SnapChat. In response to this practice, several states recently have enacted new privacy laws regulating employers’ use of social media to gather information about applicants and employees. While the specific provisions of these laws vary, in general, they prohibit employers from requesting or requiring applicants or employees to provide access to their personal social media accounts by providing user name and password information, adding an employer representative to a contact list, opening a social media account in a supervisor’s presence, or changing security settings. Jurisdictions with laws regulating employers’ access to applicants’ and employees’ social media accounts include: Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Louisiana, Maine, Maryland, Michigan, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, Oklahoma, Oregon, Rhode Island, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin. Most of these states establish a procedure for filing an administrative complaint or civil action and permit recovery of penalties, fines, damages, or other forms of relief. Most states’ laws also contain exceptions for accessing employees’ social media accounts as part of an investigation of employee misconduct or theft. Asking for passwords may also violate federal law.

While accessing applicants’ openly available, non-private, non-password-protected information on the internet by “Googling” them may not run afoul of these laws, employers should think twice about the advisability of doing so. Of course, not all information on the internet is complete, accurate, or reliable. Furthermore, “Googling” applicants might cause a prospective employer to learn information about protected status (e.g., disability, religious affiliation, or sexual preference) that it might not otherwise have known, and thus potentially raise a suggestion of improper motive if an adverse action (e.g., a no-hire decision) is taken. In addition, internet research might reveal information about legal, off-duty conduct (e.g., smoking, drinking, or firearm ownership) that some states prohibit employers from basing employment decisions on. Employers also should be aware that if their own research satisfies a state law’s definition of a background check or consumer report, they may be required to give notice to the applicant before undertaking it.

On the other hand, in this age of prevalent on-line/digital presence, a jury might consider a potential employer’s failure to “Google” an applicant in deciding whether it acted negligently in hiring an individual who, for instance, openly posted discriminatory rants or threats of workplace violence and later caused injury to a third party at work.

Given the complexity of this area of law, advice of counsel should be considered in deciding whether, how, and when to perform internet-based research about job applicants. At a minimum, decisions based on results of such research should be lawful, consistent, and documented.

8

Measures Designed to Reduce the Likelihood of Employment-Related Claims

Several factors have served to dramatically increase the risks associated with employment-related litigation. In 1991, Congress authorized jury trials in federal discrimination cases and expanded the scope of damages available as a remedy for unlawful discrimination to include compensation for emotional distress as well as punitive damages. At the same time, courts are increasingly willing to require employers to honor their implied or express commitments to employees, and are substantially eroding the employer’s traditional prerogative to terminate employees for nondiscriminatory reasons without being concerned about judicial scrutiny of such decisions.

In several cases, terminated employees have recovered more than $1 million in damages. For example, one former executive of a staffing firm was awarded $5.2 million in a sex discrimination case. Such large recoveries are almost certain to encourage the proliferation of employment discrimination and wrongful discharge suits. They highlight the need for staffing firms to be aware that employee terminations may have significant legal consequences.

There has also been a surge in litigation under the Fair Labor Standards Act. Most of these cases involve claims for overtime compensation on behalf of employees alleging they were misclassified as exempt or not paid for working overtime, for inappropriate deductions from pay, and missed meal periods. The Department of Labor continues to be active in monitoring compliance with all aspects of the FLSA. Likewise, the U.S. Citizenship and Immigration Services will likely continue in its aggressive enforcement of the Immigration Reform and Control Act, the substantive requirements of which are discussed in detail in Chapter 5.

To minimize the possibility of violations of these laws and to reduce the risk of wrongful discharge lawsuits, employers are well advised to take preventive measures and adopt appropriate policies and procedures before they are confronted with litigation. Adherence to these policies and practices will also increase the likelihood of prevailing in those proceedings that cannot be forestalled. A pair of U.S. Supreme Court decisions affirms that an employer may establish a defense to avoid liability for hostile-environment sexual harassment that does not cause a tangible employment action, such as demotion, if it can show that it acted reasonably to prevent and promptly correct any sexually harassing conduct, and the employee unreasonably failed to take advantage of opportunities available (such as an anti-harassment policy) to correct or otherwise avoid the problem.

While some of the preventive suggestions set forth below apply to regular employees, many of these suggestions can be readily modified to protect against claims by temporary employees as well. Tip 94

Tip 94—Protection Against Potential Liability

As the nature of the staffing industry evolves, employers are increasingly using long-term or indefinite temporary employees to supplement regular staff. The preventive measures discussed in this chapter and throughout the entire book are especially important in the context of long- term staffing assignments.

A. Policies and Training

1. Adopt and prominently display written equal employment opportunity (EEO) and “no-harassment” policies, so that temporary employees, applicants, guests, and agency investigators can see them when they enter the office. Sample polices are included in Appendix E.

2. Distribute the EEO policy to clients, applicants, temporary employees, and staff.

3. Provide periodic training of managers and supervisors with respect to EEO issues and company policies. Document your training sessions to demonstrate the seriousness with which the company approaches EEO issues; record attendance to ensure that all managers and supervisors are trained. Some states, such as California and Connecticut, have enacted legislation mandating that employers provide training to managers and supervisors on the prevention of sexual harassment. Such training is invaluable even if not required by law.

4. Consider having regular employees sign nondiscrimination pledges so that they understand the importance of EEO compliance. A form of a pledge is included in Appendix E. Such a pledge may help persuade the Equal Employment Opportunity Commission that any inappropriate conduct by an employee was purely individual conduct rather than evidence of some company-endorsed pattern.

5. Include the EEO and “no-harassment” policies in employee handbooks, and review the policy with new hires during orientation.

6. Develop a written internal complaint procedure so that employees may bring their EEO problems to management’s attention before turning to an outside agency.

7. Appoint an ombudsman to handle discrimination complaints that cannot be resolved through ordinary channels.

8. Insist upon the evenhanded, uniform application of employment policies to all similarly situated employees. Monitor application of employment policies to ensure consistent treatment. Any deviation from policies should be documented and based on legitimate business reasons. Tip 95

9. Refrain from threatening, penalizing, or retaliating against an employee who makes any formal or informal complaint of discriminatory treatment.

Tip 95—Evaluation by EEOC

When EEO enforcement agencies evaluate a claim of employment discrimination, they generally compare how similarly situated employees are treated rather than evaluate the employer’s decision in the abstract. For example, it is certainly within a staffing firm’s discretion to adopt a policy to terminate temporary employees who fail to report to work for two successive assignments. But if white employees are allowed to violate that policy and African-American employees are not, this conduct would be viewed as unlawful discrimination, even though terminating African-American employees for violating this policy would, at first glance, appear to be lawful.

B. ADA Compliance Measures

Since the effective date of the Americans With Disabilities Act in 1992, and its expansion over the years, claims alleging discrimination on the basis of a disability have increased at a dramatic pace. A substantial portion of the charges filed with the EEOC now allege claims of disability discrimination. In order to help reduce the risk of ADA liability, staffing firms should institute the following preventive measures:

1. Apprise interviewers of the ADA’s strict restrictions on the scope of pre-employment inquiries and medical examinations, and advise them against asking impermissible questions. (These restrictions are discussed in Chapter 7.)

2. Review the requirements for each job and assignment, such as sitting, standing, or the successful completion of certain tests, to ensure they are job related for the position at issue and are consistent with business necessity.

3. Medical information should be retained in separate files, treated as confidential, and disclosed only as permitted by the ADA or otherwise required by law.

4. Establish a procedure designed to comply with the ADA’s reasonable accommodation requirement.

■   Discuss with the disabled individual whether any reasonable accommodation exists that would allow him or her to safely and effectively perform the essential functions of the job.

■   Identify any potential accommodations, including job restructuring, to assess the viability and effectiveness of such accommodation.

■   Consider the preferred accommodation of the disabled individual.

■   Document discussions and considerations of accommodations, and the response of the disabled individual. Also be sure to document any determination rejecting an accommodation as either ineffective in allowing the individual to perform the essential functions of the job, or unduly burdensome to the company (e.g., significant disruption to the business operation, prohibitively expensive).

■   If a client rejects a disabled worker as unqualified, explore possible reasonable accommodations. Should such accommodations exist, and the client refuses to implement them, place the employee elsewhere and do not fill the position.

5. Enforce policies uniformly with regard to leave, so that employees both with and without disabilities are required to obtain authorization before they can return to work after medical leave.

C. Employment-at-Will Policy

One key to reducing your exposure to a wrongful discharge suit is to clearly adopt and disseminate an employment-at-will policy. This policy could take any of a variety of forms. A good example of such a policy is the one that follows:

Employees of XYZ Co. are employees at will. We do not have employment contracts or agreements. Employment at will means that, just as you are free to end the employment relationship at any time for any reason, the company likewise reserves its right to terminate the employment relationship at any time, for any lawful reason.

1. Add the employment-at-will policy to your employment application form. The application should prominently and conspicuously state that employees are employed at will and may be terminated with or without cause at any time. This may be the only document the applicant signs and may help to defeat employee claims of alleged promises of guaranteed assignments or guaranteed duration of assignments.

2. Word offer letters carefully to avoid any promise or suggestion of long-term employment, and include at-will employment language.

3. Avoid having a “probationary” period for new employees. It may give post-probationary employees a mistaken sense of job security. If you must have a probationary period, add a disclaimer: “The successful completion of this period should not be construed as creating a contract or as guaranteeing employment for any specific duration or as establishing a ‘just cause’ termination standard.”

D. Employment Applications

The proliferation of lawsuits brought by rejected applicants and employees makes an application form a critical tool in the employer’s defensive arsenal. All applicants for temporary or regular positions should be required to complete and to sign an application form.

An application form should serve several general purposes:

■   To elicit as much information as lawfully possible from applicants

■   To communicate to applicants information regarding their status as employees

■   To assist the staffing firm in defending itself in legal proceedings by or involving employees or former employees

■   To provide a basis for a staffing firm to protect its legal interests (e.g., to preserve confidential information, to restrict an employee from working directly for a client to which he or she was referred by the staffing firm, etc.)

Sample application forms for regular employees and for temporary employees are included in Appendix E.

E. Employee Handbooks

1. Employee handbooks serve important purposes. At the same time, however, most employers do not want to have their handbooks construed as contracts. One way out of this dilemma suggested by several courts is to include prominent disclaimers in employee handbooks. For example, the following disclaimer in a handbook may refute an employee’s claim that the handbook created an enforceable contract:

■   Neither this handbook nor any other company publication is an employment contract or agreement of any kind between the company and any of its employees.

■   The employment of any employee can be terminated by either the company or the employee, with or without cause and with or without notice, at any time.

■   No employer representative except the president or CEO has authority to enter into any agreement for any specified period or to make any agreement contrary to the above statements. Any such agreement must be in writing and executed by both you and the president or CEO.

2. Ask employees to read the handbook. Time should be spent during orientation to explain, clarify, and answer questions about the provisions in the handbook.
Employees should sign a receipt for the handbook. The receipt should repeat the disclaimer language, and a copy should be placed in the employee’s personnel file.

3. Avoid use of “mandatory language” such as “must” and “shall” in handbooks, offer letters, or other personnel documents when describing what the employer will do in any given context.

4. Avoid inflexible or mandatory procedures to be followed in every personnel situation.

5. Do not attempt to list every conceivable infraction for which discipline will be imposed. You can be sure that the list will prove to be incomplete. Indicate that the company reserves the right to impose discipline in the best interests of the company.

F. Job Descriptions

1. Comprehensive and accurate job descriptions should be prepared for all staff positions. If possible, job descriptions for staffing assignments should be obtained from clients. Alternatively, job orders should be as thorough and detailed as possible. The written job descriptions or the job orders should include, at a minimum, all duties that constitute essential functions of the job.

2. Attendance should be listed as an essential function of any job requiring an employee’s presence in the workplace. Qualitative and quantitative performance standards should also be reflected on written job descriptions, as should any physical requirements of the job, such as lifting, typing, reading, and oral communication.

3. Job descriptions should state that other duties may be assigned, and that duties are subject to change at any time. Meaningful alterations in job duties should be reflected on a revised job description.

4. Job descriptions should be prepared, or reviewed, by direct supervisors and incumbents to verify accuracy.

5. Once job descriptions are prepared, they should be reviewed regularly and updated when necessary to maintain accuracy.

G. Interviewing and Evaluations

1. Avoid making promises or guarantees in the interview. More courts are finding that oral representations may constitute agreements. Interviewers should avoid any reference to guaranteed assignments, permanent employment, just cause or good cause standards for termination, fair treatment, due process, or warnings before termination. References to the duration of a particular staffing assignment should also be avoided.

2. Avoid making statements or inquiries about race, sex (including pregnancy), sexual orientation, national origin, religion, disability, age, gender identity or expression, genetic information, or other protected categories. Avoid references to appearance as well as discussions of family planning or family obligations.

3. Develop an interview summary form. After the interview, the interviewer can check off what was asked, and sign and date the form.

4. Consider formal training for interviewers in terms of what is lawful or appropriate.

5. Obtain the applicant’s written consent to any check of references, (e.g., credit history, criminal background), etc.

H. Offers of Compensation

1. Compensation offers should not be stated in terms of an extended period (e.g., annual), lest a court conclude you intend to guarantee the person’s employment for the entire period. Instead, compensation offers should be stated in terms of an hourly wage for employees entitled to overtime under the Fair Labor Standards Act or a weekly or bi-weekly wage for FLSA-exempt employees.

2. Written offers should contain the “at will” language to negate any inference that a contract for a specific duration is intended.

3. Do not guarantee employment for a definite period or contingent upon a specific event (e.g., until next annual performance review), unless you truly intend to promise employment for that period.

I. Performance Appraisal Systems

1. Staffing firms should establish a formal performance appraisal system for regular employees. Performance appraisals should be done at least annually. Tip 96

2. Temporary employees should also be appraised, especially if the employee works on long-term or indefinite assignments, or regularly works at various clients for the same service.

3. For temporary employees, adopt a policy of asking clients for written comments evaluating a temporary employee’s performance, attendance, etc., and make a habit of recording oral comments. It is also important to maintain contact with the temporary employee, especially those on long-term assignments. Periodically contact temporary employees on assignment to discuss the work they are doing, the level of satisfaction, whether they have been experiencing any particular problems, etc.

4. Define the standards for measuring performance in a particular job, considering both objective and subjective factors. As job duties change over time, the performance criteria must be adjusted as well. Consider establishing detailed job descriptions. Such job descriptions should be periodically reviewed and updated.

5. Clear and specific rating criteria that allow for meaningful distinctions among employees should be used. Most reviewers tend to inflate grades so that average performers are rated as good. Evaluators should be instructed to provide honest and unbiased appraisals, even if this means giving a negative evaluation to a “likeable” employee. Among the most difficult problems faced by employers in litigation is explaining why an employee with a history of good written evaluations was discharged for poor performance.

6. Consider employing evaluation procedures that minimize the risk of bias affecting the process. Examples of such procedures include paired ratings, where two or more managers evaluate the employee independently; evaluating the evaluators to ensure consistency in treatment; and having all evaluations within a group or department reviewed by a single manager before being finalized.

7. Consider involving employees at various levels of the evaluation process. For example, employees can be asked to assist in establishing criteria upon which they are to be evaluated. Employees should also be given the opportunity to review their evaluations with an evaluator and comment on the ratings. An appeal procedure may also be utilized.

8. Train supervisors and managers in conducting performance reviews and make the quality of their performance reviews of subordinates part of your assessment of their performance.

9. Consider allowing employees to conduct a self-evaluation before they are reviewed by the supervisor. Such self-evaluations often disclose whether the employee is perceptive about his or her performance.

10. Performance appraisal forms should be signed by both the supervisor and the employee. This documents that the employee is “aware” and has knowledge of any performance issues. If an employee does not sign the documentation, at least give him or her a copy of the documentation.

11. Consider allowing employees to rate their counselor (for temporary employees) or supervisor (for regular employees) (i.e., “upward reviews”).

12. Employees should be given informal feedback on an ongoing basis. A formal review should never be a “surprise” for an employee.

13. If an employee’s job is in jeopardy because of poor performance, make sure that employee is told that disciplinary action up to and including termination will be taken if performance does not improve. Relate misconduct or poor performance directly and unambiguously to continued (regular) employment or continued eligibility for (temporary) staffing assignments.

14. Establish performance goals and timetables and document the employee’s efforts and success in meeting these goals.

Tip 96—Performance Appraisals

For poor performers, appraisals should be done more frequently (e.g., quarterly), with scheduled review periods and agreed-upon goals and objectives to be met. However, avoid making these reviews appear as a “setup” for terminating the employee. Goals and objectives should be attainable, and a sufficient amount of time in which to satisfy the goals and objectives should be provided.

J. Document Performance Problems

1. Develop a formal documentation procedure.

2. Supervisors and counselors should record and memorialize complaints, concerns, problems, and critical issues.

3. Periodically review documentation procedures for format, contents, distribution, and retrieval.

4. Make sure the documentation is fair, reasonable, and objective. Such records may need to be used to defend a personnel decision, and should be written with that context in mind. Tip 97

Tip 97—Employees’ Right to Inspect Personnel Files

Some states have enacted legislation requiring employers to permit employees to inspect their personnel files. The specific requirements vary from state to state. In the absence of such a legal requirement, employees have no legal right to inspect their personnel files.

K. Progressive Discipline

1. In imposing discipline on employees, distinguish between misconduct, policy violations, and poor performance.

2. Policies providing for progressive discipline, if properly crafted and adhered to, may help reduce the risk of liability for discrimination or wrongful discharge in the context of minor misconduct and poor performance problems. Such policies must be flexible enough to allow for deviation in appropriate circumstances.

3. A progressive discipline policy generally provides for a series of steps to be instituted in the event of repeated instances of the same or similar problems (e.g., tardiness or attendance problems, failure to submit reports on time, etc.). Typically, progressive discipline begins with an informal oral warning (documented), followed by one or more written warnings, suspension, and eventually discharge.

4. A progressive discipline policy should not be rigid and must permit termination at any point in the process at the employer’s discretion. The policy should be characterized as a guide to be utilized in appropriate cases as determined by the employer. Summary dismissal should be reserved for egregious situations, such as employee theft.

L. Termination

A termination is typically the most high-risk personnel decision leading to litigation. Poorly planned and ill-advised terminations often result in lawsuits. Careful planning of the termination process is an important component to managing this risk.

1. Determine who has the authority to terminate an employee and the grounds for termination. Managers and supervisors should be aware of their responsibilities and authority before problems occur. In most cases, an employee should not be summarily discharged without review by an impartial manager familiar with company policies and practices.

2. If your handbook or policy manual outlines progressive discipline, follow those policies and procedures.

3. Consider alternatives to discharge such as a suspension, demotion, or transfer.

4. Investigate the circumstances and rationale for a termination decision before carrying it out. Make sure your documentation supports the termination (e.g., recorded complaints and comments from clients about a temporary employee’s poor performance or attendance), and that there are no indications of bias, unequal treatment, or legal considerations.

5. Compare how the company has handled similar situations in the past. The company must be able to justify differentiating among similarly situated employees based on legitimate business-related considerations.

6. Handle the termination with dignity and treat the employee in a professional manner. Terminations should be done in person.

7. Two managers and/or a manager and human resources representative should be involved in the termination interview to help guard against claims of malice and to provide an additional witness if credibility becomes an issue. While employers in most states have no legal obligation to discuss with the employee all of the reasons for the termination decision, whatever you choose to say should be accurate and truthful. An employee who is let go for poor performance should not be told his or her position has been eliminated, even though such a reason may spare hurt feelings.

8. Give out all forms and insurance conversion papers; ask politely for keys and confidential documents, etc. Give the employee an opportunity to clean out his or her desk and say goodbye to co-workers.

9. Be prepared to discuss with the employee your policy on employment references, severance pay, benefits continuation, and how you will respond to an unemployment compensation claim. Consider conducting an exit interview to discuss with the employee his or her experience and treatment.

10. Courteously remind the employee of his or her duty to comply with a restrictive covenant if there is one.

11. Releases are sometimes useful to reduce the risk of litigation and to obtain early dismissal of claims. Such releases must be knowingly and voluntarily made, and must be supported by “consideration”—something of value in addition to what the employee is entitled to under law or company policy. Tip 98

Tip 98—Releases

Releases are contracts in which employees promise not to sue the company in exchange for additional consideration. The wisdom of asking for a release varies from situation to situation and from state to state. Experienced employment law counsel should be consulted before an employer asks an employee to sign a release.

Pursuant to the Older Worker Benefit Protection Act, releases used for employees age 40 or over must contain certain specific provisions in order to effectively release claims of age discrimination under the Age Discrimination in Employment Act. In 2001, the EEOC amended its regulations on the OWBPA to provide that an individual wishing to challenge the validity of an ADEA waiver is not required to return or “tender back” the severance payment or other benefits received before filing a lawsuit or discrimination charge under the ADEA. The OWBPA specifically requires that releases for employees age 40 or over

■   Must be in a writing that is easily understandable by the employees signing it or, if a group, understandable to the average individual in the group

■   Must point out that the employees are giving up their rights or claims under the ADEA

■   Cannot purport to waive claims that may arise after the date the releases are executed

■   Must give the employees something of value to which the employees are not otherwise entitled

■   Advise the employees to consult with an attorney before signing the releases

■   Give the employees at least 21 days to consider the releases or, if requested in connection with an exit incentive program or other termination program offered to a group or class of employees, 45 days, and

■   Provide that the employees may revoke their agreement at any time during a seven-day period after the release has been signed.

Employers should check with counsel regarding the special requirements under OWBPA and state law.

Further, when releases are requested in connection with an exit incentive program or other termination program offered to a group or class of employees, the consideration time required is 45 days (as opposed to 21 days for an individual termination), and the employer must inform the eligible employees in a writing that is easily understandable by the average individual in the group of

■   Any class, unit, or group covered by the program, eligibility factors, and applicable time limits

■   Job titles and ages of all individuals eligible or selected for the program and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program

M. Reductions in Force

Workforce reductions designed to trim staff and increase profitability have become increasingly common. Although not all that prevalent in the staffing industry, branch closings, acquisitions, and restructuring sometimes result in layoffs. It is important that any workforce reductions be handled properly, because such reductions have spawned a substantial amount of litigation, particularly claims alleging age discrimination. Among the several steps staffing firms can take to reduce the risk of liability associated with reductions in force are as follows:

1. Prepare a detailed layoff plan before implementation of the reduction in force. This plan should include a description of selection criteria, bumping rights, ranking methods, guidelines for supervisors preparing evaluations, and review procedures. Each layoff decision should be justified and documented.

2. Employee handbooks should clearly state that the staffing firm has the right to reduce its workforce in broadly defined circumstances. Reductions in force should be at the employer’s discretion, and not specifically limited to periods of economic crisis or a need to eliminate an individual job.

3. Consider conditioning severance payments on the signing of a release.

4. Consult with counsel to determine whether the federal Worker Adjustment Retaining and Notification Act or state “plant closing” laws apply.

5. Conduct an adverse impact analysis of preliminary termination decisions to ensure that there does not exist a statistical imbalance. If the reduction in force would have an adverse effect on a protected group, review each individual decision and consider alternatives that are equally consistent with the selection criteria.

6. Meet with employees slated for layoff on an individual basis with at least two managers and/or a manager and human resources representative present. The reason for the decision should be generally explained and the employee should be apprised of any severance benefits, outplacement assistance, and opportunities to apply for other jobs within the company. Staffing firms should not adopt a policy or practice of making laid-off employees eligible for any available job. Rather, if the staffing firm wishes to provide assistance to laid-off employees, it should contract with an outplacement firm and/or make available lists of openings within the company. In this way, the burden is placed on the employee to affirmatively apply for positions. If the staffing firm chooses to assist laid-off employees in finding alternative positions, similar efforts should be made in all cases and inquiries should be carefully documented to memorialize placement activities.

7. Avoid hiring new employees for a reasonable period leading up to and following a reduction in force. This helps avoid any appearance that the workforce reduction was unnecessary or pretextual.

8. Consider using seniority or another objective factor to break any ties in ranking among similarly situated employees.

9. To the extent releases are utilized, they must comply with the OWBPA, and special notices must be provided to employees over the age of 40 who are included in the reduction in force.

N. Alternative Dispute Resolution

In an effort to curb litigation costs, many employers have begun to experiment with alternative means of resolving disputes with their employees. Numerous options are available, such as grievance procedures, mediation, and arbitration. Most courts will enforce evenhanded agreements providing for arbitration of employment-related disputes. Arbitration is ordinarily a less expensive and faster means of resolving such disputes than litigation. An enforceable agreement to arbitrate may preclude a court action or administrative proceeding. A form of an arbitration agreement is included in Appendix E.

1. In order for an arbitration agreement to be enforceable, it must be clearly written and signed by the employee and the employer. The agreement should make clear that participation in alternative dispute resolution will not be met with retaliation.

2. The scope of the arbitration agreement should be clearly set forth. Typically, an arbitration provision applies to all employment-related claims and specifically references statutory provisions prohibiting discrimination, such as Title VII of the Civil Rights Act and the ADA. It is also best to describe the procedures for instituting an arbitration, the rules that govern the arbitration process, and the scope of the arbitrator’s authority.

3. The law governing enforceability of arbitration agreements is still developing and varies considerably from state to state. See the discussion of the advantages and disadvantages of arbitration in Chapter 4, Section D. There is a general trend favoring arbitration of most wrongful discharge and discrimination claims, provided the agreement is not one-sided in favor of the employer.

O. Discriminatory Client Requests

If you receive a discriminatory job order from a client, the following general guidelines may be helpful:

1. Politely but firmly explain to the client that, while you welcome the opportunity to provide services, it would be a violation of the law and contrary to company policy for you to honor a discriminatory request.

2. Try to ascertain and address the underlying concerns of the client that may have led to the discriminatory request in the first place. For example, if a client requests a “young” person, the client may really mean “lower cost” due to a stereotypical view that older employees are too expensive. It would be lawful to assure the client that your rates will be competitive, but it would not be lawful to take into account the employee’s age when making the employment decision. Tip 99

Tip 99—Replacing Employees

It is vital to refrain from replacing a temporary employee who has been removed from an assignment for reasons that you know or reasonably suspect may be impermissible. To replace the dismissed temporary with an “acceptable” person tends to make the staffing firm a participant in the discriminatory conduct rather than being subject to the client’s actions.

P. Protecting Against Negligent Hiring

Claims alleging negligence by employers in the hiring process have become more prevalent in recent years. Some states have been rather receptive to such claims, finding that employers owe a duty of care to prevent harm to persons who may come in contact with the employees. The employer’s duty is generally satisfied if it exercises reasonable care in screening its applicants. (For a fuller discussion of negligent hiring, see Chapter 7.)

The following steps should be taken to minimize the risk of liability for negligent hiring:

1. Determine the risks associated with the position where the applicant will be placed. Positions that require unsupervised exposure of the employee to vulnerable members of the public (i.e., children, elderly) carry greater risks and counsel for greater investigation. Increased investigation also may be warranted for current employees transferred to high-risk assignments.

2. Make sure reference checks are actually completed. While a contingent job offer can be extended to the applicant pending receipt of a satisfactory response from the applicant’s references, it is unwise to assign a temporary employee while awaiting return of the reference check with a prior employer.

3. Ask former employers and other references if they have any reason to doubt the applicant’s honesty or reliability, and document the response by noting the date and individual responding. If you are unable to contact the applicant’s former employers, ask for additional information. Document the efforts made to contact the applicant’s references.

4. If the position requires a specialized degree or license, make sure the applicant has such a degree or license and that it is currently in effect.

5. Verify the applicant’s education and work history. Résumé fraud (i.e., misstating one’s qualifications on a résumé) is quite common.

6. Look for gaps in employment history, frequent address changes, and lack of employment stability.

7. Criminal conviction and credit searches, while costly, are perhaps the most effective tool to avoid negligent hiring liability. Any pre-employment background search must comply with the Fair Credit Reporting Act, which is discussed in Chapter 7, Section G, and state law. Expenses can be minimized by limiting such searches to high-risk positions, or by having the cost passed through to clients. (As discussed in Chapter 7, the Americans With Disabilities Act limits the circumstances under which medical examinations can be administered and would require that the criminal background check be performed prior to a medical exam, which may only be conducted post offer.)

Q. Insurance

The availability of insurance protection for wrongful discharge and other employment-related claims should not be overlooked. For example, claims for mental distress asserted in a wrongful discharge case may be covered by workers’ compensation. A staffing firm should immediately contact its workers’ compensation insurer if a claim of mental or physical injury is asserted by a former employee in a wrongful discharge lawsuit to ascertain if it has coverage for such a claim.

Similarly, other claims often asserted by former employees in wrongful discharge suits (e.g., negligent hiring or defamation) may fall within a staffing firm’s insurance coverage under general liability, errors, and omissions, or other policies. Depending on the coverage and the nature of the injury complained of, insurance policies may provide some protection against wrongful discharge lawsuits. Accordingly, it is advisable for a staffing firm promptly to notify its carrier if it is sued for wrongful discharge.

Insurance companies also offer employment practices liability insurance (“EPLI”) policies ensuring against a variety of discrimination, harassment, and wrongful termination claims. In general terms, EPLI policies cover such claims made against the insured during the period covered by the policy. EPLI policies are generally sold separately from other traditional commercial insurance policies (e.g., commercial general liability, excess-umbrella, and directors and officers). Unlike these more established policies, there is no standard form for EPLI coverage. Consequently, the language contained in EPLI policies, including the scope of the insured, insured events, and exclusions, will vary depending on the insurance carrier.

Most EPLI policies cover the employer entity and its employees. Some policies also include temporary employees within the scope of coverage. Other policies cover only directors, officers, and management employees.

The event or loss covered under an EPLI policy also varies. Commonly, claims of discrimination, harassment, retaliation, and wrongful termination are covered; however, the terms of coverage differ significantly. For instance, some policies cover only institution of a lawsuit against the insured in court (or a charge before the EEOC or a state or local agency responsible for administering state employment practices laws). Other policies cover not only the institution of a lawsuit or agency proceeding, but also a complaint lodged with the insured’s human resource department.

EPLI policies generally reimburse the insured for expenses relating to a covered loss or claim. However, while some policies cover only the costs incurred in defending covered claims, other policies cover defense costs and provide for indemnification of the insured for any judgment or settlement.

The scope of EPLI policies varies. For example, some policies exclude claims that could be brought under a workers’ compensation act, claims based on contractual liability, claims arising under ERISA, the WARN Act, COBRA, FLSA (or state law wage and hour claims), and the NLRA, or claims based on willful or intentional conduct by the employer. Other EPLI policies allow for coverage of wage and hour claims (although such coverage usually is quite expensive).

Given the varying nature of EPLI coverage, staffing firms should carefully review the various policies offered by insurance companies before purchasing this type of insurance.

R. Indemnification Provisions

Consider including an indemnification clause in client contracts or time sheet contracts. Such a clause generally provides that the client will indemnify the staffing firm for wrongful or negligent acts or omissions by the client and/or its employees. Indemnification clauses may serve to protect the staffing firm from liability on the basis of unlawful acts, such as assault or sexual harassment, committed by an employee of the client against a temporary employee.

S. Reducing the Risk of Violations of Wage and Hour Laws

To avoid the most common overtime violations found among staffing firms, follow these suggestions:

1. Pay overtime wages to nonexempt employees after they work 40 hours in any workweek. Some states require overtime to be paid after a certain number of hours of work in a day. Accordingly, staffing firms must be familiar with both federal law and applicable state law.

2. Almost all employees paid on an hourly basis (except attorneys, physicians, and certain computer professionals paid at least $27.63 per hour) are not exempt employees and must be paid overtime, even if they would qualify for an exemption if paid on a salary basis (e.g., managers, accountants). Tip 100

3. Staffing firms must pay overtime for nonexempt employees who work more than 40 hours during the workweek even though they may have worked for more than one client and thus no client will reimburse for the overtime.

4. Employees who work more than 40 hours a week and get paid a shift-differential for part of the week must be paid on a weighted average rate for overtime hours. The shift-differential does not substitute for time and one-half overtime.

5. Keep appropriate records to track when employees are approaching 40 hours in a week or your state’s daily overtime requirement. You may want to use another employee who has not accrued as many hours.

6. Try to obtain a written contract that the client is responsible for any overtime pay of the staffing firm’s employees.

7. It is unlawful to reduce an employee’s regular rate of pay in order to avoid the impact of the overtime rules.

8. You may adopt a policy prohibiting employees from working overtime without the prior consent of the staffing firm. If the employee violates the policy, he or she may be disciplined or fired, but he or she must be paid overtime for the hours worked.

9. Do not make deductions of salary for partial-day absences for salaried exempt personnel. Such deductions may destroy exempt status and subject the company to an overtime obligation it would not otherwise be obliged to honor.

10. Conduct a careful audit of the duties and responsibilities of employees who are classified as exempt to ensure that they fall within the FLSA’s strict requirements for the executive, administrative, professional, or outside salesperson exemptions. These exemptions are discussed in more detail in Chapter 3.

11. All employees must receive at least the federal minimum wage for all hours worked. Some states may have established higher minimum wage rates. See Chapter 3.

12. Employees paid on a commission basis must still be paid minimum wage, even if they make no sales and earn no commissions in a given week.

13. Many state wage and hour laws have specific rules and regulations regarding breaks, meal breaks, pay days, payment by check instead of cash or direct deposit, and the like. The rules are generally obtainable from the state department of labor and should be strictly followed. Violations of wage payment laws are sometimes criminal offenses, and employers can be fined.

14. Employees generally cannot waive or surrender their rights under the federal and state wage and hour laws. For example, if an employee signs a written waiver of his or her right to time and one-half in exchange for preferred assignments, that waiver would not be enforceable.

15. In the absence of a contract to the contrary, wage rates and salaries can generally be varied from assignment to assignment, but only prospectively and not as a sham to avoid paying time and one-half for overtime hours.

16. In most states, it is unlawful for an employer to withhold monies from an employee’s paycheck to recover monies owed to the employer (e.g., to repay a loan from the owner of the company). This “recoupment” of monies owed is unlawful in many states even if the employee agrees in writing. Check with employment counsel before withholding any sums from an employee’s paycheck except for

■   Federal, state, and local income taxes

■   Social Security contributions

■   Other legally mandated withholdings in your state (e.g., disability fund payments)

■   Withholding in accordance with a bona fide court order to garnish or attach an employee’s wages (Request a copy of the order itself and keep it on file.)

17. It is generally advisable to pay commissions after receipt of payment from the client, rather than at the time the “sale” is made. This avoids future setoffs, adjustments, and other problems. This should be clearly set out in any commission policy or plan.

18. Spell out in a writing signed by the employee the precise details of an employee’s commission or bonus compensation. It is especially important to articulate precisely what payments are due to an employee who resigns or is terminated.

19. More and more states are requiring employers to inform employees in writing as to their vacation and sick leave policies. Compliance with these notice requirements is generally simple, but a failure to do so exposes the company to damages and/ or fines.

20. In most states, whether to provide severance pay (and how much) is within the employer’s discretion. Very often, however, once an employer develops a practice of providing severance pay, it is difficult to refuse severance pay to other employees. It is prudent to develop a written severance pay policy reflecting the employer’s decision and to apply that policy in an evenhanded manner. Such a policy can and should distinguish between temporary and regular employees, and can vary depending on whether an employee was terminated for misconduct, terminated for unsatisfactory performance, or laid off through no fault of the employee.

21. In almost all states, it is lawful to condition severance payments upon an employee’s compliance with a restrictive covenant not to compete with the employer for the duration of the severance payments. While a noncompete agreement will not be enforced in every state, the former employer will have the right to discontinue the severance if it is violated, and this often provides the former employee with a strong incentive to refrain from competing.

22. Many states have provisions governing child labor that are more comprehensive than the FLSA. When hiring an employee under the age of 18, check with employment counsel to ensure compliance with these laws.

23. Finally, remember that the wage and hour laws are vigorously enforced by federal and state agencies. A staffing firm faces enormous financial liabilities (as well as damage to its reputation as a company in the business of employment) if it violates the wage and hour laws, even if the violation was unintentional. Do not hesitate to confer with employment counsel or contact the department of labor (on an anonymous basis) for guidance and advice when it comes to any issue involving employee compensation and compliance with wage and hour laws.

Tip 100—Salary

For some staffing assignments, particularly long-term or lengthy project work, it may be possible to establish a weekly salary for the employee. If an employee is performing duties that would make him or her exempt from the overtime requirements (e.g., professional engineer, accountant, manager), no overtime would be due.

T. Reducing the Risk of IRCA Violations

A detailed discussion of the Immigration Reform and Control Act of 1986 is contained in Chapter 5. The following measures should be taken to reduce the risk of IRCA violations by staffing firms:

1. Do not inquire of an applicant as to whether he or she is a U.S. citizen (IRCA prohibits employment discrimination on the basis of citizenship for most job categories).

2. Make sure that each temporary employee and staff employee has a completed Form I-9 on file, and that all necessary signatures, both employer and employee, are on the Form I-9.

3. When dealing with resident aliens, make sure to include the alien registration number on the Form I-9 itself.

4. Do not utilize the information provided on the Form I-9 or on the documents you review to establish an applicant’s identity and eligibility for assignment as the basis for any substantive employment decision.

5. Do not ask applicants to complete Forms I-9 until either the temporary employee is on the payroll or until after a bona fide offer of employment has been made and accepted by the temporary employee. This process may take place following the completion of testing and interviews at the time the temporary employee registers for employment. Do not selectively ask applicants about their eligibility to work in the U.S. (i.e., only asking applicants with foreign-sounding surnames or with foreign accents).

6. Decide whether to make a photocopy of the documents submitted by employees. If you choose to copy the documents, you must copy the documents provided by all temporary employees, not just those you may view as “suspicious.” If the supporting documentation is photocopied, it must be physically attached (e.g., stapled) to the Form I-9 itself.

7. Keep the Forms I-9 in a separate file, apart from the employee’s regular personnel file.

8. Create a tickler system so that you can periodically review any documents that have expiration dates or that limit the employee’s right to remain and work in this country for a specific period.

9. The original Forms I-9 (or a microfiche copy of the Forms I-9) must be maintained for three years after the employee is hired or one year after the termination of employment, whichever date is later.

U. New Hire Reporting Laws

The federal Personal Responsibility and Work Opportunity Act of 1996 established a national directory of “new hires” for child support enforcement orders. The act also requires that states establish and maintain their own directories of new hires.

Under the act, employers must report a new hire to the state directory within 20 days of the date of hire. Individuals are considered “new hires” subject to the act on the first day they perform services in exchange for compensation. For staffing firms, this means that the 20-day time period begins to run when the employee is assigned to a client and begins to earn wages.

Multistate employers may report new hires to the state in which the new hires are working, or the employer may select one state directory to which they will report all new hires. If the multistate employer chooses to report all new hires to only one state, the employer must follow certain guidelines. First, the employer must submit the reports by magnetic tape or electronically. Second, the employer must notify the Office of Child Support Enforcement at the U.S. Department of Health and Human Services regarding the state to which it will report all new hires. Some states have adopted reporting periods shorter than the 20 days mandated by the act. Additionally, some states have different requirements for reporting rehires as opposed to new hires. It is recommended that staffing firms consult the laws of the state(s) in which the specific company operates concerning the reporting requirements for new hires. Tip 101

Tip 101—Rehires

Under the act, staffing firms generally do not have to report “rehires” unless the individual is required to submit a new W-4 form upon returning to work. This is within the discretion of the staffing firm. The applicable state law should also be consulted, as the definition of a rehire may differ.

V. Conclusion

While these checklists and suggestions do not constitute a complete delineation of everything an employer may do to reduce its risk of liability for employment-related claims, they certainly provide the framework for a viable preventive employee relations policy for staffing firms. In dealing with employees, there is no substitute for knowing your legal rights and those of the employees, and for exercising good judgment and discretion within the bounds of the law.

9

The Occupational Safety and Health Act

Even before the Industrial Revolution, worker safety and health was recognized as an important public concern, but concerted efforts toward legislating workplace safety occurred relatively late in the U.S. Some states had attempted to regulate workplace safety within their borders, but without real success. In 1970, however, Congress enacted the Occupational Safety and Health Act in response to surveys showing that more than 2 million employees were disabled due to job-related accidents or unsafe working conditions. The OSH Act created three federal agencies, each having different responsibilities. The Occupational Safety and Health Administration is responsible for promulgation and enforcement of workplace safety and health regulations and standards. The Occupational Safety and Health Review Commission was created to adjudicate disputes arising under the OSH Act. Lastly, Congress created the National Institute for Occupational Safety and Health as a nonregulatory agency to research workplace safety and health issues and to recommend standard safety practices.

Questions regarding the applicability of the Act to staffing firms have surfaced increasingly. This chapter highlights areas of special concern to the staffing industry. It does not attempt to cover all possible areas, and staffing firms should consult with counsel experienced in workplace safety and health issues if a problem arises. In addition, because some states have adopted OSHA-approved state plans, staffing firms should familiarize themselves with the requirements of any plans in their state. A list of states with such programs appears at the end of this chapter.

A. Coverage of the OSH Act

The OSH Act covers virtually every private-sector employer and its employees. Some states, as authorized by the OSH Act, have their own workplace safety statutes, which apply in those states in lieu of the federal law. Employers in all fields, including manufacturing, construction, and the staffing industry, are covered by the Act.

Under the Act, covered employers have two general obligations: to provide a safe working environment for their employees, and to comply with the Act’s rules and regulations, including its record-keeping requirements.

B. Application of the OSH Act to Staffing Firms

The extent to which the OSH Act may apply to a staffing firm in any given situation depends primarily on whether the staffing firm is considered to be the “employer” of persons who work at client company work sites for purposes of the Act. Plainly, staffing firms are the employers of their own regular employees for purposes of the Act.

In 1985, OSHA informally decided that the entity hosting the temporary employees (i.e., the client) will generally be responsible for complying with the OSH Act with respect to temporary employees assigned to its work site, particularly where, as is customary, that entity controls the work site, directs and controls the work of the temporary employees, and is in a position to cure any unsafe conditions at the workplace. Decisions from administrative law judges deciding specific cases generally were consistent with OSHA’s informal policy.

In recent years, however, as staffing firms have become involved in various different types of staffing arrangements, and as various OSHA field offices have begun to receive complaints filed by temporary employees naming the staffing firm as their employer, the issue of whether a staffing firm is the responsible employer under the act has become more complex.

In 2013, OSHA launched a Temporary Worker Initiative (“TWI”), an education and enforcement campaign pursuant to which the agency published, among other documents, a record-keeping bulletin and recommended safety practices for temporary employee safety. In the recommendations, OSHA highlighted the joint responsibility between staffing firms and client companies for providing and maintaining safe working conditions.

In May 2014, ASA and OSHA entered into a formal alliance aimed at further educating staffing companies, their clients, and temporary workers about temporary worker rights and employer responsibilities under the Occupational Safety and Health Act. Through the alliance, and with ASA member input, OSHA published additional TWI Bulletins, including those covering the topics of personal protection equipment, bloodborne pathogens, noise and hearing conservation, and whistleblower protection rights. See OSHA’s website for a full list of TWI Bulletins.

In assessing whether a staffing firm may be liable under the Act, OSHA will normally take into account the following factors:

■   Who directs and controls the employees at the work site

■   Who employs the employees’ supervisor

■   Whether the parties allocated among themselves responsibility for complying with the OSH Act (e.g., in a staffing services agreement)

■   Who the temporary employees consider their employer to be

■   Who has the authority to control the physical conditions at the work site

■   Who has knowledge of the workplace hazards and conditions

■   Whether the staffing firm has the right or the authority to remedy any hazardous conditions or unsafe practices at the work site

■   Who provides the tools and equipment used by the temporary employees

No one of these factors is determinative, but direction and control of the employees and of the work site are generally the most important factors. Notably, factors such as who pays the employees and who is responsible for employment tax obligations are not generally considered as significant in assessing who is the employer for purposes of the OSH Act.

It remains the case that in most traditional temporary help arrangements, the client company will generally be viewed as the host employer responsible under the Act to provide a safe workplace for all employees who perform work at the client company’s work site, including temporary employees. However, in outsourcing, facilities management, or other staffing arrangements where the staffing firm directly supervises the employees on site or has control over the workplace itself, OSHA will generally view the staffing firm as the host employer. Tip 102

Tip 102—Reducing Liability for Violations

Staffing firms may reduce the likelihood of being cited for OSH Act violations by including a provision in their staffing services agreements explicitly establishing that the client controls the work site and is therefore responsible for OSH Act compliance at the work site. You should consult with an experienced OSH Act attorney concerning appropriate legal provisions.

Even if the staffing firm is not the host employer, it can be cited for violations related to preparing employees for likely work site safety hazards. Depending on the circumstances, such preparation may include providing safety training for temporary employees or certain personal protective equipment, such as hard hats or gloves.

C. Providing a Safe Workplace

Under the Act, employers have two principal duties with regard to ensuring the safety of their employees: a “general duty” to provide a place of employment that is free from recognized hazards that cause, or are likely to cause, death or serious physical harm to its employees, and a duty to comply with all occupational safety and health standards under the Act. An employer’s “general duty” is to maintain a safe and healthy workplace for its employees, and arises from the Act’s “general duty clause.” The general duty clause exists in addition to specific standards and rules promulgated by OSHA as regulations under the Act. The general duty clause allows OSHA to protect employees from hazards or conditions that may be inherently dangerous but for which no specific standard or rule has been adopted. Thus, the general duty clause acts as a catchall for OSHA, enabling it to require employers to abate any recognized hazard that causes or is likely to cause death or serious harm to employees.

Like all employers, staffing firms have a general duty to ensure a safe workplace for their staff employees. As noted above, OSHA requires that the host employer provide the safe workplace for temporary employees assigned to a client site. Also, OSHA requires that staffing firms inquire into the conditions of their temporary employees’ assigned workplaces and verify that the host has fulfilled its responsibilities to ensure that the temporary employees are being sent to safe workplaces.

The Act’s specific safety standards fall into four categories: general industry, maritime, construction, and agriculture. There are various rules and regulations under each category requiring employers in those industries to follow certain procedures and practices to ensure the safety of their employees. The general industry category applies to all employers covered by the Act, including staffing firms, unless employees are engaged in the type of work falling under the construction, maritime, or agriculture categories.

D. Hazard Communication

In 1986, OSHA issued an administrative regulation officially titled the Hazard Communication Standard. The HCS is designed to protect employees from chemical hazards in the workplace. Specifically, the HCS is intended to reduce the incidence of chemically related injuries and illnesses in companies where chemicals are either used, produced for use or distribution, or otherwise handled. The HCS does not generally apply to companies in office settings.

The HCS applies to all employees, temporary or regular, who may be exposed to hazardous chemicals under normal operating conditions or foreseeable emergencies. In most instances, covered employees are production workers, line supervisors, and repair or maintenance personnel. Office workers, security personnel, and other nonproduction employees normally are not covered unless their job routinely involves potential exposure to hazardous chemicals in an amount greater than the average consumer.

The HCS requires employers to develop a written hazard communication program; preserve warning labels provided by the chemicals’ manufacturers; obtain and make available safety data sheets; and provide affected employees with information and training.

A question that often arises is whether a staffing firm that furnishes employees to a covered employer (e.g., a chemical manufacturer) is required to comply with the HCS because its temporary employees are entitled to the protection of the regulation.

According to OSHA’s website, “[i]n meeting the requirements of OSHA’s Hazard Communication Standard, the temporary agency employer would…be expected to provide generic hazard training and information concerning categories of chemicals employees may potentially encounter. Host employers would then be responsible for providing site-specific hazard training….” OSHA also advises that contracts between a staffing firm and client “should clearly describe the responsibilities of both parties in order to ensure that all requirements of the regulation are met.” When asked “[i]s the temporary help service required to maintain cumulative exposure data (e.g., 30-day lead exposure, six months noise exposure, etc.), when the employee works for several different companies during the year,” the agency answered “[y]es, the temporary help service must maintain employee records in accordance with the appropriate OSHA standard (e.g., the lead standard, the occupational noise exposure standard, etc.). However, the client employer must perform the site characterization and monitoring of exposure to hazardous chemicals on the work site.”

In 2016, OSHA released a TWI Bulletin explaining how the Hazard Communication Standard applied to the temporary staffing environment. In it, OSHA emphasized that the “staffing agency also has a duty to inquire and verify that the host employer has adequately fulfilled its shared training responsibilities for assigned employees.” To do so, OSHA advises that “the staffing agency should take reasonable steps and have a reasonable basis for believing that the host employer’s hazard communication training adequately addresses the potential chemical hazards to which employees may be exposed to at the host’s work site.”

In those situations where the staffing firm controls the manner in which assignments are performed, or otherwise controls the work environment, the staffing firm may be legally obligated to provide site-specific hazard training under the HCS. Unusual or complex work arrangements involving temporary employees will be decided on an individual basis by the appropriate OSHA area director.

In 2012, OSHA revised its Hazard Communication Standard to align with the United Nations Globally Harmonized System of Classification and Labeling of Chemicals. Two significant changes in the revised standard require the use of new labeling elements and a standardized format for Safety Data Sheets. All OSHA state-plans were required to adopt the 2012 changes, and therefore, employers under both federal OSHA jurisdiction and state-plan jurisdiction must comply with the new requirements.

Some states, including, for example, New York, Massachusetts, New Jersey, and Pennsylvania, have laws similar to the HCS. It is advisable to learn how staffing firms are treated under these state laws in the state(s) in which you operate.

E. Record-Keeping Requirements

As a general rule, it is the host employer that must keep and maintain the injury and illness records required by the OSH Act. Normally, this is the client company. Even if the staffing firm agrees to help the client by keeping the required records for temporary employees, this will not relieve the client company of the legal obligation to keep and maintain the required records.

In general terms, employers that have not been exempted from the record-keeping requirements must adhere to the following requirements:

■   Maintain a log and incident report of all occupational injuries and illnesses (OSHA Forms 300 and 301, or their equivalent), and submit these forms annually. Whether staffing firms and other employers are required to electronically submit their reporting obligations is in flux. Toward the end of the Obama administration, OSHA required employers with 250 or more employees in industries that are routinely required to keep records to electronically submit their information. However, under the Trump administration, OSHA issued a final rule on January 25, 2019, to retract this requirement, thereby relieving establishments with 250 or more employees from the need to electronically submit information from OSHA Forms 300 and 301. These employers must still submit their Form 300A (see below) electronically. Despite this relief from federal regulators, California recently passed legislation requiring California employers to electronically submit the required information to California’s OSHA, thereby circumventing the federal OSHA’s efforts to relax regulatory requirements.

■   Record all occupational injuries and illnesses on the log within seven calendar days of receiving information that a recordable injury or illness has occurred

■   Post an annual summary of occupational injuries and illnesses for each establishment (OSHA Form 300A)

■   Report to OSHA all work-related fatalities within eight hours, and report to OSHA all inpatient hospitalizations, amputations, and losses of an eye within 24 hours. The report must be made to the nearest OSHA area office or by calling OSHA at 1-800-321-6742. OSHA now allows online reporting as well. In a situation where the host employer is responsible for reporting injuries to OSHA, confirm that the host employer did so in a timely manner. Note that certain states and local jurisdictions have shorter reporting periods than does OSHA.

Staffing firms and placement agencies are required to maintain the above injury and illness records for all employees that they supervise on a day-to-day basis, which will typically be only their regular office staff.

F. Enforcement

According to OSHA’s guidance and several OSHA administrative decisions, citations for all safety and health hazards occurring at workplaces where temporary employees are assigned should generally be issued against the host employer. For example, in several cases involving temporary employees assigned to construction sites, the construction company that supervised the work site, not the staffing firm, was found liable. However, staffing firms are occasionally issued citations either due to complaints by temporary employees or because a particular OSHA field office concluded that the staffing firm should be treated as the host employer in the circumstances of that case.

Unless the staffing firm qualifies as a host employer, these citations are typically limited to those safety issues within the staffing firm’s control. For example, OSHA has cited staffing firms for failure to provide certain safety equipment (e.g., hard hats) for those employees it sends to a client’s work site, for failing to provide safety training (e.g., ergonomics for word processors who later develop repetitive motion injuries), or for failing to provide satisfactory information or training as required by the HCS.

OSHA has the authority to conduct on-site inspections of any employer’s workplace, including staffing firms, during regular working hours. Generally, inspections are conducted without advance notice. Tip 103

Tip 103—Inspections

If an OSHA compliance officer unexpectedly arrives at an employer’s office and wishes to inspect the premises or review its records, the following course of conduct may be prudent:

■   Politely try to learn why the inspection is being conducted. Although the compliance officer may say it is only part of a routine inspection, he or she may offer more detailed information (e.g., that an employee complained about an allegedly unsafe condition). In the latter instance, it may be possible to limit the scope of the inspection to the allegedly unsafe condition. It is a good idea not to offer any more information than is necessary to the OSHA compliance officer, because anything said by the staffing firm may be used against it at a later date.

■   OSHA may not conduct warrantless inspections without an employer’s consent. It may, however, inspect after acquiring a judicially authorized search warrant based upon administrative probable cause or upon evidence of a violation.

■   In the likely event that the OSHA compliance officer does not have an authorized search warrant, politely decline to allow him or her to inspect the premises or review records at that time. Ask the officer to contact the appropriate official in the firm for an appointment to come back on a mutually convenient day. However, it is usually not a good idea to insist that the inspector obtain a warrant before he or she conducts the inspection. Such warrants are easy for OSHA to obtain, and employers who insist on them often find that they are subjected to a far more thorough inspection than would have been the case if they had not insisted on a warrant.

Most important of all, consult counsel experienced in OSHA matters as soon as possible, preferably in advance of the compliance officer’s return, to obtain guidance and advice concerning how to proceed.

Under OSHA’s TWI, during on-site inspections, the OSHA inspectors will determine whether temporary employees are present, identify their staffing firm, identify their day-to-day supervisor, determine whether they have been exposed to hazardous conditions, and determine whether they received required training in a language and vocabulary that they understand. As such, staffing firms should prepare their employees for possible OSHA interviews, considering that 60-70% of citations are based on employee statements to OSHA inspectors.

While the list of potential safety hazards at a staffing firm is beyond the scope of this chapter, hazards cited in office workplaces have included improper grounding of electrical equipment (e.g., copiers, computers, refrigerators, etc.), failure to post the OSH Act notice, record-keeping violations, and HCS violations for substances such as photocopier toner. For the past several years, OSHA and its adjunct agency, the National Institute for Occupational Safety and Health, have been studying the possible health hazards of video display terminals (VDTs), but so far no standards have been issued. San Francisco has enacted safety ordinances regarding VDT safety, and such local laws create opportunities for additional citations and violations.

Additionally, OSHA proposed a workplace ergonomics standard that would require employers in manual handling and manufacturing operations to implement ergonomics programs, and further required employers in other industries to institute an ergonomics program if one musculoskeletal disorder was reported, but the standard was not adopted after vociferous opposition by the business community that it was too far-reaching and unworkable. OSHA does have authority, however, to issue citations relating to ergonomics under the “general duty clause.”

G. Penalties

Employers can be assessed a civil fine for each violation an OSHA inspector finds. There are four main categories of violations: willful, repeated, serious, and non-serious. In 2015, Congress passed the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requiring DOL to adjust its civil money penalty levels for inflation on an annual basis no later than January 15. Effective January 23, 2019, OSHA penalties are adjusted as follows: willful, up to $132,598 and no less than $9,472 for each violation; repeated, $132,598 for each violation; serious, $13,260 for each violation; and nonserious, $13,260 for each violation. OSHA has the discretion to assess fines lower than these figures, and frequently it does. It also may assess no fine for a nonserious violation. An inspection usually uncovers several violations, so the fines can mount up very quickly. Willful violations can also result in criminal penalties with fines of up to $500,000 per violation if the violation results in a fatality.

An employer that disagrees with the results of an inspection has two options. First, it can request an informal conference with the local OSHA area director. At that conference, the employer can explain why it disagrees with the alleged violations or proposed penalties. Often, the area director will be willing to adjust the penalties downward, especially if the employer can demonstrate that it already has corrected the violation. Second, the employer can protest the alleged violations, the proposed penalties, or both by filing a simple “Notice of Contest” with OSHA within the time for doing so specified in the citation, usually 15 working days. At that point, OSHA will commence an administrative proceeding against the employer that will proceed much like a lawsuit, except it will be tried before an OSHA administrative law judge. Tip 104

Tip 104—Requesting Informal Conference

It is often advantageous to request an informal conference with the OSHA area director. If OSHA believes the employer is acting in good faith, penalties may be reduced and, if necessary, the employer may obtain more time to correct any violations. You should, however, consult an attorney experienced in OSHA matters beforehand.

The staffing firm may pursue both options concurrently. As a general matter, it is wise to consider the possible precedential effects of a citation, even if OSHA’s proposed penalty is de minimis. Agreeing to pay an OSHA penalty without contesting, even a reduced penalty, is essentially conceding the existence of a violation. In some instances this implicit concession of a violation could leave the staffing firm at risk of receiving future citations (with possibly greater penalties) or even “repeat” citations.

H. States With Approved Plans

Contact the following state agencies for details about their OSHA compliance procedures.

Alaska Department of Labor and Workforce Development
P.O. Box 111149
Juneau, AK 99811-1149
907-465-4855

Industrial Commission of Arizona
800 W. Washington St.
Phoenix, AZ 85007
602-542-4411

California Department of Industrial Relations
1515 Clay St., 17th Floor
Oakland, CA 94612
510-622-3965

Connecticut Department of Labor Division of Occupational Safety and Health
38 Wolcott Hill Rd.
Wethersfield, CT 06109
860-263-6900
(Covers state and local government employees only.)

Hawaii Department of Labor and Industrial Relations
830 Punchbowl St.
Honolulu, HI 96813
808-586-8844

Illinois Department of Labor
900 S. Spring St.
Springfield, IL 62702
800-972-4216
(Covers state and local government employees only.)

Indiana Department of Labor
402 W. Washington St., Room W195
Indianapolis, IN 46204
317-232-2655

Iowa Division of Labor
1000 E. Grand Ave.
Des Moines, IA 50319 515-242-5870

Kentucky Department of Labor Office of Workplace Standards
1047 U.S. 127 S., Suite 4
Frankfort, KY 40601
502-564-3070

Maine Department of Labor Workplace Safety and Health Division
45 State House Station
Augusta, ME 04333-0045
207-623-7900
(Covers state and local government employees only.)

Maryland Division of Labor and Industry
1100 N. Eutaw St., Room 606
Baltimore, MD 21201
410-767-2241

Michigan Occupational Safety & Health Administration
7150 Harris Dr.
P.O. Box 30643
Lansing, MI 48909-8143
517-322-1817

Minnesota Department of Labor and Industry
443 Lafayette Rd. N.
Saint Paul, MN 55155 651-284-5372

Nevada Department of Industrial Relations Occupational Safety and Health Enforcement Section
1301 N. Green Valley Pkwy., Suite 200
Henderson, NV 89074
702-486-9044

New Jersey Department of Labor and Workforce Development
P.O. Box 110
Trenton, NJ 08625-0110
609-292-2975
(Covers state and local government employees only.)

New Mexico Environment Department, Occupational Health and Safety Bureau
1190 St. Francis Dr., Suite N4050
Santa Fe, NM 87502
505-827-2855

New York State Department of Labor
W. Averell Harriman State Office Campus, Bldg. 12
Albany, NY 12240
518-457-2238
(Covers state and local government employees only.)

North Carolina Department of Labor Occupational Safety and Health Division
111 Hillsborough St.
Raleigh, NC 27601-1092
919-733-7166

Oregon Occupational Safety and Health Division, Department of Consumer and Business Services
350 Winter St., NE, Room 430
P.O. Box 14480
Salem, OR 97309-0405
503-378-3272

Puerto Rico Department of Labor and Human Resources
Prudencio Rivera Martinez
Building, 21st Floor
505 Muñoz Rivera Ave.
Hato Rey, PR 00918
787-754-2119

South Carolina Department of Labor
P.O. Box 11329
Columbia, SC 29211
803-734-9644

Tennessee Department of Labor and Workforce Development
220 French Landing Dr.
Nashville, TN 37243-1002
615-741-2793

Utah Occupational Safety and Health
P.O. Box 146600
Salt Lake City, UT 84114-6600
801-530-6901

Vermont Department of Labor
5 Green Mountain Dr.
P.O. Box 488
Montpelier, VT 05601-0488
802-828-2138

Virgin Islands Department of Labor
P.O. Box 302608
St. Thomas, VI 00803-2608
340-773-1994
(Covers state and local government employees only.)

Virginia Department of Labor and Industry
Main Street Centre
600 E. Main St.
Richmond, VA 23219
804-371-2327

Washington Department of Labor and Industries
P.O. Box 44600
Olympia, WA 98504-4600
360-902-5494

Wyoming Department of Workforce Services
Herschler Building
122 W. 25th St., 2nd Floor E.
Cheyenne, WY 82002
307-777-8650

10

Family and Medical Leave Act

The Family and Medical Leave Act of 1993 was enacted to protect the job security of employees faced with family care responsibilities such as the birth of a child or the serious health condition of themselves or an immediate family member. The FMLA requires covered eligible employers to grant up to 12 weeks of unpaid leave per leave year (and up to 26 weeks per 12-month period for military caregiver leave) to an employee. State and local laws must also be considered when determining whether and how much leave an employee must be given. Employers must follow the most generous provisions under federal, state, or local leave laws. Tip 105

Tip 105—Employers Covered

As a preliminary matter, each staffing firm should take these steps:

■   Determine whether it is an “employer” within the meaning of the FMLA (most staffing firms are covered by the law)

■   Determine which corporate offices and work sites have “eligible employees”

■   Determine if these offices are subject to any state or local family leave laws that have broader coverage constraints

■   Review existing corporate leave policies (paid or unpaid pregnancy, sick, vacation, and other authorized leaves of absence) to determine what changes may be needed to comply with the FMLA

■   Ensure that each office is in compliance with the notice of posting requirement

■   Issue a written FMLA policy (a sample policy is included in Appendix E)

■   Administer all leaves of absence in compliance with the FMLA

A. Leave Entitlements Under the FMLA

1. Covered Employers

A staffing firm will be covered by the FMLA if it employed at least 50 employees during at least 20 calendar weeks in the current or preceding calendar year, including both regular and temporary employees. For purposes of this section, any regular or temporary employee whose name appears on the staffing firm’s payroll in a particular week will be considered employed for that calendar week, regardless of whether the employee actually receives any compensation for that week, and regardless of whether the employee is personally eligible for FMLA leave as set forth herein. Tip 106

Tip 106—Joint Employment

In most temporary help situations, it is likely that a joint employment relationship will be found for purposes of the FMLA. Therefore, both the staffing firm and its client must count the temporary employees in determining employer coverage and employee eligibility. For example, an employer that utilizes 15 temporary employees (who worked at least 1,250 hours in the preceding 12-month period) from a staffing firm and employs its own 40 full-time regular employees is covered by the FMLA.

2. Qualified Employees

a. Time Worked

To be eligible for an FMLA leave, an employee must have worked for his or her employer for at least 12 months, for at least 1,250 hours during the 12-month period preceding the start of the leave, and be employed at a work site where the employer employs at least 50 employees within a 75-mile radius. With respect to staffing firms, the relevant work site for the 75-mile-radius test is the staffing office that assigned the employee to a client, and not the client’s work site. A temporary employee who satisfies these criteria would be eligible for FMLA leave.

A Sixth Circuit case stressed that the determination of whether an employee has worked for the required 1,250 hours in the preceding 12 months must always be measured from the date leave commences, and not from the date of an adverse employment action, such as termination.

To be protected by the FMLA, an employee must meet the three criteria described above. If an employer has failed to maintain accurate records of hours worked, it is the employer’s burden to show that the employee did not meet the eligibility criteria.

Time spent on paid or unpaid leave is not counted in the hours of service for purposes of determining eligibility for FMLA leave. If, however, the employee is kept on the payroll for any part of a week, including during a period of paid or unpaid leave, the week will count as employment for purposes of determining the 12-month eligibility test. Tip 107

Tip 107—50-Employees Test

It is important to recognize the distinction made under the FMLA between the 50-employees test for determining if an employer is covered by the act, versus the separate 50-employees-employed-within-75-miles-of-the-work-site test for determining if a particular employee is eligible to take FMLA leave. An employer may be covered because it employs more than 50 employees at multiple, geographically dispersed work sites. Yet the employer might have no employees eligible for leave if fewer than 50 employees are working within 75 miles of each work site. With respect to staffing firms, the relevant work site for the 75-mile-radius test is the staffing office that assigned the employee to a client, and not the client’s work site.

b. Americans With Disabilities Act

Even if an employee is not eligible for FMLA leave, employers should keep in mind that some serious health conditions may qualify as disabilities under the Americans With Disabilities Act, which prohibits discrimination on the basis of a disability. The ADA also requires employers to provide “reasonable accommodations” to qualified employees with disabilities, unless the accommodation would create an “undue hardship” for the employer. Additional leave, intermittent leave, and/or modified work schedules may be required under the ADA as reasonable accommodations if these accommodations do not create an undue hardship for the employer. Not all conditions that qualify as “serious health conditions” under the FMLA will also qualify as “disabilities” under the ADA. (For more detailed information on the ADA, see Chapter 1.) Tip 108

Tip 108—Prior Employment

All prior employment by an employer, regardless of how long ago it occurred, must be considered in determining whether an employee has the 12 months of total service required for coverage under the FMLA. Therefore, employment applications should be sure to request information about the applicant’s prior employment by the employer, and current employees who have not yet reached the 12-month mark should be asked for this information before any leave is designated as non-FMLA.

3. Leave Entitlement Under the FMLA

a. Determination of a Leave Year

An eligible employee generally is entitled to take up to 12 weeks of FMLA leave in “any 12-month period.” Employers are allowed to choose among four different methods for computing the 12-month period in which eligible employees may take FMLA leave:

■   The calendar year

■   Any fixed 12-month “leave year” (e.g., a fiscal year or a year starting on an employee’s anniversary date)

■   A 12-month period measured forward for each employee from the date of commencement of his or her first FMLA leave

■   A “rolling” 12-month period measured backward from the date an employee uses any FMLA leave Tip 109

Tip 109—Calculating Leave

Under the first two “years” described above, an employee would be entitled to up to 12 weeks of FMLA leave at any time in the fixed 12-month period selected. An employee could, therefore, take 12 weeks of leave at the end of the year and 12 weeks at the beginning of the following year. Under the third option, an employee would be entitled to up to 12 weeks of leave during the year beginning on the first date FMLA leave is taken; the next 12-month period would begin the first time FMLA leave is taken after completion of any previous 12-month period. Under the fourth option, each time an employee takes FMLA leave, the remaining leave entitlement would be any balance of the 12 weeks that has not been used during the immediately preceding 12 months. For example, if an employee has taken eight weeks of leave during the past 12 months, an additional four weeks of leave could be taken. If an employee used four weeks beginning Feb. 1, 2015, four weeks beginning June 1, 2015, and four weeks beginning Dec. 1, 2015, that employee would not be entitled to any additional leave until Feb. 1, 2016. However, on Feb. 1, 2016, the employee would only be entitled to four weeks of leave, on June 1, an additional four weeks of leave, etc.

Under the first two methods, an employee may be able to take 12 weeks of leave back to back, aggregating to as much as 24 consecutive weeks. This would also be possible after the employee’s first leave under the third method, in which the measuring year is established by the first date the employee takes FMLA leave. If, for example, an employee takes only one week of FMLA leave beginning on Jan. 1, 2015, and the remaining 11 weeks at the end of 2015, the employee will be eligible to take 12 weeks on Jan. 1, 2016. Thus, stacking of leave entitlement may be possible under the third method when an employee takes FMLA leave intermittently.

Only the fourth method will avoid the problem of stacking leaves back to back. Under this method, each time the employee takes FMLA leave, the remaining leave entitlement is the balance of 12 weeks not used in the preceding 12 months. Tip 110

Tip 110—Continuation of Benefits

Whichever method is chosen, it must be applied consistently and uniformly to all employees.

If a staffing firm fails to choose the method of calculation, any employee needing leave can use whichever method is most advantageous to the employee until, and for 60 days after, the employer chooses a method for its workforce. Furthermore, the staffing firm may designate a measure prospectively only and must comply with the 60-day notice provision for changing its method. Therefore, it is imperative that the firm adopt a measure for calculating the 12-month period and include this method in its FMLA policy.

b. FMLA Does Not Require Paid Leave

The FMLA requires unpaid leave be provided. An employer may provide paid leave benefits and/or require the substitution of any available paid leave during any unpaid FMLA, unless prohibited by state or local law.

c. Benefit Continuation

Employers must continue to provide the employee on leave with the same life and health insurance coverage (if any) that it offered prior to the leave, under the same conditions (e.g., if the employee received only individual coverage prior to the leave, he or she is only entitled to individual coverage during the leave; if the employee paid 10% of the premium cost prior to the leave, he or she must continue that payment during the leave period, etc.).

If an employee is responsible for paying health insurance premiums and fails to pay a premium during the FMLA leave, the employer must provide written notice to the employee at least 15 days before group health insurance coverage is terminated due to the failure to receive a premium payment within 30 days of its due date. Tip 111, Tip 112

Tip 111—Unpaid Leave

Providing unpaid leave will not affect an employee’s status as an exempt employee under the Fair Labor Standards Act provisions governing overtime pay exemptions. Nor will an employee be entitled to unemployment compensation during an unpaid FMLA leave.

Tip 112—Employee Benefits

The term “employment benefits” encompasses all benefits provided or made available to employees by the employer. Included are group life insurance, health insurance, disability insurance, sick leave, annual leave, educational benefits, and pensions.

While an employee is on FMLA leave, the employer is required to maintain the same level of health insurance benefits provided to the employee prior to the leave period. If a new benefits plan is established during the leave period, the employee on FMLA leave is entitled to the new benefits.

If an employee fails to return to work after the period of leave expires, the employer may recover the premium the employer paid for coverage during the leave period unless the employee’s failure to return was due to the continuance or recurrence of a serious health condition or due to other circumstances “beyond the control of the employee.” Medical certification may be required.

d. Leave Taken for the Birth of a Child or Placement of a Child for Adoption or Foster Care

Employees are entitled to leave to care for a child, whether the child is born to the employee or his spouse, adopted, or placed for foster care. An employee’s entitlement to FMLA leave for the birth or placement of a child expires 12 months after the birth or placement. An employee is entitled only to one leave of absence (for up to 12 weeks) under these circumstances, and such leave cannot be taken intermittently or by working a reduced workweek without the employer’s approval.

Employees who take such leave can elect, or the employer can require them, to substitute their paid vacation time, personal leave, or family leave for any part of the 12 weeks of unpaid FMLA leave.

e. Leave Taken to Care for a Sick Family Member or Due to the Employee’s Own Serious Health Condition

Employees are also entitled to leave to care for a family member with a serious health condition, or if their own serious health condition prevents them from working. When leave is taken to care for this purpose, it may be taken all at once, intermittently, or on a reduced work schedule (e.g., on those days when the normal caregiver is unavailable) when medically necessary (e.g., to transport a sick child to weekly medical treatments). Unlike leaves for the birth of a child, the employer’s approval is not required for intermittent or reduced schedule leaves when the leave is taken for health-related reasons.

Under the FMLA, a “family member” means a child, parent, or spouse who has a serious health condition. The Department of Labor has revised the definition of “spouse” to include a same-sex spouse for purposes of taking FMLA leave. Under the FMLA, spouse is defined as “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.” “Child” includes legal wards, biological, adopted, foster, and stepchildren less than 18 years of age, plus older children with physical or mental disabilities.

Employees who take leave due to their own serious health condition may elect, or the employer may require them (unless prohibited by state or local law), to substitute whatever paid vacation, medical, and sick leave the employer provides for any part of their FMLA leave. Paid vacation leave may be substituted for the care of a family member with a serious health condition, but paid medical or sick leave may be substituted for the care of a family member only if the employer’s leave plan allows such leave to be used for that purpose.

An exception to the usual rule that an employee can be required to substitute paid leave for unpaid FMLA leave is when the employee is receiving payments from a plan covering temporary disability, such as an employer’s disability insurance plan, workers’ compensation plan, or a state-mandated disability statute. If the employee is receiving such payments, the employer cannot require the employee, and the employee cannot elect, to substitute paid leave for unpaid leave. While the leave still counts as FMLA leave (i.e., workers’ compensation leave and FMLA leave can run concurrently), the employer cannot require the employee to use up accrued paid leave during the period the employee is receiving such payments.

f. Serious Health Condition

Under the FMLA, a “serious health condition” is defined as an illness, injury, impairment, or physical or mental condition that involves one or more of the seven situations described below. Some of the situations described below require supervision or treatment by a health care provider in order to qualify as a “serious health condition.” The definition of “health care provider” has been expanded to include clinical social workers and any health care providers recognized by the employer or the employer’s group health plan benefits manager, and authorized to provide certification as to the employee’s medical condition.

i. Inpatient Care. An overnight stay in a hospital, hospice, or residential medical care facility, and any period of incapacity or subsequent treatment in connection with such an overnight stay.

ii. Pregnancy or Prenatal Care. Any period of incapacity due to pregnancy or for prenatal care, regardless of the length of the incapacity or whether the individual visits a health care provider. Absences due to severe morning sickness are protected.

iii. Four-Day Absence Involving Treatment. A condition involving incapacity for more than three consecutive calendar days (and any subsequent treatment or period of incapacity relating to the same condition) that involves two or more treatments by or under the supervision, orders, or referral of a health care provider within a 30-day period. In the alternative, it may involve at least one visit to a health care provider for treatment resulting in a regimen of supervised continuing treatment to resolve the condition. The taking of over-the-counter medications, bed rest, drinking fluids, and other activities that can be initiated without visiting a health care provider are alone not sufficient to constitute a “regimen of continuing treatment.” Prescription drugs or therapy requiring special equipment, however, would satisfy this requirement. A patient also would be under “continuing supervision” if, for example, the patient is advised to contact the physician if the condition does not improve.

iv. Chronic Serious Health Condition. A period of incapacity or treatment for such incapacity due to a chronic serious health condition that requires periodic visits for treatment by or under the direct supervision of a health care provider, continues over an extended period, and may involve occasional episodic recurrences of incapacity. An individual need not receive treatment during the absence, and the absence need not last more than three days to qualify as FMLA leave. This category covers conditions such as asthma, diabetes, and epilepsy. For example, asthma would be a chronic, serious health condition in which an employee is unable to report to work due to the onset of an asthma attack or because the employee’s health care provider has advised the employee to stay home when the pollen count exceeds a certain level.

v. Long-Term or Permanent Incapacity. A period of permanent or long-term incapacity for which treatment may not be effective. Only supervision by a health care provider, rather than active treatment, is required. Individuals suffering from Alzheimer’s disease, severe strokes, or the terminal stages of an illness may fit into this category. The condition must involve a period of incapacity that is permanent or long term and for which treatment may not be effective.

vi. Multiple Treatments to Avoid Incapacity. An absence to receive or recover from multiple treatments for a condition likely to result in a period of incapacity of more than three consecutive calendar days if not treated. Examples include chemotherapy or radiation for cancer, dialysis for kidney disease, and physical therapy for severe arthritis.

vii. Multiple Treatments for Restorative Surgery. An absence to receive or recover from multiple treatments for restorative surgery after an accident or other injury.

An “incapacity” exists only when an individual is unable to work, or perform other regular daily activities. It does not cover an absence that is not “required” by a serious health condition. If an employee chooses to stay home from work for four days, when the condition only requires a three-day absence, the absence should not be protected under the prong of the serious health condition definition that requires incapacity for more than three consecutive calendar days. In practice, however, it may be difficult for an employer to prove that a four-day absence was not warranted. Tip 113

Tip 113—Serious Health Condition

Unless complications arise, the common cold, the flu, earaches, upset stomach, minor ulcers, headaches (other than migraine), routine dental or orthodontic problems, and periodontal disease are not serious health conditions. If, however, these conditions result in incapacity for more than three days, plus two or more treatments by a health care provider or one visit resulting in a regimen of continuing treatment, these conditions may qualify as “serious health conditions.” Routine physicals, eye examinations, and dental exams are not considered treatment, although exams to determine if a serious health condition exists and evaluations of the condition are considered treatment.

g. Examples of Serious Health Conditions

Courts have held that the following conditions qualify as “serious health conditions” entitling the employee to FMLA leave:

■   Migraine headaches, under circumstances meeting the FMLA definition (i.e., if chronic or if the headache involves more than three days of incapacity plus two treatments by a health care provider or one treatment with a regimen of continuing treatment), qualify.

■   Although a “minor ulcer” may not qualify as a serious health condition absent complications, peptic ulcer disease causing incapacity for more than three days, plus two treatments by a health care provider, may qualify; it may also qualify as a “chronic” condition.

■   If temporally linked, several diagnoses, no one of which rises alone to the level of a serious health condition (such as elevated blood pressure, hypothyroidism, back pain, severe headaches, sinusitis, infected cyst, sore and swelling throat, coughing, and stress and depression), can, if taken together, constitute a serious health condition.

■   In certain circumstances, the courts have found that the flu and/or a viral infection may rise to the level of a serious health condition provided, however, that the employee was incapacitated for more than three days and treated twice by a health care provider for the flu or viral infection.

■   Chicken pox, if the employee was examined twice by a doctor who advised the employee to remain out of work until the vesicles dried, which is likely to be more than three days, qualifies.

■   At least one court has held that an employee was entitled to FMLA leave for fatigue she claimed was related to radiation treatments for cancer that had ended more than two months earlier.

■   Substance abuse or alcoholism may constitute a serious health condition, but FMLA leave may only be taken for treatment of alcohol or substance abuse.

■   Severe or major depression may constitute a serious health condition under the FMLA where the depression results in an employee’s incapacity over a period of more than three days.

h. Transfer of an Employee to an Alternate Position to Accommodate Intermittent Leave or a Reduced Leave Schedule

If an employee requests intermittent leave or a reduced work schedule to care for a seriously ill family member or for the employee’s own serious health condition, an employer may temporarily transfer the employee to an available alternate position, for which the employee is qualified, with equivalent pay and benefits if the intermittent or reduced leave schedule is due to planned medical treatment. There is no requirement that an employee consent to such a transfer. Additionally, the employee must be reinstated to his or her former position upon conclusion of leave.

i. Leave Entitlement When a Husband and Wife Are Employed by the Same Employer

The FMLA limits the amount of leave time that may be taken by spouses who work for the same employer to a combined total of 12 workweeks during any 12-month period if leave is taken to care for a newborn or newly placed adopted or foster child or to care for a seriously ill parent. This limitation applies even if the spouses work at different work sites or in different divisions of the same company, as long as they are employed by the same employer. When leave is taken to care for a seriously ill spouse or child, spouses employed by the same employer may each take 12 weeks of leave.

j. Return to Work Upon Expiration of Leave

Any eligible employee who takes FMLA leave is entitled to be restored to the same position he or she held before taking leave. If “business necessity” requires that the position be permanently filled while the employee is on leave, the employer may do so. If so, the employee on leave must be given an equivalent position with the same pay that he or she had prior to taking leave.

However, an employee may lose entitlement and reinstatement if, at the end of FMLA leave, he or she is incapable of returning to work with or without accommodation. If the Americans With Disabilities Act applies, the employer will be obligated to consider a reasonable accommodation, and hold an employee’s position open as a reasonable accommodation.

Although an employee cannot lose any employment benefits that accrued prior to his or her leave, he or she is not entitled to accrual of seniority or employment benefits while on FMLA leave. For example, if company policy provides that employees earn one paid sick day per month, the employee on leave for two months would not earn two additional days of paid sick leave during the FMLA leave period. If the employer can demonstrate that the employee’s employment would have terminated without regard to whether the employee was on FMLA leave (i.e., a job elimination as part of a reduction-in-force), the employer is not obligated to restore the employee. However, because any termination in the course of a leave or failure to restore an employee upon conclusion of an FMLA leave could lead to legal claims under the FMLA or the ADA, employers should consult with legal counsel before taking any such action.

k. Key Employee Exemption

An employer may deny job restoration (but not the leave itself) to certain “key employees.” This exception applies to any salaried, eligible employee who is among the highest paid 10% of the employees employed within 75 miles of his or her work facility if the denial of job restoration is necessary to prevent substantial and grievous economic injury to the employer’s operations; the employer notifies the employee of its intent to deny restoration when the employer learns that such economic injury would occur; and, if leave has begun, the employee elects not to return to work after receiving such notice.

l. Leave for Military Families

Qualifying exigency leave allows an eligible employee to take up to 12 weeks of FMLA leave during the designated FMLA leave year because of a “qualifying exigency” arising out of the fact that the spouse, son, daughter, or parent of the employee is on active duty or has been notified of an impending call or order to active duty in the Armed Forces. The DOL defines a “qualifying exigency” as at least one of eight categories of events: short-notice deployment, military events and related activities, certain childcare and school activities, financial and legal arrangements, counseling, rest and recuperation, post-deployment activities, and any additional activities related to service that the employer and employee agree constitute qualifying exigencies.

Military caregiver leave entitles an eligible employee who is the spouse, son, daughter, parent, or next of kin of a covered service member in the Armed Forces to take up to 26 weeks of leave during a 12-month period to care for a service member who, because of a “serious injury or illness,” is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list. A “serious injury or illness” is one that is incurred by the member in the line of duty while on active duty that may render the member “medically unfit to perform the duties of [his or her] office, grade, rank, or rating,” or an injury or illness that was incurred before the member’s active duty and was aggravated by service in the line of duty while on active duty.

An eligible employee also may take such leave to care for a veteran who was a member of the Armed Forces at any time during the preceding five-year period who is undergoing medical treatment, recuperation, or therapy for a serious injury or illness incurred in the line of duty while on active duty or which existed prior to active duty but was aggravated by service in the line of duty while on active duty.

Both the qualifying exigency leave and military caregiver leave may be taken intermittently or on a reduced schedule. An employee who is eligible to take more than one type of leave is limited to 26 weeks of FMLA time off in a 12-month period.

4. Responsibility for Compliance in the Staffing Industry

The regulations issued pursuant to the FMLA specifically address the employer status of temporary help companies and employee leasing firms. The rules recognize that such firms and their clients may be joint employers and that both must count the employees in determining employer coverage and employee eligibility. However, they also make clear that only the “primary employer” is responsible for giving required notices to its employees, providing leave, maintaining health benefits, and restoring jobs. The regulations state that temporary help companies and employee leasing firms generally will be considered the primary employer.

Clients of staffing firms are normally viewed as “secondary employers” under the regulations. As such, they may not interfere with a temporary employee’s attempt to exercise rights under the act, or discharge or discriminate against an employee for opposing a practice that is unlawful under the act.

Secondary employers, such as clients of temporary help firms, must accept an employee returning from FMLA leave if the client continues to use the firm’s employees. A covered secondary employer in a joint employment situation need only keep basic payroll records with respect to its secondary employees.

a. Primary and Secondary Employers in the Temporary Help Context

Pursuant to the regulations, the following factors will be considered in determining whether the staffing firm or the client is the primary employer:

■   The nature and degree of control of the employees

■   The degree of supervision, direct or indirect, of the work

■   The power to determine pay rates or methods of payment

■   The right to hire, fire, or modify employment conditions

■   The preparation of payroll and payment of wages Tip 114

Tip 114—Primary Employer

In response to comments submitted by ASA, the DOL’s regulations provide that staffing firms generally will be considered the “primary employer” and will be responsible for complying with the leave requirements under the act. The customer will be viewed as the “secondary employer” and is only prohibited from interfering with a temporary employee’s attempt to exercise such rights under the act or from discriminating against an employee for opposing a practice that is unlawful under the act.

b. Job Restoration for Temporary Employees

Neither the FMLA nor the regulations directly address a staffing firm’s obligations to a temporary employee who returns from FMLA leave when the job order has ended or the client has terminated the assignment. It is unclear whether this problem will have a significant practical effect because relatively few temporary employees are likely to qualify for, take, or be able to afford FMLA leave of absence.

However, in its formal interpretation of the regulations, the DOL has provided the following guidance:

■   If the temporary employee’s assignment continued after the FMLA leave had expired, or if the client continues to engage temporary employees in the same job category, the temporary employee is entitled to be restored to work at that client at the conclusion of the FMLA leave even if a substitute temporary employee assigned to the client during the leave of absence must be displaced to make room for the employee returning from leave.

■   If the temporary employee was hired for a specific term or only to perform work on a discrete project, the employee is not entitled to be restored to a position if the term or project is over and the client would not have otherwise continued to employ the temporary employee.

■   If the client discontinues the services of the primary employer or stops using that staffing firm to furnish employees in the same job category as the employee who took the FMLA leave during the period of the FMLA leave, the employee is not entitled to be restored to a position at that client.

■   In the latter two situations, the employee returning from FMLA leave is entitled to priority consideration by the primary employer for possible placement at other clients—the so-called “head-of-the-line” rule. Tip 115

Tip 115—Notice of FMLA Leave by Employee

An employee should be given an FMLA notice as soon as the company learns that the employee’s reason for an absence may qualify for leave under the FMLA, regardless of whether the employee specifically mentions the FMLA or requests a leave of absence. See Employer Requirements on page 9.

B. Employee and Employer Requirements Under the FMLA

1. Employee Requirements

a. Notice

Employees must give notice of their request or need for an FMLA leave as set forth below.

i. Leave for Birth or Placement or Adoption of a Child. To reduce workplace disruption, employees taking FMLA leave for birth or adoption are required to provide employers with at least 30 days’ oral notice. The notice need only be sufficient to alert the employer to the necessity and the timing of such a leave, but employees must explain the necessity so that the employer can determine whether it qualifies under the act. The employer may require compliance with its usual policies for unpaid leave notice, but an employee’s failure to comply will not disqualify his or her taking leave so long as oral notice was provided. In the event that 30 days’ notice cannot be provided, then the employee must provide notice as soon as is practicable.

ii. Leave for the Care of a Family Member or in the Event of Employee Illness. In the case of leave for the care of a family member or in the event of employee illness when the need for the leave is foreseeable due to planned medical treatment, 30 days’ oral notice is required (or as soon as practicable if the treatment is scheduled to begin in less than 30 days). When the need for leave is unforeseeable (e.g., sudden medical emergency), only notice as soon as practicable is required, which would usually be within one or two days of discovering the need to take the leave.

iii. Consequences of a Failure to Give the Required Notice. If an employee fails to give the normal 30 days’ notice for foreseeable leave with no reasonable excuse, the employer may delay or deny the taking of FMLA leave. It must be clear, however, that the employee had actual notice of the FMLA notice requirements. This condition could be satisfied by the employer’s proper posting of the required FMLA notice at the work site where the employee works and by proof that the FMLA notice was otherwise distributed to the employee in question, which would usually be within one or two days of discovering the need to take the leave.

b. Certification

Employers may request certification related to the FMLA leave as set forth below:

i. Medical Leave. An employer may require that any leave request based on a family member’s or the employee’s own serious health condition be supported by a certification completed by a health care provider. Sample health care provider certification forms are available at the DOL’s Wage and Hour Division website.

Upon request, the employee must provide a copy of the certification to the employer within 15 calendar days, unless it is not practicable to do so under the specific circumstances. The certification must contain the following information:

■   The date the serious health condition began

■   The probable duration of the condition

■   The appropriate medical facts regarding the condition (except for in California)

■   If the leave is based on care of a spouse, child, or parent, a statement that the employee is needed to provide the care and an estimate of the amount of time that need will continue

■   If the leave is based on the care of a spouse, child, or parent, documentation as to the family relationship (may be required)

■   If the leave is based on the employee’s own serious health condition, a statement that the employee is unable to perform the functions of his or her job

■   In the case of intermittent leave or leave on a reduced schedule for planned medical treatment, the dates the treatment is expected to be given and the duration of the treatment

A supervisor or employer cannot contact an employee’s health care provider. A health care provider employed by the employer or human resources may, however, contact the employee’s health care provider, with the employee’s permission, to obtain clarification or authentication, but cannot request additional information without the employee’s consent and a proper basis for doing so.

The FMLA allows an employer to require the employee to provide recertification “in certain circumstances.” With some limited exceptions, an employer may not require recertification until after the minimum period of incapacity specified on the medical certificate. Moreover, an employer can require an employee on FMLA-mandated leave to report periodically on his or her status and the intention of the employee to return to work.

Finally, the law allows the employer to require each employee taking leave due to the employee’s serious health condition to obtain a fitness for duty or medical certification that the employee is able to resume work. Tip 116

Tip 116—Notice of FMLA Leave Certification

If an employer is uncertain of the validity of an employee’s certification, it can require the employee to obtain a second opinion, at its expense. The second health care provider may not be employed on a regular basis by the employer.

If the opinions of the first and second health care providers differ, the employer may require a third opinion, at its expense, from a health care provider mutually agreed upon by the employer and employee. The third opinion will be considered final and binding

ii. Military Exigency Leave. Employers may require two different types of certification with respect to military exigency leave. One is a certification that the family member is a member of the Armed Forces who is on active duty or faces an impending call to active duty. A copy of the service member’s active duty orders will contain the necessary information. Once an employee furnishes the certification, employers may not require the same certification again for subsequent absences related to the same active duty of the service member. The other certification is a statement from the employee (including available written supporting documentation) about the nature and details of the specific exigency, the amount of leave needed, and the employee’s relationship to the military service member. The employee must provide both certifications within 15 days absent unusual circumstances.

2. Employer Requirements

Within five business days of the initial request for leave or when the employer acquires knowledge that an employee’s leave may be for an FMLA qualifying event, an employer must inform the employee of his or her eligibility status and, if ineligible, one reason why.

It is the employer’s responsibility to designate all time off (whether paid or unpaid) as FMLA leave (or not) and to notify the employee of the designation based on the information provided by the employee and the certification. The employer must also indicate whether paid leave will be substituted for unpaid leave. If an employer lacks sufficient information regarding an employee’s reason for taking paid leave, it must inquire of the employee or his or her spokesperson to ascertain whether the requested leave is FMLA-qualifying leave.

a. Designation of FMLA Leave in Writing

DOL regulations provide that an employer must designate and document FMLA leave as follows:

■   Notify an employee, within five business days (absent extenuating circumstances) after ascertaining that an employee is taking leave for an FMLA purpose, whether the requested leave will be counted as FMLA leave and whether paid leave will be substituted

■   Provide the employee with a written designation notice

■   Document all discussions and decisions concerning disputes as to whether paid leave qualifies as FMLA leave

An employer may designate a leave as FMLA leave, even if the employee has not requested FMLA leave, if the leave is for a condition that qualifies for FMLA leave. An employee cannot refuse to allow the employer to count otherwise qualifying leave as FMLA leave. Tip 117

Tip 117—Loss of FMLA Protection

An employee who fails to answer whether he or she is requesting time off for an FMLA reason will lose FMLA protection within two days after returning to work if, by that time, he or she has not notified the employer that the leave was for an FMLA reason.

b. Notice Requirements

Pursuant to the regulations, employers must provide detailed notice to an employee of his or her rights and obligations under the FMLA when an employee notifies the employer of the need for FMLA leave. The notice must include the following:

■   That the leave will count as FMLA leave

■   The employee’s right to substitute paid leave, whether the employer will require the substitution of paid leave, and the conditions related to any substitution

■   Any requirement for the employee to make premium payments to maintain health benefits, the arrangements for making such payments, and the ramifications of failing to make timely payments

■   Any requirement for the employee to present a fitness-for-duty certificate to be restored to employment

■   Designation of the employee’s status as a “key employee” and the potential consequence that restoration may be denied following leave

■   The employee’s right to restoration to the same or an equivalent job

■   The employee’s potential liability for payment of health insurance premiums paid by the employer during the employee’s unpaid FMLA leave if the employee fails to return to work after taking FMLA leave

While late retroactive designation of leave may be allowed in certain circumstances, it is imperative that staffing firms provide FMLA notice in accordance with the regulations as retroactive designation is not guaranteed. Tip 118, Tip 119

Tip 118—Notice of FMLA Leave by Employer

The safest course for employers is still to notify employees that their leave is being counted as FMLA leave as soon as possible, and whenever possible before the employee commences such leave. Such notice should also state if the leave is being counted against any state family or medical leave for which the employee may be eligible.

Tip 119—Medical Certification

If the employer has not advised an employee that its policy requires the employee to provide medical certification of a serious health condition, the employer may not delay the leave or discharge the employee based on the employee’s failure to submit this documentation. In addition, if the employer does not notify an employee of the ramifications of failing to make timely premium payments for health benefits, the employer may not cancel these benefits when the employee fails to make the required payments.

c. Record Keeping

Employers are required to make, keep, and preserve records pertaining to their obligations under the FMLA in accordance with the record-keeping requirements of the FMLA. The records must disclose the following:

■   Payroll and identifying employee data

■   FMLA leave dates or hours of the leave if taken in increments of less than one full day

■   Copies of leave notices provided to the employer and copies of notices provided to employees by the employer

■   Any documents describing employee benefits or employer policies and practices regarding the taking of paid and unpaid leaves

■   Premium payments of employee benefits

■   Records showing the calculation of any intermittent leave

■   Records of any dispute between the employer and employee regarding FMLA leave

While the FMLA allows an employer to obtain medical information, both the FMLA and the ADA require that medical information obtained must be kept confidential. In addition, some states also require that medical records be maintained in confidential files separate from other personnel information. (For more information regarding the ADA’s requirements, see Chapter 1.)

d. Posting

Employers must conspicuously post a notice containing information about the FMLA and information on how to file a charge for any violation of the act. A copy of the DOL’s FMLA “poster” is included in Appendix E.

Employers must include information concerning FMLA rights in any written guidance (e.g., a handbook) concerning leaves, wages, attendance, and similar matters. If the employer does not have a written policy, the employer must still provide written guidance to any employee who requests leave.

C. Remedies for FMLA Violations

1. Violations

The following actions constitute an employer violation of the FMLA:

■   Interfering with, restraining, or denying the exercise of rights conferred by the FMLA

■   Firing or otherwise discriminating against any employee who exercises his or her rights under the FMLA or who opposes the employer’s denial of those rights

■   Designating leave as FMLA leave after an employee has returned to work, except if the employer did not learn the reason for the absence until the employee’s return or the employer made a preliminary designation (and notified the employee) pending receipt of medical certification or requested information

Employees have two principal means of enforcing their rights under the FMLA: a private lawsuit, or through an investigation or lawsuit by the DOL.

2. Civil Suits by Employees

An employee (or former employee) alleging a violation of the FMLA may sue in state or federal court on his or her own behalf or on behalf of all similarly situated employees.

If found guilty, the employer would be liable for the following:

■   Damages equal to any wage, salary, employment benefits, or other compensation denied or lost by reason of the violation

■   Where no compensation or benefits have been lost (for example, where leave was denied and the employee continued to work), damages equal to any actual monetary losses suffered by the employee due to the violation (such as the cost of providing care to a family member)

■   Interest on the above damages

If an employer does not designate in a timely manner an absence as an FMLA qualifying absence, in writing, the absence cannot be used as the basis for any adverse employment action.

In addition, the court will double the damages awarded unless the court finds that the employer acted in good faith and had reasonable grounds for believing it was not in violation of the law.

The employer will also be required to pay reasonable attorneys’ fees, reasonable expert witness fees, and other court costs incurred by the employee.

Finally, if appropriate, the court may order equitable relief such as employment, reinstatement, and promotion of the employee.

Even though there is some disagreement as to whether an individual manager can be held personally liable for damages for violations of an employee’s rights under the FMLA, most courts have held individuals personally liable when they exercise sufficient control, in whole or in part, over the employees’ ability to take leaves of absence and return to their positions.

3. Action by the Department of Labor

Alternatively, the employee may complain to the DOL, which will investigate and attempt to resolve the complaint. If the complaint cannot be resolved, the DOL may bring a court action to recover the damages or other relief available to the employee in a civil action. Any damages would be payable to the employee.

a. Statute of Limitations

Any lawsuits by the employee or the government must be commenced within two years of the last event constituting a violation for which relief is sought. If the violation is willful, the statute of limitations is extended to three years. Tip 120

Tip 120—Termination of Employment

A staffing firm or its client may also have liability under the FMLA if the decision to terminate the business relationship or the employment relationship of a particular temporary employee is motivated by an intent to circumvent the act or to retaliate against the employee for exercising his or her rights under the act.

4. Arbitration

Properly drafted contractual agreements to arbitrate claims under the FMLA are enforceable. However, if a contractual arbitration clause does not refer to arbitration of employment discrimination claims, an FMLA claim may not be subject to arbitration.

D. Employer Business Credit for FMLA

On December 22, 2017, Congress signed tax reform legislation that makes significant changes to numerous Internal Revenue Code provisions governing executive compensation and employee benefits. Under new Code Section 45S, the Tax Cuts and Jobs Act permits employers to claim a business credit for a percentage of the amount of wages paid to certain employees for the time they are on family and medical leave. The credit equals 12.5% of wages paid during the leave period, increased by 0.25 percentage points for each percentage point by which the rate of pay is more than 50% (but capped at 25% of wages paid). The maximum amount of family and medical leave that may be taken into account for each employee for a tax year cannot exceed 12 weeks.

An eligible employer for Code Section 45S purposes is one that has adopted a written policy allowing all qualifying full-time employees at least two weeks of annual paid family and medical leave and permits part-time qualifying employees a commensurate amount of leave, calculated on a pro rata basis. If an employer provides paid leave as vacation leave, personal leave, or other medical or sick leave, this paid leave is not considered family and medical leave under Code Section 45S.

The new code Section 45S will not apply to wages paid in tax years beginning after December 31, 2019.

11

The Affordable Care Act

The Affordable Care Act imposes major legal obligations on employers, including new excise taxes, which will increase the cost of supplying temporary and contract workers. The staffing industry is committed to compliance with the ACA, and the American Staffing Association is actively working to help staffing firms and clients understand the rules and how they will affect staffing services.

Download the most up-to-date ACA reference guide from the American Staffing Association website, americanstaffing.net/stateaddendums. If you are studying to take an American Staffing Association certification exam, use this ACA reference guide to help you prepare.

The American Staffing Association has a website dedicated to resources for staffing and recruiting professionals; visit americanstaffing.net/aca.

12

Independent Contractor Versus Employee Status

Failing to appropriately classify a worker as an employee or an independent contractor can have serious consequences. Companies that misclassify workers as independent contractors when they should have been classified as employees can be held liable for a number of federal and state taxes (e.g., income, unemployment, workers’ compensation). Further, such workers often sue for unpaid overtime under the FLSA and state wage and hour laws. In addition, companies can be held liable for the negligent acts and omissions of individuals mistakenly believed to be contractors engaged in their own businesses. The Internal Revenue Service, the U.S. Department of Labor, and various other federal and state government agencies regulate the accuracy of worker classification. However, as discussed in more detail below, the standards and criteria used by these agencies and in courts can vary.

The common law standard used by courts was developed out of the law of agency over many years of court decisions. Under the common law standard, the primary issue in determining worker status is whether or not the principal has the right to direct and control the agent (the worker). If the right of direction and control exists regarding the manner and means of performance and the end result, the agent is likely an employee.

For many years, the IRS utilized a 20-factor test adapted from the common law to determine worker status. The IRS, however, simplified its test to three factors, all of which are geared toward the degree of control exercised by the putative employer as compared to the independence with which the worker operates:

1. Behavioral Control. This factor focuses on the level of control the putative employer has over the manner and means with which the worker performs the job. The more control the principal exerts, the less likely an independent contractor relationship will be found.

2. Financial Control. The IRS also looks at the level of control the putative employer has over financial aspects of the working relationship, such as how the worker is paid, whether the worker has the potential for profit or loss, whether the worker’s business expenses are reimbursed, and who provides the tools. Again, the more control the putative employer has, the less likely the worker is properly classified as independent contractor.

3. Type of Relationship. This factor focuses on the parties’ perception and definition of the relationship. For instance, do the parties have a written agreement specifying that they intended to form an independent contractor relationship; how permanent is the relationship; and are the services provided by the worker integral to the core business activity or is the worker providing an incidental service.

The factors should not be mechanically applied, as no one factor is determinative. The various factors must be looked at together and evaluated looking at the totality of the circumstances.

A. Categories of Employees

Section 3121(d) of the Internal Revenue Code contains four separate and distinct categories of employees:

■   Common-law employees

■   Corporate officers

■   Statutory employees, real estate agents, direct sellers, companion sitters

■   Employees covered by agreement under Section 218 of the Social Security Act

This discussion focuses only on common-law employees.

Please note that separate tests are utilized regarding employment tax withholdings for the following taxes:

■   Income tax (please refer to IRC §3401[c])

■   FICA (please refer to IRC §3121(d))

■   FUTA (please refer to IRC §3306[i])

B. Section 530 of the Revenue Act of 1978

Under Section 530 of the Revenue Act of 1978, employers may find relief from federal employment tax obligations (income, FICA, and FUTA) when workers who have been misclassified as independent contractors are reclassified as employees. Section 530 relieves the employer’s employment tax liability for the period of misclassification if certain requirements are met. An employer must meet the following two tests in order for the relief provisions under Section 530 to apply.

1. Consistency Test

a Reporting Consistency

File all required tax forms consistent with the manner in which the worker was treated (e.g., issue Form 1099s to workers reported as independent contractors).

b Substantive Consistency

Treat all workers in similar positions the same.

The following list of considerations is used in determining the existence of substantive consistency:

■   Work performed on a day-to-day basis

■   Method used to perform services

■   Compare with services and methods of other workers and how they are classified

■   Compare job functions of employees and independent contractors

2. Reasonable Basis Test

The taxpayer must reasonably rely on one of the following bases:

■   Prior judicial or administrative precedent

■   Traditional practice safe haven (prior audit of similar workers)

■   Industry practice safe haven (a longstanding industry practice to treat the particular type of worker like an independent contractor); or

■   Other reasonable basis

If an employer meets these tests, the employer may be relieved from employment tax liability even though workers are determined to be employees rather than independent contractors.

The most important factor under the reasonable basis test is whether the employer has reasonably relied on a longstanding (but at least 10 years), recognized practice of a significant segment of the industry (at least 25%) in which the individual was engaged. However, the practice does not have to be utilized by all businesses in the particular industry.

C. Section 1706 of the Tax Reform Act of 1986

Section 1706 of the Tax Reform Act of 1986 amended Section 530 to provide that relief from tax liability under Section 530 may not be obtained in the case of a three-party arrangement where an individual (worker) who, pursuant to an arrangement between the taxpayer (staffing firm) and another person (client), provides services for such person (client) as any of the following capacities:

■   Engineer

■   Designer

■   Drafter

■   Computer programmer

■   Systems analyst

■   Other similarly skilled worker engaged in a similar line of work

Section 1706’s limited exception to the safe harbors of Section 530 only applies to multiparty transactions that involve firms that supply or broker the services of technical personnel; technical personnel; and clients that benefit from the services of technical personnel. Tip 121

Tip 121—Worker Status

Whether or not a worker is incorporated as an independent business is irrelevant in determining the worker status of individuals retained by a company to provide the above technical services.

Even if an employer’s liability is relieved by Section 530, the employee still remains liable for the employee’s portion of FICA taxes on wages received from the employer.

D. The Benefits to the Employee of Being Classified as an Independent Contractor

There are numerous pros and cons of being an independent contractor. The fact that independent contractors are their own boss is obviously a significant pro. However, there may also be significant tax benefits to being engaged in a separately established business. Independent contractors can deduct business expenses for tools and equipment, travel, home offices, and business entertainment. Independent contractors are also given more flexibility to allocate more income to retirement benefit plans.

E. The Benefits to a Business of Classifying Workers as Independent Contractors

Many of the benefits and advantages to businesses of using independent contractors have been alluded to above. For example, businesses are not required to contribute to pay FUTA, FICA, SDI, SUI, or other federal and state employment-related taxes. Businesses utilizing independent contractors also are not subject to wage and hour laws (e.g., overtime and minimum wage) and do not have to contribute to employee benefit plans for those workers. Other benefits include

■   No requirement to pay workers’ compensation insurance

■   Generally no liability for the negligence of independent contractors; and

■   Usually no liability under discrimination laws

F. Internal Revenue Code Section 3509

If a staffing company misclassifies an employee as an independent contractor, the employer becomes liable for the misclassified employee’s share of federal payroll taxes, in addition to penalties. Penalties may be avoided if the employer can prove that the failure is due to reasonable cause rather than willful neglect. However, penalties will increase if the failure to pay the taxes or file the appropriate forms (e.g., W-2, W-3, 940, 941, 1099, etc.) was the result of intentional disregard.

Relief is also available for the employer through an abatement process to identify what, if any, taxes were paid individually by the misclassified employee. However, it is often difficult to achieve the employee’s cooperation. Section 3509 relief applies when Section 530 relief is not available. However, it does not apply in all employment situations or if the failure to pay was due to the employer’s intentional disregard of its tax obligations. Section 3509 may provide employers with the following relief if 1099s were filed for the misclassified worker:

■   Reduce the employer’s obligation to pay income tax withholding to 1.5% of employee’s wages

■   Reduce the employer’s obligation to pay the employee’s share of Social Security taxes to 20% of the tax Tip 122

Tip 122—IRS Voluntary Classification Settlement Program

The IRS has a program for taxpayers who may have misclassified workers as independent contractors, Under the Voluntary Classification Settlement Program, companies can reclassify workers from independent contractors to employees for employment tax purposes and obtain some relief from potential tax-related penalties associated with misclassification. Companies interested in participating in this program are advised to consult with legal counsel before doing so.

G. Worker Status Under Other Laws

As noted above, the common law standard for determining worker status applied by the IRS does not apply across the board. Whether or not a worker is an employee or an independent contractor varies from state to state and also depends upon the particular law the worker status issue is being considered under. The following summary highlights the considerations under a few other laws.

H. The Fair Labor Standards Act

In order for an employer to be subject to the wage and hour provisions of the Fair Labor Standards Act, an employment relationship must exist. As such, employers generally are not liable for FLSA compliance on payments made to its independent contractors. However, classification mistakes are made, and considerable litigation has ensued over the last decade over independent contractor misclassification claims. For example, companies who retain temporary workers to help in rush situations or on large projects often misclassify such workers as independent contractors when they should be treated as employees. The temporary nature of the relationship alone is not sufficient to support an independent contractor classification.

The FLSA itself does not clearly define who is an employee for purposes of the statute. As a result, courts must decide the correct standard to use when assessing whether a worker is an employee or an independent contractor. Although there is a significant degree of variation among the circuit courts as to the correct standard, the analysis generally boils down to an “economic realities test” focused on determining whether, as a matter of economic reality, the worker is dependent upon the business to which he or she is providing services. While all of the facts and circumstances should be considered when making a determination, courts have identified the following factors as significant to the analysis:

■   The worker’s opportunity for profit or loss

■   The worker’s investment in the business

■   The permanency of the working relationship

■   The degree of skill required to perform the work

■   The degree of control exerted by the putative employer over the worker

No one factor is determinative and the totality of the circumstances must be considered.

The U.S. Department of Labor, which is charged with interpreting and enforcing the FLSA, has identified the following factors:

■   The extent to which services rendered are an integral part of the employer’s business

■   The permanency of the relationship

■   The amount of individual investment in facilities and equipment versus that of the putative employer

■   The opportunities for profit and loss

■   The degree of initiative, judgment, or foresight exercised by the individual who performs the services

■   The nature and degree of control the putative employer exercises over the worker

As the various factors used by the Department of Labor and courts demonstrate, worker status considerations under the FLSA do not focus as heavily on the right to control as the common law standard. Rather, the focus is on how dependent the individual is on the business for which the services are provided and how economically dependent the worker is on his or her relationship with that entity. Further, for purposes of state wage and hour laws, the definition of an “employee” vs. an “independent contractor” varies on a state-by-state basis. Staffing firms should thus review these state laws applicable to their operations.

Although written independent contractor agreements do provide evidence of the intent of the parties in entering the work relationship, they do not control if they are inconsistent with the actual relationship between the parties to the contract. Courts and the Department of Labor regularly disregard these written agreements. Such agreements tend to be form contracts, and the worker usually has little or no negotiation ability in entering them. Tip 123

Tip 123—Worker Incorporated as Independent Business

Each case must be examined on an individual basis and all of the facts and circumstances must be considered. It is possible for a worker to be determined to be an independent contractor under the common law (IRC) test and be determined to be an employee under the economic realities test at the same time.

I. State Unemployment and Workers’ Compensation Laws

State workers’ compensation and unemployment laws should be referred to, because these laws vary from state to state and may utilize different standards for determining employment status within the state. Because the purpose of these laws is remedial in nature and they are broadly construed to serve the purposes of the legislation, employment status can be found under these laws even when independent contractor status is found under other laws.

J. The ABC Test

A number of states (approximately 20) utilize a three-part test for determining employment status for unemployment insurance purposes. While there are variations of this test, a business trying to rebut the presumption of employment must generally establish

■   That the worker is free from its direction and control in performing services, both under a contract and in fact

■   That the services provided by the worker are either outside the usual course of the principal’s business or outside all of the principal’s places of business

■   That the worker is customarily engaged in an independently established trade, occupation, profession, or business like that of the services being performed

Please note that under some state laws, the language in part two of the test, which reads, “outside all of the places of the principal’s business,” is removed. This omission makes it much more difficult for an alleged employer to meet its burden of proof.

13

Per Diem Regulations

When an employee is assigned a job away from his or her primary place of work, the employer may reimburse him or her for business-related expenses through an accountable plan per diem arrangement. Per diem is a Latin phrase that means “by the day.” Such arrangements are particularly relevant in the staffing industry because they provide a way of reimbursing a temporary employee for business, travel, and living expenses incurred while the employee is working away from his or her permanent home on a temporary job assignment with funds that do not constitute taxable wages. Employers can benefit by being able to deduct the amounts reimbursed, with some limitations, while avoiding some administrative costs and matching obligations required with FICA and FUTA taxes. The employee benefits because reimbursed per diem business expenses are not considered taxable income.

However, these benefits may only be reaped if the reimbursements are made pursuant to an accountable expense reimbursement plan. While the Internal Revenue Code and the Internal Revenue Service provide these benefits, the IRS strictly monitors the appropriate use of per diem arrangements to ensure that they are not merely disguised attempts to pay tax-free wages. If the accountable plan requirements are not met, then the reimbursements must be included as wages and noted in the employee’s Form W-2 income, and the employer must make appropriate tax contributions and withholdings, and include the amount paid within the employee’s regular rate of pay.

In order to be considered a reimbursement made under an accountable plan, the following requirements must be met:

■   The cost or expense must have a “business connection,” meaning the cost must have been incurred in the rendering of services to the employer;

■   The cost must be “substantiated” (the employee must appropriately account for the expenses to the employer within a reasonable amount of time); and

■   The employee must be required to return any amounts reimbursed that are in excess of expenses actually incurred and substantiated.

All of the accountable plan requirements are located in the Internal Revenue Code Section 62(a)(2)(A) and (c) and Treasury Regulations Section 1.62-2.

A. Business Connection

In general, a reimbursement, advancement, or allowance meets the business connection requirements if the employee uses it in connection with the performance of services for the employer. The business connection requirement is not met if the employer does not reasonably believe that the employee will use the reimbursement for deductible expenses.

According to IRC Section 162(a), deductible travel-related expenses include all ordinary and necessary trade or business expenses that are incurred away from an employee’s tax home, are not extravagant or lavish, and are incurred in the pursuit of trade or business. Examples include:

■   Travel expenses

■   Meals

■   Lodging

■   Other incidental expenses

The definition of “incidental expenses” includes only fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Transportation between places of lodging or business and places where meals are taken, and the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings are not considered incidental expenses.

For purposes of determining if any employee is traveling away from his or her tax home for business, an employee’s “tax home” is his or her regular place of business or his or her principal place of business if the employee has more than one regular place of business. If the employee has no regular or principal place of business, then the employee’s tax home is his or her regular place of abode. Should the employee fail to have a tax home as defined by the above categories, because he or she has no regular or principal place of business and no regular place of abode, then the employee is considered to be an itinerant whose tax home is wherever the employee happens to work. As a result, an itinerant worker is technically never away from his or her tax home, and his or her travel related expenses, such as lodging, food, and transportation, are deemed personal and nondeductible, and any reimbursement of such expenses are not excluded from the employee’s income. If an employee does not have a regular or principal place of business, the following factors are used to determine the location of the employee’s tax home:

■   Whether the employee performs a portion of his or her business in the vicinity of the claimed abode and uses such abode for lodging while performing such business

■   Whether the employee’s living expenses incurred at the claimed abode are duplicated because business requires him or her to be away from that abode

■   Whether the employee

–   Has not abandoned the vicinity in which his or her historical place of lodging and the claimed abode are located,

–   Has at least one family member currently residing at his or her claimed abode, and

–   Uses his or her claimed abode frequently for purposes of lodging. Tip 124

Tip 124—Regular Place of Abode

If the employee does not customarily or frequently work in any one specific or general area, but instead frequently changes work locations, it is probable that he does not maintain “a regular place of abode” in a real and substantial sense. Employees can provide certification to employers of a permanent place of abode, but the employer should not rely exclusively upon the employee’s certification and should take affirmative steps to confirm via alternate means.

If all three of the above factors are satisfied, then such abode is the employee’s tax home. If only two of the factors are satisfied, the abode may be the employee’s tax home, depending on other facts and circumstances. If less than two factors are satisfied, the employee is an itinerant.

For tax purposes, an employee can exclude from income reimbursements for travel expenses while away from home on assignment only if the assignment is temporary and not indefinite. To qualify as temporary, the absence from home for a work assignment must not exceed one year. As explained by Revenue Ruling 93-86, “if employment away from home in a single location is realistically expected to last (and does in fact last) for one year or less, the employment is temporary, in the absence of facts and circumstances indicating otherwise. If employment away from home in a single location is realistically expected to last for more than one year, or there is no realistic expectation that the employment will last for one year or less, the employment is indefinite, regardless of whether it actually exceeds one year. Finally, if employment away from home in a single location initially is realistically expected to last for one year or less, but at some later date the employment is realistically expected to exceed one year, that employment will be treated as temporary (in the absence of facts and circumstances indicating otherwise) until the date that the taxpayer’s realistic expectation changes.”

If the employer’s reasonable expectation did not change during the one-year period, there is no affirmative requirement to reclassify the reimbursable expense as income. However, if the reasonable expectation did change during the one-year period, the reimbursement should no longer be excluded from the employee’s taxable income.

B. Substantiation

In order to meet substantiation requirements, employees must provide “adequate records” or sufficient evidence to substantiate the alleged business expense. (See IRC Section 274(d).) “Adequate records” refers ideally to the maintenance of an account book, diary, statement of expenses, or other similar documentation. For example, with respect to travel away from home, Treasury Regulations Sections 1.62-2(e)(2) and 1.274-5T(b)(2) require that information sufficient to substantiate the amount, time, place, and business purpose of the expense must be submitted to the employer.

In lieu of substantiating the amount of actual travel-related meals and lodging costs, an adequate accounting for the amount of such costs can be made by the employee’s use of certain types of established per diem rates (e.g., rate for meals or incidental costs provided by the federal government). However, such rates may be used only if the employee substantiates the time, place, and business purpose of the expense.

There are two types of approved plans under which an amount of expenses up to the specified rate may be deemed substantiated:

1. M&IE Only—A per diem allowance for an employee’s meals and incidental expenses only.

2. Lodging-Plus-M&IE—A per diem allowance for an employee’s lodging, meals, and incidental expenses.

If an employee receives a per diem allowance or reimbursement for only meals and incidental expenses, the amount of expenses deemed substantiated is equal to the lesser of the per diem allowance actually received or the amount computed using the daily federal M&IE-only rate.

Per diem for M&IE only may be used in connection with an employer’s reimbursement or expense allowance arrangement only if the employer

■   Provides lodging in kind

■   Pays the cost of lodging directly

■   Reasonably believes that the employee will not incur any lodging costs

■   Pays the employee for actual expenses of lodging

■   Computes the allowance on a basis similar to that used in computing the employee’s wages or other compensation

Under Lodging-Plus-M&IE approved plans, if an employee receives a reimbursement or per diem allowance for these expenses under an accountable plan, the amount deemed substantiated is the lesser of the actual allowance provided to the employee or the amount determined using one of the two following rates:

■   The maximum federal per diem rate for the particular locality (these rates change annually and can be accessed via gsa.gov, or the IRS Web page, irs.gov)

■   The high-low substantiation method

Per diem rates depend upon the locality of travel within the continental U.S. (CONUS) and are determined by the General Services Administration. Employers may use the CONUS tables published annually by the GSA. CONUS tables indicate the acceptable maximum per diem rate that can be used without treating part of the per diem allowance like wages for tax purposes. New CONUS per diem rates become effective on Oct. 1 of each year and remain effective through Sept. 30 of the following year.

The high-low rate provides a simplified method of computing the federal per diem rate for CONUS travel. Under the high-low method, the IRS publishes a list of localities that are considered to be high-cost localities for all or part of the year, and all other localities are considered low-cost. The IRS then publishes a per diem rate for all high-cost localities and for all low-cost localities.

The last three months of every year, when the new rates become effective, is generally considered to be a transition period. During this period, employers may change to the new rates or finish out the year with the rates the employer had been using during the first nine months of the year. However, a payor that uses the high-low method must use that method for all amounts paid to a particular employee for travel away from home within CONUS during the entire calendar year.

Employers may also utilize flat rates or schedules for determining travel allowances. These methods must be uniform and objective. An example would be a method by which the allowance is calculated by the number of days away from home. However, an allowance that is computed on a basis similar to that used in computing wages or other compensation does not meet the business connection requirement and is not a per diem allowance under an accountable plan.

When an employer pays a per diem allowance for lodging, meals, and incidental costs, it must treat an amount equal to the federal M&IE rate for the locality of travel for each calendar day the employee is away from home as an expense for food and beverage, except that if a per diem allowance for lodging, meals, and incidentals is paid at a rate less than the federal per diem rate for the locality of travel, the employer may instead treat 40% of the allowance as the federal M&IE rate for the locality of travel. This is significant for employers because meals are not totally deductible as a business expense. The allowable deduction for meals is generally 50%. Tip 125

Tip 125—Travel Less Than a Full Day

For work-related traveling that is less than a full day (partial day), the federal rates must be prorated to reflect time that an employee is not actually traveling. The rate may be prorated by allocating 75% of the applicable rate to each day, or by using any method that is consistently applied and is in accordance with reasonable business practice.

C. Return of Amounts in Excess of Expenses

In general, to meet this accountable plan requirement, a reimbursement arrangement must require the employee to return any amounts in excess of the expense amount actually substantiated by employee to the employer. Such return must occur within a reasonable period of time. Whether or not an arrangement requires an employee to return amounts in excess of the substantiated expense amount provided will depend on the particular facts and circumstances. What constitutes a “reasonable period of time” will also generally depend upon the particular facts and circumstances. (See Safe Harbor discussion below.) All money advances must be reasonably calculated to not exceed the amount of anticipated expenditure. The money advanced must be provided reasonably close to the time that the expenses are anticipated. Therefore, if an employee’s work assignment requiring travel is scheduled for July, the advancement should not be provided in January. Tip 126

Tip 126—Excess Amounts

If an employee fails to return excess amounts within a reasonable period of time, only the amounts substantiated will be treated as paid under an accountable plan and the excess must therefore be included in the employee’s gross income reported on the Form W-2, and applicable employment taxes must be paid and withheld. Also, if an appropriate regulatory agency determines that an employer’s expense allowance practices violate applicable rules and regulations, all payments may be treated as made under a nonaccountable plan and appropriate penalties may be imposed.

1. Safe Harbors

The following scenarios will generally meet the “reasonable time period” requirements:

■   If an employer gives an advance within 30 days of the time the employee incurs the expense, the employee substantiates the expense within 60 days after incurring the expense, and any excess amount is returned to the employer within 120 days after the expense is incurred—this is known as the “Fixed Date Method.”

■   If an employer provides the employee with periodic statements (no less frequently than quarterly) setting forth the amounts reimbursed that exceed substantiated expenses and requesting that expenses be substantiated and that any excess or unsubstantiated amount returned, or both, within 120 days of the statement—this is known as the “Periodic Statement Method.”

As noted above, per diem payments that do not qualify as being paid under an accountable plan will be considered wages. Courts and regulatory agencies are skeptical of any payments that may be disguised compensation for services.

It should be noted that there is a difference between what constitutes taxable income and what constitutes wage. Regulations issued by the U.S. Department of Labor provide that per diem payments are not included in the employee’s regular wages as long as the payment does not exceed reasonable living expenses and meets certain requirements. In order to be excludable from one’s regular wage rate, per diem payments must (1) be based on living expenses for an entire day, (2) not be limited or tied to the number of hours worked in a day, (3) be reasonably related to expenses actually incurred, and (4) not be paid to employees who live close to where the work is to be performed. This is an important consideration because the FLSA’s definition of wages and what constitutes one’s regular rate of pay affect overtime calculations for nonexempt employees. If the amount paid to an employee for business expense reimbursement varies depending upon the number of hours worked, then under the FLSA, the amount paid will generally be considered wages and should be included in the employee’s regular rate of pay for premium rate overtime calculations. Failure to properly include all amounts paid to the employee as wages or to pay the appropriate applicable overtime rate will result in a violation of the FLSA’s overtime provisions.

For example, an employee’s regular rate of pay is $15 per hour, and the employer mistakenly believes it is appropriate to calculate the per diem reimbursement rate on an hourly basis, that is, at $10 per hour. Also suppose that the employer pays the employee overtime at $25 per hour for all hours worked in excess of 40 hours per week. This would be incorrect. Since the employer did not pay per diem correctly, the per diem amount would generally be included in the employee’s regular rate of pay for calculating overtime. Therefore, the FLSA would require the employee to be paid $37.50 for overtime hours.

$15.00

Hourly wage rate

+ 10.00

Reclassified per diem

$25.00

Regular rate of pay per hour

x 1.5

Required by the FLSA for hours worked in excess of 40 per workweek

$37.50

Per hour for each overtime hour (1.5 x $25 = $37.50)

Tip 127

Tip 127—Department of Labor Versus Internal Revenue Service Regulations

The DOL and IRS have similar, but not identical, regulations. Employers must be careful to satisfy the requirements of both regulatory agencies. It is possible for an employer to meet the requirements under one set of regulations but fail to satisfy the requirements under the other set of regulations.

2. Business Transportation Rules for Temporary Employees

Transportation outside of the metropolitan area of an employee’s residence to a temporary business location is considered business transportation. Therefore, it is deemed to be a deductible business expense. On the other hand, transportation from an employee’s residence to a temporary work location within the same metropolitan area where the employee lives and normally works may be considered business transportation if

■   The employee has one or more regular work locations away from his or her residence, or

■   The employee’s residence is his or her principal place of business (i.e., a home office) and he or she incurs expenses going between the residence and another work location in the same trade or business.

Please note that the applicable regulations specifically refer to “temporary” work locations within the same metropolitan area. As such, this regulation can be beneficial to temporary employees and their employers. For this purpose, the definition of “temporary” work location is generally a location at which the work is realistically expected to last (and does in fact last) for one year or less.

14

The H-1B Worker in a Specialty Occupation

The H-1B visa for employees in a “specialty occupation” is one of the most common, and most heavily regulated, work visa categories available to a foreign national whose services are desired by a U.S. employer. It is also subject to an annual numerical quota for each federal fiscal year. The H-1B quota—which often proves insufficient to cover annual employer demand—allows for the issuance of 65,000 visas per year plus another 20,000 visas available to graduates with master’s or higher degrees conferred by American universities and colleges.

The H-1B classification is regulated by the Departments of Labor, Homeland Security, and State. Each agency’s role is distinct. The Department of Labor certifies that an employer has complied with a variety of worker protections benefiting U.S. and H-1B workers, and investigates and enforces violations of these rules. The Department of Homeland Security, acting through its component, U.S. Citizenship and Immigration Services, determines whether a prospective job opportunity and foreign citizen meet the respective employer and employee requirements of the H-1B visa category in order to decide if the sponsored foreign citizen may be approved for H-1B “classification.”

As defined in the Immigration and Nationality Act, the H-1B category is limited to nonimmigrant employees seeking to perform services in “specialty occupations.” To qualify for H-1B classification, the offered job must be in a specialty occupation and the sponsored foreign citizen must be qualified to perform services in the same specialty occupation.

The term “specialty occupation” is defined to mean an occupation that requires:

■   Theoretical and practical application of a body of highly specialized knowledge, and

■   Attainment of a baccalaureate or higher degree, or its equivalent, in a specific specialty, as a minimum for entry into the occupation in the United States.

In general, eligibility for classification as an H-1B may be established by showing that:

■   A foreign citizen has graduated from a U.S. college or university and holds a baccalaureate or higher degree with a major field of study that is directly relevant to the specialty occupation offered by the sponsoring employer. In the absence of a U.S. baccalaureate or higher degree, an individual may still qualify for H-1B status if he or she holds a degree from a foreign college or university that is determined by a qualified academic credentials evaluation service to be educationally equivalent to a U.S. bachelor’s or higher degree. One may even qualify without holding a college degree if the individual has equivalent nondegree training, equivalent professional experience, or a combination of the two. (Note that USCIS equates three years of progressively responsible work experience to be the equivalent of one year of university study; hence, 12 years of progressively responsible work experience in a relevant field, if verified, may serve as a substitute for a four-year bachelor’s degree.)

■   The foreign citizen has an offer of employment in a position that requires at least a U.S. baccalaureate degree or its educational or work-experience equivalent. The prospective job duties must be such as to require the specific theoretical training that a graduate of a U.S. college obtains through his or her baccalaureate or higher studies.

■   The prospective employer is eligible to serve as an H-1B employer. In practice, this means that the prospective H-1B employer may not be a so-called “working owner,” i.e., he or she may not have an ownership interest in the entity such that the employer-employee relationship will be disregarded. It also means that if the H-1B services to be rendered will take place at the location of a third party, such as the location of a customer of an H-1B employer, then the H-1B firm must demonstrate (a) the existence of an agreement to provide services requiring an individual in a specialty occupation, and (b) the authority of the firm (and not the customer) to direct and control the work of the sponsored H-1B employee.

■   The required wage obligations and other H-1B worker protections are met. Tip 128

Tip 128—H-1B Part-Time Professional Workers

A position does not need to be “full time” in order to qualify for the H-1B. H-1B petitions may be obtained for individuals working for 20 hours a week and, in some cases, if justified, less than 20 hours a week.

The first three H-1B requirements noted above are within the authority of USCIS to determine; the fourth requirement is under the purview of the DOL.

An H-1B visa is one of the several nonimmigrant work visas that require an approval of a preliminary petition in the U.S. before the sponsored foreign worker (and the individual’s spouse and minor children) may apply for the visa at a U.S. consular post abroad. The sponsoring employer is called the “petitioner.” The foreign national employee is known as the “beneficiary.”

The H-1B process involves several steps. If a staffing firm is the prospective H-1B employer, it must (1) determine the required wage, (2) comply with the preconditions to executing a labor condition application (LCA), discussed below, (3) file the LCA with the DOL, and (4) once the DOL has certified the LCA, file the petition for a nonimmigrant worker, Form I-129 with USCIS. These processes are outlined below.

A. The Required Wage Determination

The H-1B “required wage” is the higher of (a) the “prevailing wage” for an occupation in a particular metropolitan area that includes the place where the H-1B worker will render services, and (b) the “actual wage” paid by the employer to employees with similar qualifications performing comparable duties as the H-1B worker at the employer’s work site where these duties will be performed. A prevailing wage determination may be obtained from the DOL or through an independent survey that satisfies the DOL regulations.

Because the place of employment is geographically confined to a particular metropolitan area and work site, an H-1B worker may not render services in a different locality unless the employer obtains another certified LCA from the DOL for that new area and receives USCIS approval of an amended petition to work in the new location. Staffing firms should note that the place of employment is not the headquarters or regional office of the staffing firm but rather the customer’s work site location. If an H-1B worker employed by a staffing firm is to be moved to another customer’s work site in the same metropolitan area, the DOL does not require certification of a new LCA; instead, it requires paper posting or an electronic notice at the new customer’s work site. Moreover, USCIS would still require submission of an amended petition before the move occurs. If, however, the H-1B worker employed by a staffing agency is to be assigned to perform services for a different customer at a new location that is beyond normal commuting distance from the metropolitan area where he or she had initially been stationed, then the DOL would require a new LCA to be certified. Likewise, USCIS would require submission of an amended petition before the job change to a different metropolitan area takes place. Tip 129

Tip 129—Required Wage

A violation of the required obligation can lead to expensive back-wage obligations. The H-1B employer should therefore consult with legal counsel to confirm that the required wage obligation has been satisfied. The DOL online prevailing wage information classifies jobs based on educational degree and by level of experience. Counsel for the staffing firm can confirm if the prevailing wage source provided by the DOL and the employer’s proposed classification of experience level are justified in light of case precedent and the requirements of the DOL regulations. Counsel can also advise on the required filing procedures and anticipated timetable if a staffing firm wishes to reassign an H-1B employee from one customer to another, whether in the same or a new metropolitan area.

B. The Labor Condition Application

Employers seeking to employ a foreign worker in an H-1B specialty occupation must file, in advance, a labor condition application (LCA) with the DOL. The LCA (Form ETA Form 9035), which is available at foreignlaborcert.doleta.gov/preh1bform.cfm, must be filed electronically. The LCA requires the employer to attest that it (1) will pay at least the local prevailing wage or the employer’s actual wage, whichever is higher, and pay for nonproductive time, (2) will provide working conditions for nonimmigrants which will not adversely affect the working conditions of workers similarly employed, while offering benefits on the same basis as offered to U.S. workers, (3) confirms the absence of a strike, lockout, or work stoppage in the named occupation at the place of employment, and (4) has publicly notified the union bargaining representative of the employees in the occupational classification at the place of employment of its intention to employ an H-1B nonimmigrant, or, if there is no representative, it has posted an appropriate paper or electronic notice of the plan to employ an H-1B worker at the employer’s or customer’s job site, as applicable under the regulations.

The DOL does not require supporting documentation to be submitted with the LCA at the time of the filing. It is, however, required that both the LCA and the supporting documentation be made available for public inspection in the employer’s files within one working day after the date on which the LCA is filed with the DOL. The documentation must support each of the following attestations, which the employer must make on the LCA: (1) the actual wage paid the H-1B worker, (2) the prevailing wage determination, (3) the required notice of the filing made available to other employees, (4) the working conditions at the intended place of employment, and (5) the absence of a strike or lockout. The documents that must be maintained for public inspection within 24 hours upon request are collectively known as the “public access folder.” The employer must also maintain a “private access folder” that contains payroll, tax, and other records that the employer must provide to the DOL if an aggrieved party files a complaint with the DOL’s Wage and Hour Division alleging a violation of the agency’s H-1B regulations.

In addition, the employer must (1) be prepared to provide the H-1B worker with return transportation to the individual’s country of last residence if the employer terminates employment before the period of H-1B petition validity, (2) make only authorized deductions (meeting the requirements of the DOL regulations) from the payment of the required wage (e.g., the employer may not shift employer business expenses directly or indirectly to the employee such as government filing fees and attorney fees for preparation of the H-1B petition), (3) refrain from imposing a penalty as determined by state law if the employee resigns before the end of the H-1B period of petition validity (although legitimate, mutually agreed liquidated damages under state law may be imposed), and (4) maintain required business records and make them available for inspection by the DOL upon request. A violation of these requirements may allow the DOL to impose sanctions including debarment from sponsorship of current and future foreign employees for employment-based nonimmigrant and immigrant visa benefits for up to three years, back wages, civil fines, and other equitable or “make whole” relief. The extent of these sanctions will vary with the substantial nature of the violations found and the employer’s state of mind. Unwitting violations committed in good faith may lead to minor penalties, whereas willful, substantive violations may result in more significant sanctions. The DOL may not impose penalties for an employer’s technical or procedural failures to comply with the regulations unless the agency gives the employer 10 days to correct the violations and they remain uncorrected by the expiration of the 10-day warning period.

C. Form I-129H for Submission to USCIS

After the DOL has certified the LCA, the next step involves the employer’s filing with USCIS of the H-1B petition on Form I-129. The I-129H Petition to Classify Nonimmigrant as Temporary Worker or Trainee—accessible at uscis.gov/i-129—is submitted, along with supporting documentation, to the USCIS Regional Service Center office having jurisdiction over the employer’s place of business. Supporting documents include a letter from the U.S. employer describing its business, the proffered position (confirming that the job is a specialty occupation), and the foreign national’s qualifications (confirming that the individual is qualified to perform in a specialty occupation); evidence of the foreign national’s professional qualifications (such as the university degree and transcript, the academic credentials evaluation if the degree is a foreign degree, or the work experience equivalency evaluation); the LCA; and the required fees.

USCIS may approve the petition or issue a request for additional evidence (RFE). The employer must then submit additional proof satisfying the RFE, and then USCIS will make a final decision to approve or deny the petition.

H-1B petition and status adjudications may take USCIS from approximately two to six months, but the employer may accelerate the process by paying an extra fee for premium processing service, whereby a response is provided in 15 days (if an RFE is issued, then the final decision is issued within 15 days of the submission of supplemental evidence in response to the RFE). An approval comes in the form of a Notice of Action, Form I-797, indicating approval of the petition with the period of petition validity noted. If the employer has requested a change or extension of status under the H-1B visa category, then the approval includes a clip-out status document evidencing employment authorization known as an I-94 Departure Record. A denied petition may be subject to a motion to reopen and reconsider or to an appeal to the USCIS Administrative Appeals Office. Tip 130

Tip 130—Period of Approval

An H-1B petition may be approved for an initial period of three years. After that time, an additional three years may be obtained. After a six-year stay in the U.S. in H-1B status, the foreign national must reside abroad for one year before once again seeking H-1B status. Exceptions to this “visa max- out” rule and extensions of time in H-1B status are available if the employer has initiated the labor certification process (which involves pre-filing recruitment and job ads) at least one year before the sixth year of the individual’s cumulative H-1B presence in the U.S., or if the individual may not yet be granted lawful permanent resident status because the immigrant visa quota is oversubscribed.

Unlike F-1 optional practical training, where a student is allowed to work for any employer whose activities are connected to his or her field of study, an H-1B beneficiary is only allowed to work for the petitioning employer. Tip 131

Tip 131—Families of Foreign Employees

A spouse and unmarried minor children, including a same-sex spouse and stepchildren through the same-sex marriage, may accompany the foreign employee to the U.S. in H-4 status for the same length of stay as the foreign employee. However, neither the spouse nor the children are allowed to accept employment in the U.S. while in H-4 status.

D. Special Circumstances

Competent immigration counsel should be consulted (preferably in advance when possible) if any of the following occur or are likely to occur:

■   A merger, acquisitions, or other corporate restructuring transaction resulting in the change of an H-1B worker’s employer or job location

■   A reduction in force

■   A termination of employment prior to the expiration of H-1B petition validity

■   A government audit

■   Internal complaints about wages and working conditions by U.S. workers or H-1B employees

■   The staffing firm wishes to employ an individual who has received H-1B petition sponsorship through another employer. Tip 132

Tip 132—USCIS Premium Processing Service

A staffing firm need not wait until USCIS approves its new petition for a foreign national employed in H-1B visa status by a different company. Under the principle of H-1B “portability,” the staffing firm can hire and deploy the individual as soon as the DOL has certified an LCA and USCIS has received a “properly filed” H-1B petition from the staffing firm. The individual may be employed until USCIS adjudicates the petition. If the petition is approved, employment may continue; but if it is denied, employment must cease immediately. A “properly filed” petition is one that is duly signed by an authorized official of the staffing firm and accompanied by a check or checks for the required filing fees. In order to invoke H-1B portability and commencing employment, staffing companies may choose to rely upon a courier’s confirmation that the H-1B petition has been delivered to USCIS or wait until USCIS confirms receipt of the new petition by issuance of a receipt on Form I-797 (notice of action). Alternatively, a staffing firm may eschew H-1B portability, postpone hiring the individual (who in the interim must maintain lawful nonimmigrant status by continuing employment with his or her current H-1B employer), and instead seek an accelerated adjudication under the USCIS premium processing service. Information on this service is available here: uscis.gov/forms/how-do-i-use-premium-processing-service.

E. Proposed Changes to H-1B Process

On December 3, 2018, USCIS proposed two significant changes to the current H-1B selection process. Currently, employers and foreign national employees seeking an initial grant of H-1B status may file petitions with USCIS during the first five business days of April. As stated above, the H-1B quota allows for the issuance of 65,000 regular visas per year plus another 20,000 masters visas.

If USCIS receives more than the allowable number of H-1B petitions within the first five business days of April, USCIS conducts a lottery to select the H-1B petitions it will continue to adjudicate. USCIS first conducts the lottery for the master’s visa allotment. Master’s petitions not selected in the first lottery are placed back in the general pool for the regular visa lottery.

USCIS proposed the following changes to that process: First, the proposed rule requires employers seeking H-1B petitions to electronically register each petition with USCIS during a designated registration period. USCIS would then conduct the annual selection process from the pool of timely filed electronic registrants.

Second, USCIS proposed to change the process by which it selects H-1B petitions. The proposed rule would reverse the selection—currently master’s petitions are selected first—to select regular visas before selecting petitions for master’s visas. By changing the order in which it counts visa allocations, USCIS hopes to materially increase the number of H-1B petitions awarded to individuals holding an advanced degree from a U.S. institution of higher education.

The proposed rule’s 30-day notice and comment period ended on January 2, 2019. USCIS is currently reviewing all concerns raised by the public and finalizing the rule accordingly. It is unlikely that this rule will be finalized for the upcoming H-1B filing season. Therefore, the proposed rule includes a provision to temporarily suspend the electronic registration requirement for the upcoming 2020 fiscal year selection process.

15

Laws Specific to Health Care Staffing

Contents

Americans With Disabilities Act

Anti-Kickback and the Stark Laws

Health Care Credentialing Requirements

Locum Tenens as Independent Contractors

Malpractice Issues

Mandatory Vaccination Policies for Health Care Personnel

Medical Information Privacy

When Is Continuing Education Time Compensable?

Introduction

This chapter is intended to provide health care staffing professionals with a basic explanation of federal and state laws and other requirements that are more likely to apply in the health care staffing context. This chapter does not attempt to describe each and every requirement of these laws. Rather, it discusses those aspects of the laws that are more likely to affect a health care staffing firm and offers practical comments and suggestions designed to assist health care staffing professionals with understanding and complying with these laws.

In this chapter, the term “health care client” refers to any health care staffing company’s client that provides services, such as a hospital, nursing home, outpatient facility, ambulatory center, prison, school, home health, surgical center, clinic, or pharmacy. The term “medical professional” refers to health care practitioners such as physicians, dentists, pharmacists, nurses, emergency medical technicians, ancillary personnel, and therapists. The term “health care staffing professional” refers to the internal staffing professionals who work for the health care staffing firm.

A. Americans With Disabilities Act

1. When Health Care Workers Are “Employees” Under the ADA

While the ADA’s protections apply to applicants and employees, the statute does not cover independent contractors. Many medical professionals in the health care industry who are placed through staffing firms are classified as independent contractors. However, whether a particular medical professional is properly classified as an independent contractor or an “employee” covered by the ADA is a fact-based and case-specific determination that depends on a variety of factors.

These factors are set forth in EEOC guidelines, and have been adopted by the Supreme Court as the proper test to determine whether a medical professional is a covered “employee” under the ADA (see EEOC Compliance Manual Section on Threshold Issues, Section 2-III A.1; Clackamas Gastroenterology Associates, P. C. v. Wells, 538 U.S. 440, 449 (2003)). The factors to be considered are:

■   The employer has the right to control when, where, and how the medical professional performs the job.

■   The work does not require a high level of skill or expertise.

■   The employer furnishes the tools, materials, and equipment.

■   The work is performed on the employer’s premises.

■   There is a continuing relationship between the medical professional and the employer.

■   The employer has the right to assign additional projects to the medical professional.

■   The employer sets the hours of work and the duration of the job.

■   The medical professional is paid by the hour, week, or month rather than the agreed cost of performing a particular job.

■   The medical professional does not hire and pay assistants.

■   The work performed by the medical professional is part of the regular business of the employer.

■   The employer is in business.

■   The medical professional is not engaged in his/her own distinct occupation or business.

■   The employer provides the medical professional with benefits such as insurance, leave, or workers’ compensation.

■   The medical professional is considered an employee of the employer for tax purposes (i.e., the employer withholds federal, state, and Social Security taxes).

■   The employer can discharge the medical professional.

■   The medical professional and the employer believe that they are creating an employer-employee relationship.

The mere fact that an individual is designated as an “independent contractor,” has a certain title (i.e., partner, director, or vice president), or has an employment agreement, by itself is not determinative of whether the individual would be covered under ADA.

When temporary nurses or other temporary workers who are provided by health care staffing firms are covered under the ADA, the staffing firm’s client will generally have a joint obligation with the staffing firm for ADA compliance. For a thorough discussion of the ADA and the protections that it provides to individuals with disabilities, please see Chapter 1.

2. Health Care Employees as Direct Threats

In February 2007, the Equal Employment Opportunity Commission published a factsheet directed specifically to employers and employees in the health care industry. In this fact sheet, the EEOC explains that an employer may exclude an applicant or employee with a disability from a particular position if that individual would pose a direct threat to health or safety. The EEOC also makes clear that the determination that an applicant or employee with a disability poses a direct threat to safety must be based on “an individualized assessment of the employee’s present ability to safely perform the essential functions of the job. The decision must be based on a reasonable medical judgment that relies on the most current medical knowledge rather than on speculation about what people with a particular impairment generally do.” The EEOC provides the example of an HIV-positive phlebotomist at a blood bank who is responsible for drawing blood. Since the best available medical evidence indicates that HIV-positive medical professionals performing that function do not pose a direct threat to the safety of patients if they adhere to universal precautions, the phlebotomist does not pose a direct threat in the position based on the employee’s HIV-positive status (2007 EEOC Fact Sheet: Questions and Answers about Health Care Workers and the Americans With Disabilities Act, eeoc.gov/facts/health_care_workers.html).

B. Anti-Kickback and the Stark Laws

1. The Anti-Kickback Statute

On the books since 1972, the federal Anti-Kickback Statute was enacted to protect patients and the federal health care programs from fraud and abuse by curtailing the corrupting influence of money on health care decisions. The law states that anyone who knowingly and willfully receives or pays anything of value to influence the referral of federal health care program business, including Medicare and Medicaid, can be held criminally accountable for a felony. The statute applies to virtually all sectors of the health care industry, and establishes penalties for individuals and entities on both sides of the prohibited transaction. Health care staffing professionals should have an understanding of the law as it pertains to medical professionals they place. Tip 133

Tip 133—Anti-Kickback Statute

Health care staffing professionals should understand the Anti-Kickback Statute to identify and report unlawful practices.

The law prohibits kickbacks and bribes as well as other economic relationships significantly more complex than simple direct payments for services. As a result, the statute applies to many practices that were previously commonly accepted in business, including discount arrangements, incentives given to pharmacists, payments for services, and the practice of manufacturers giving gifts and offering business courtesies.

a. Authority

The Social Security Amendments of 1972 included the original anti-kickback legislation. In 1977, Congress enacted the Medicare-Medicaid Anti-Fraud and Abuse Amendments, which increased the severity of penalties from a misdemeanor to a felony. The Office of Inspector General was given authority to issue civil penalties in addition to the already authorized criminal penalties set forth in The Medicare and Medicaid Patient and Program Protection Act of 1987.

Because of the broad nature of the law, some relatively innocuous—and in some cases even beneficial—commercial arrangements are prohibited by the anti-kickback law.

b. Elements of the Offense

The Anti-Kickback Statute prohibits individuals and entities from knowingly and willfully (1) receiving or soliciting or (2) offering or paying remuneration in exchange for or as an inducement to: (a) refer a patient or business for services paid for by Medicare or Medicaid or (b) purchase or lease items, services, or facilities paid for by Medicare or Medicaid. Tip 134

Tip 134—Anti-Kickback Statute

Health care staffing professionals should align their business practices with the ethical standard common to the industry. Financial transactions between potential referring parties should be conducted at fair market value. For maximum protection under the Anti-Kickback law, a financial arrangement should meet all of the requirements of one of the law’s enumerated safe harbors.

i. Remuneration. Remuneration includes the transfer of anything of value, in cash or in kind, directly or indirectly, overtly or covertly. Almost any benefit by and between medical providers can be considered remuneration. Examples of remuneration include:

■   Kickbacks

■   Bribes

■   Rebates

■   Gifts

■   Above- or below-market rent or lease payments

■   Discounts

■   Furnishing of supplies, services, or equipment, either free or above or below market

■   Above- or below-market credit arrangements

■   Waivers of payments due

ii. Intent. The Anti-Kickback Statute is an intent-based statute requiring that the party “knowingly and willfully” engage in the prohibited conduct. While actual knowledge of, or specific intent to violate, the kickback statute is not required, a general intent to commit wrongdoing must be proven.

c. Safe Harbors

In recognition of the broad range of transactions potentially implicated by the Anti-Kickback Statute, certain types of payments are excluded from consideration by statute. In addition, the U.S. Department of Health & Human Services OIG has been given authority to adopt “safe harbors” to protect specifically identified business and financial practices from criminal and civil prosecution, provided they fall within parameters defined to minimize the risk for potential corruption.

Safe harbors protect certain payment and business practices that are implicated by the anti-kickback statute from criminal and civil prosecution under the statute. To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor.

The original 13 safe harbors address the following types of business or payment practices: investments in large publicly held health care companies; investments in small health care joint ventures; space rental; equipment rental; personal services and management contracts; sales of retiring physicians’ practices to other physicians; referral services; warranties; discounts; employee compensation; group purchasing organizations; and waivers of Medicare Part A inpatient cost-sharing amounts.

Newer, additional safe harbors address ambulance replenishing and the following practices in managed care settings: increased coverage, reduced cost-sharing amounts, or reduced premium amounts offered by health plans to beneficiaries; and price reductions offered to health plans by providers. Also, in 2013, the OIG extended and modified the exceptions that allow agreements to donate electronic health records (EHR) software and related training services.

d. Penalties

The Anti-Kickback Statute applies to both individuals and entities alike—a health care staffing firm and its internal staff members may be charged with violating the law. Conviction for a single violation under the Anti-Kickback Statute may result in a fine of up to $25,000 and imprisonment for up to five years. In addition, conviction results in mandatory exclusion from participation in federal health care programs. Absent a conviction, individuals who violate the Anti-Kickback Statute may still face exclusion from federal health care programs at the discretion of the Secretary of Health and Human Services.

The government may also assess civil monetary penalties, which could result in triple damages plus $50,000 for each violation of the Anti-Kickback Statute.

2. The Stark Law

Section 1877 of the Social Security Act, also known as the physician self-referral law and commonly referred to as the “Stark law,” was passed in 1989 to prevent unethical physician self-referrals and to reduce corruption within the medical profession. The law is named for United States Congressman Pete Stark, who sponsored the initial bill.

Physician self-referral is the practice of a physician referring a patient to a health care client in which he has a financial interest, be it ownership, investment, or a structured compensation arrangement. A provider, or members of the provider’s family, may not make referrals to designated health services (DHS) clients that the physician has a financial relationship with unless an exception applies. The law also prohibits the DHS client from submitting claims to Medicare for those services resulting from a prohibited referral. Referral of Medicare and Medicaid patients to health care clients with whom the referring physician has a financial relationship is also prohibited under the “Stark II” amendments to the statute. A financial relationship includes ownership, investment interest, and compensation arrangements.

Under Stark, DHS includes the following services:

■   Clinical laboratory services

■   Physical therapy, occupational therapy, and outpatient speech-language-pathology services

■   Radiology and certain other imaging services (now includes nuclear medicine)

■   Radiation therapy services and supplies

■   Durable medical equipment and supplies

■   Parenteral and enteral nutrients, equipment, and supplies

■   Prosthetics, orthotics, and prosthetic devices and supplies

■   Home health services

■   Outpatient prescription drugs

■   Inpatient and outpatient hospital services

a. Referral

The term “referral” is defined more broadly than merely recommending a vendor of DHS to a patient. Instead, the term “referral” means, for Medicare Part B services, “the request by a physician for the item or service” and, for all other services, “the request or establishment of a plan of care by a physician which includes the provision of the designated health service.”

b. Financial Relationship

Under the Stark law, a physician has a “financial relationship” with a health care entity if the physician (or an immediate family member of such physician) has “an ownership or investment interest in the entity,” or “a compensation arrangement” with it. A “compensation arrangement” is defined as “any arrangement involving any remuneration between a physician … and an entity” (subject to certain exclusions). Similarly, the Stark regulations define “compensation arrangement” as “any arrangement involving remuneration, direct or indirect, between a physician … and an entity.” In determining whether a physician has a compensation arrangement with a DHS, the physician “stands in the shoes” of his or her physician organization. That is, the physician will be deemed to be direct parties to contracts between their physician organizations (such as a group practice) and other entities. Staffing companies that do not directly provide and bill for patient care services are not “physician organizations” under Stark.

The Stark law defines remuneration as “any remuneration, directly or indirectly, overtly or covertly, in cash or in kind.” In addition, the Stark regulations further explain that remuneration “means any payment or other benefit made directly or indirectly, overtly or covertly, in cash or in kind.” Thus, remuneration includes any indirect or covert payment (or other benefit) received.

c. Exceptions

The Stark law contains several exceptions. They include physician services, in-office secondary services, ownership in publicly traded securities and mutual funds, rental of office space and equipment, and bona fide employment relationships. Some of the exceptions apply to both ownership and compensation arrangements; some apply only to ownership arrangements; and some apply only to compensation arrangements.

d. Intent

Unlike the Anti-Kickback law, the Stark law is a “strict liability” law, meaning that proof of intent to violate the law is not required. That is, parties to a financial arrangement having a good faith (although erroneous) belief that the arrangement did not implicate the law or that it complied with an exception could still violate the Stark law.

e. Penalties

Sanctions for violations of the Stark law are imposed on the DHS that receives the prohibited referral and that bills Medicare for the service. Under the law, a DHS furnishing a service as a result of a prohibited referral is not allowed to bill Medicare or Medicaid, the patient, or any third party for the service. The Stark law also imposes civil penalties for violations. Potential penalties include:

■   An overpayment or refund obligation

■   Additional liability under the False Claims Act

■   Civil monetary penalties and program exclusion for knowing violations

■   $15,000 in civil monetary penalties for each service resulting from a prohibited referral

■   Civil assessment of up to three times the amount claimed.

C. Health Care Credentialing Requirements

Health care credentialing is a systematic approach to the collection and verification of the education, training, and proven skills of medical professionals. The process can be very lengthy depending upon the specific items that need to be verified. The qualifications that are reviewed and verified include, but are not limited to, relevant training, licensure, skills validation, certification and/or registration to practice in a health care field, and academic background. Credentialing requirements are client specific. A health care staffing firm should design its credentialing system to be flexible in order to customize credential requirements for each client. Tip 135

Tip 135—Credentialing Qualifications

Examples of relevant trainings, licensure, certification, and/or registrations may include CPR, blood borne pathogens, fire safety, body mechanics, and more.

Steps taken during the credentialing process include verifying license(s); identifying schools and verifying completion of education, e.g., medical; verifying training such as internships, residency, and fellowships; and verifying other qualifications. Verification is done by going to the primary source, which means reaching out to the entity that provided the education, license, or other credential to verify the accuracy of the information given by the health care provider. For example, verifying medical licenses means contacting the state licensing board to verify the license is active and that there are no restrictions, or no board action, on the license; verifying education means contacting the medical school and verifying that a degree was received and that the dates of completion are correct.

State licensing statutes regulate entry and establish quality standards for medical professionals. Private credentialing includes certification of professionals through various means such as professional specialty boards and institutional providers such as the Joint Commission on Accreditation of Hospitals, and reviewing the scope of professional practice within institutions through peer control over staff privileges.

1. Legal Risks

Practitioner credentialing decisions, which regulate medical professionals’ access to hospitals, clinical facilities, or insurance networks, are unquestionably essential to ensuring quality health care. At the same time, credentialing activities can expose clients and health care staffing firms to a variety of potential claims. These claims can come from a variety of sources such as injured patients, affected medical professionals themselves, or regulators. Tip 136

Tip 136—Importance of Credentialing

Credentialing is very important for medical professionals. Health care staffing professionals should have a clear understanding of their local state laws and contractual obligations with their clients.

The typical example of a credentialing-related claim is that a hospital failed to exercise due care in granting or retaining a medical professional’s privileges, and that as a result, the plaintiff was injured by the medical professional. A patient’s claims against a client or staffing firm can go beyond simple negligence, however. A patient could also allege that the health care client, or a staffing firm, by holding out credentialed medical professionals as skilled or competent in the relevant procedure or discipline, made negligent or fraudulent misrepresentations. Or a patient could also contend that a hospital’s failure to verify a medical professional’s competence made it impossible to provide informed consent. Tip 137

Tip 137—Importance of Verification

A health care staffing firm should ensure that it maintains proper documentation with respect to vetting and establishing medical professionals’ credentials.

Equally well-known are the variety of claims that can be brought by medical professionals who are dissatisfied with the result of credentialing decisions, including:

■   Conspiracies in violation of antitrust laws

■   Actual or attempted monopolization of a relevant health care market

■   Breach of contract arising from alleged violations of staff bylaws

■   Unlawful discrimination or other civil rights violations

■   Defamation

■   Civil conspiracy

■   Tortious interference with contractual relations

■   Unfair or deceptive trade practices

■   Intentional infliction of emotional distress

As the stakes surrounding credentialing have risen, health care clients have modified their credentialing processes to avoid potential claims from dissatisfied medical professionals. The modifications are designed to bring the credentialing process within the protections afforded by federal and state peer review immunity laws. When properly applied, peer review immunity is a powerful defense for credentialing entities and a significant hurdle to individual medical professionals.

2. Peer Review Protections

The best-known and primary source of peer review immunity is the Health Care Quality Improvement Act of 1986. The statute provides immunity to claims for monetary damages arising from peer review actions. However, to qualify for immunity, several requirements must be met.

a. Professional Review Action

A credentialing decision may qualify for immunity under HCQIA if it is a “professional review action.” This action is a recommendation against the medical professional by a professional review body that reviews medical competence or professional conduct that could affect the health or welfare of patients. This review could impact the medical professional’s clinical privileges or membership in a professional society.

b. Safe Harbors

Once a determination has been made that a challenged peer review action is a professional review action, immunity under HCQIA is available if four safe harbor provisions are met. These four provisions are that the professional review action was taken:

1. In the reasonable belief that the action was in furtherance of quality health care

2. After a reasonable effort to obtain the facts of the matter

3. After adequate notice and hearing procedures are afforded to the medical professional involved or after such other procedures as are fair to the medical professional under the circumstances

4. In the reasonable belief that the action was warranted by the facts known after such reasonable effort to obtain facts and after meeting the requirements of paragraph (3).

In sum, the HCQIA provides immunity from damages for those participating in peer review activities, so long as they involve reasonable fact-finding efforts and procedural due process protections, and are taken in the reasonable belief that they are warranted by the facts and will further quality health care.

In addition to the federal HCQIA peer review protection, many states by law impose limitations on medical malpractice suits (including, for example, limitations on compensatory or punitive damages, and requirements that a claim’s merit be “pre-certified”). Some states have extended those limitations to apply to claims alleging negligent or improper credentialing.

Peer review protections such as these may protect good-faith peer review and credentialing decisions. Even so, these protections cannot be taken for granted. A Washington state appellate court recently held a hospital was not entitled to HCQIA immunity because it had not conducted a reasonable investigation and did not provide due process in suspending an obstetrician’s privileges.

Risk management strategies, including internal process controls and the emerging use of outsourced, “real time” credentialing information systems, may minimize these risks.

3. Best Practices

Setting and adhering to best practices can minimize the risk that an unqualified medical professional will injure a patient and can ensure that HCQIA immunity and other peer review protections will apply. These best practices include the recognized standards put out by professional bodies, such as the Joint Commission or the National Committee for Quality Assurance, but that is only a start. It is the primary responsibility of the staffing firm to ensure that credentialing has been completed and meets state, federal, regulatory, accreditation, and client requirements. Clients can have varied requirements to qualify someone as “credentialed.” Each staffing firm needs to understand its clients’ requirements and have established protocols for both hiring and orientation processes. Tip 138

Tip 138—Documented Checklists

It is a best practice to have documented checklists for each client credentialing process. These checklists should be reviewed as a training tool to ensure the staffing professional understands each of its components, including checking education and license verification.

Health care staffing firms should incorporate information that is reasonably accessible to consumers (e.g., by “Googling” applicants and checking social media to the extent allowed by law) and attempt to obtain truthful assessments of practitioner quality. Companies should pay particular attention to red flags such as unanswered reference requests, unexplained resignations, and prior investigations and claims. Health care staffing firms should also create and retain detailed documentation to support credentialing decisions, and ensure adequate due process.

Further, credentialing should be a continual process, not a single action.

Health care staffing firms should:

■   Review pending licensure actions in real time

■   Collect performance data on an ongoing basis

■   Establish a consistent, evidence-based evaluation program with defined and enforceable parameters

■   Incorporate quality-improvement activities and peer review findings into an ongoing quality-assurance program

By doing so, health care staffing firms can identify and correct emerging problems before they give rise to claims or disputes.

The emerging “gold standard” in credentialing risk management is the use of third-party, online, credential-verification organizations (CVOs), in addition to or in lieu of an individualized, manual credentialing process. Manual processes not only are prone to human error (or worse, manipulation) but more importantly, they have difficulty capturing constant changes in practitioner data, ranging from innocuous demographic changes to problematic licensure or claim developments. In contrast, the use of a CVO can increase efficiency, minimize error, and—by conducting continuous, real-time monitoring of primary source databases—ensure that credentialing transitions from an event to a process. Moreover, by outsourcing much of the credentialing process, health care staffing firms may protect themselves against the charge that individual decisions are the product of personal bias or anticompetitive animus.

In sum, necessary and reasonable practitioner-credentialing activities can give rise to a variety of claims, but health care staffing firms can minimize the associated risk by implementing and enforcing a thorough risk-management strategy including, as appropriate, the use of third-party CVOs.

D. Locum Tenens as Independent Contractors

A locum tenens position is a temporary or substitute position. Locum tenens is a Latin phrase, the literal meaning of which is “place holder.” Most commonly referring to temporary physicians, locum tenens doctors contract with staffing firms to perform medical services over a certain period of time for a health care client of the staffing firm. The physician works as an independent contractor paid through the staffing firm, which is in turn paid by the client.

1. The Benefits of Locum Tenens

Locum tenens work benefits both physicians and the health care organizations that are staffing firm clients. Physicians can be contracted for any number of reasons, from compensating for physician shortages to covering for vacation leave taken by a client’s own doctors. Clients benefit from locum tenens contracts by covering gaps in patient care during periods of growth or physician shortage. The industry continues to grow as more physicians choose this way of practicing medicine and health care entities discover the value of locum tenens staffing.

2. Employee vs. Independent Contractor

Unlike nurses, advance practice, and allied health care professionals—who are generally treated as W2 employees because they are subject to control, supervision, and direction—locum tenens are generally treated as independent contractors. A hospital, clinic, or other health care provider contracting with a staffing firm for the services of a locum tenens does not retain the right to exercise the overall direction and control over the doctor’s services necessary to establish an employer-employee relationship. The hospital may provide some general policy and procedure direction, but in no way can it supervise, direct, or control the services performed, that is, treating patients. Similarly, the staffing firm does not provide any control, supervision, or direction.

The treatment of individuals as either independent contractors or employees can have a significant economic consequence: Tip 139

Tip 139—Locum Tenens— Employees vs. Independent Contractors

Health care staffing firms must ensure that individuals classified as locum tenens are in fact independent, not under the control of the hospital or staffing firm. All contracts that address the relationship between the locum tenens and the health care staffing firm should specify that the locum tenens are not employees, but rather are independent contractors. While such a contractual provision will not guarantee that a particular physician will be deemed to be an independent contractor, it will be an important indication of the parties’ intent in establishing the relationship.

■   The employment relationship triggers obligations relating to unemployment insurance, workers’ compensation, Social Security, wage and hour laws, OSHA, ERISA, and various federal and state tax withholding statutes.

■   Employees have much broader rights under the National Labor Relations Act to organize and be represented by labor organizations than do independent contractors.

■   Employees can assert claims of employment discrimination under Title VII, the ADA, and the ADEA, and other employment-related causes of action relating to adverse employment decisions.

–   The parties’ designation of the status of the worker—i.e., independent contractor or employee—is not controlling. Instead, the status of the worker will be determined by the court or reviewing agency from all the facts and circumstances. For a thorough discussion of the various tests used by courts to determine worker classification, please see Chapter 12.

E. Malpractice Issues

Medical malpractice is when doctors, nurses, hospitals, pharmacists, or other medical professionals injure a patient by providing care that is below the acceptable standard.

Under state law, a patient may pursue a civil claim against physicians or other health care providers, called medical liability or medical malpractice, if the health care provider causes injury or death to the patient through a negligent act or omission.

The legal concept of medical malpractice is not limited to the conduct of medical doctors, but applies also to nurses, anesthesiologists, health care facilities, pharmaceutical companies, and staffing firms that provide medical professionals. The main thrust of a medical malpractice suit is proving fault—often by a doctor or someone else directly related to medical care—but sometimes these other entities are liable as well. Tip 140 Tip 141

Tip 140—Classification of Medical Professionals

Health care staffing firms can limit their exposure to medical malpractice claims by taking steps to ensure that the medical professionals they place are treated as independent contractors, rather than employees, and that the health care staffing firm does not control the conduct of its medical professionals.

Tip 141—Can a Medical Professional Be Personally Sued?

A medical professional can be sued individually, and this often happens in certain types of situations (e.g., malpractice lawsuits). A medical professional may be sued individually or as an employee of a health care client. There is no general rule of immunity that precludes a medical professional from being sued in a lawsuit.

1. Negligence

Most medical malpractice cases proceed under the theory that a medical professional was negligent in treating the patient. To recover damages, the patient must establish:

■   The medical professional owed a duty to the patient

■   The standard of care and that the medical professional violated that standard

■   A compensable injury

■   The violation of the standard of care caused the harm suffered by the patient

To find a medical professional negligent, it must be shown that his or her conduct fell below a generally accepted standard of medical care. In order to establish the applicable standard of care, a plaintiff must present the testimony of another medical expert who is qualified in the same area of medicine as the defendant. The expert testifies as to what standard, or level of care, is commonly met by those recognized in the profession as being competent and qualified to practice. In addition to establishing the standard of care, a plaintiff must also show the defendant failed to meet this standard.

2. Informed Consent

Most medical procedures or treatments involve some risk. It is the doctor’s responsibility to give the patient information about a particular treatment or procedure so the patient can decide whether to undergo the treatment, procedure, or test. This process of providing essential information to the patient and getting the patient’s agreement to a certain medical procedure or treatment is called informed consent.

Whether or not a patient gave his or her informed consent to a treatment is crucial in the law of medical malpractice. If a doctor does not get a patient’s informed consent, and the patient would not have opted for the treatment if he or she knew about the risks, the patient may be able to sue the doctor for medical malpractice. Often, a physician’s failure to obtain a patient’s informed consent before administering a procedure or treatment is a form of medical negligence, and may even give rise to a cause of action for battery. Doctors typically require patients to sign a consent form detailing the risks of any given treatment or procedure. But signing a form alone does not necessarily prove that the patient gave informed consent. The doctor must actually discuss the procedure and risks with the patient. And the patient must understand, to the extent possible, the risks he or she faces.

States vary on the specific definition of informed consent. A doctor does not have to tell a patient about every possible thing that might happen as a result of a procedure or treatment, but only those risks that are important. For the most part, states use one of two standards to determine what risks are important and must be disclosed:

1. Would Other Doctors Have Disclosed the Risk? In states that use this first standard, an injured patient who is suing a doctor must hire a medical expert to testify that other competent doctors would have informed the patient of this risk. The doctor being sued will also hire an expert to testify that a competent doctor would not necessarily have disclosed the risk to the patient. In the end, the crux of the argument is usually over whether the risk was statistically likely enough to make disclosure worthwhile. Simply because a particular bad result is a remote possibility does not mean it must be disclosed—even if that bad result comes to pass.

2. Would a Normal Patient Have Made a Different Decision If Informed of the Risk? In states using this second standard, courts ask whether a normal patient, with the same medical history and conditions as the plaintiff, would have changed his or her mind about the treatment if the risk was disclosed. Unlike states following the first standard, a doctor must also inform a patient of realistic alternative treatments, even if the doctor only recommends one treatment.

There may be exceptions to the informed consent rule. An example is an emergency situation in which there is no time to describe the risks involved and the doctor must act quickly to save a life. A patient cannot sue for lack of informed consent in this situation, even if he or she would not have allowed the treatment.

3. The Res Ipsa Doctrine

If a patient injured as the result of a medical procedure does not know exactly what caused his or her injury, but it is the type of injury that would not have occurred without negligence on the part of his or her health care provider(s), he or she may invoke a legal doctrine known as “res ipsa loquitur.” Translated, this Latin phrase means “the thing speaks for itself,” and implies that the plaintiff only needs to show that a particular result occurred and would not have occurred but for someone’s negligence.

To prove a negligence claim based on res ipsa loquitur, a plaintiff must prove that:

■   He or she was injured

■   He or she was injured in an occurrence that ordinarily does not happen in the absence of negligence

■   He or she was injured by an agency or instrumentality within the defendant’s management or exclusive control.

4. Vicarious Liability

When a patient is injured due to malpractice by a medical professional who is an employee of a health care client, the health care client itself may be held vicariously liable under the legal doctrine of “respondeat superior.” Under this doctrine, an employer may be held liable for the negligent acts of its employee, if the employee was acting within the scope of his or her employment when the negligent act or omission occurred. Also, under this doctrine, a health care client may be held vicariously liable for the negligent acts of a medical professional placed by a health care staffing firm. The client could be held liable, even though the medical professional is an employee of the staffing firm, if the medical professional was under the control of the hospital at the time of the conduct that caused the patient’s injury. Likewise, the health care staffing firm may also be held liable for the malpractice of a medical professional it places if that individual is an employee of the staffing firm.

5. Respondeat Superior and Independent Contractors

Where medical professionals are considered independent contractors rather than employees, the doctrine of “respondeat superior” is inapplicable. Therefore, if a doctor or other medical professional is appropriately classified as an independent contractor, and commits malpractice while treating a patient at a health care client, the client cannot be held liable for the doctor’s or medical professional’s negligence. However, the health care client can be held liable for its own negligence, for example, in granting attending privileges to an unlicensed or incompetent physician. Also, in certain situations, a hospital may be vicariously or directly liable for the acts or omissions of contractors it retains to operate emergency rooms and outpatient facilities. Tip 142

Tip 142—Malpractice Insurance

Health care staffing firms should have malpractice insurance and understand the terms of the insurance policy.

6. State Legislation Affecting Malpractice Actions

While the general principles required for a medical malpractice lawsuit are consistent nationwide, medical malpractice laws vary by state. State laws differ on the applicable statute of limitations (time within which individuals must file a lawsuit) for medical malpractice suits. Most states have a two-year time limit for filing malpractice actions, unless extraordinary circumstances affect the case. There are also differences in the types of negligence requirements, and in “caps” on award amounts for certain types of damages. Tip 143

Tip 143—State Malpractice Laws

Health care staffing professionals should be aware of the malpractice laws for the states in which they are placing medical professionals.

7. If Named in a Lawsuit

If a health care staffing firm is named in a lawsuit the following steps should be taken:

1. All documents and information should be preserved—this will assist in defending the case.

2. Short time deadlines apply in legal proceedings, and counsel for the staffing firm should be contacted and retained as soon as possible.

3. Comments about the lawsuit should not be made with anyone other than counsel for the staffing firm. Anything said or written about the lawsuit is apt to be discovered in the lawsuit process, and oral or written statements (e.g., an email) are considered to be “admissions” that can be used against the staffing firm (whereas statements given to the attorney for the staffing firm are privileged and cannot be discovered or used against the staffing firm in the lawsuit).

Virtually anything can be sought in discovery, including being the subject of a subpoena. Even an email sent to another employee in confidence is subject to discovery. The only exception is a privileged communication between an employee and a lawyer for the employee or the company if the communication is related to the giving of legal advice. If information and documentation is destroyed, the law deals with this destruction through the grant of an adverse inference (i.e., the judge will instruct the jury to presume that the destroyed documents would have supported the plaintiff’s case and been adverse to the staffing firm).

If the individual staffing professional or the health care staffing firm is sued lawsuit procedures will follow. The procedures vary in the court or jurisdiction, but typically involve a process of discovery where information is exchanged and pre-trial testimony is taken from parties and witnesses. The judge will consider motions to dismiss the lawsuit or determine the issues short of trial, or preside over a trial of the claims asserted in the lawsuit.

F. Mandatory Vaccination Policies for Health Care Personnel

Because medical professionals work in an environment where contact with patients or infectious material from patients is routine, they are at risk for exposure to many diseases. This risk includes not only the risk of personal infection, but transmission of infection to patients, friends, family, and other health care personnel. For this reason, many employers of medical professionals have mandatory vaccination policies requiring their health care personnel to receive a variety of vaccines. This section discusses mandatory vaccines, including exemption provisions, some legal issues faced by employers with mandatory vaccination policies, and guidance from the United States Equal Employment Opportunity Commission regarding evaluation of employee requests for exemption from immunization requirements.

1. Mandatory Vaccination Policies

A growing number of hospitals and other health care clients have mandatory vaccination policies. Currently, most states do not mandate vaccinations for medical professionals. Instead, mandatory vaccination policies are usually based on the hospital’s or other health care client’s desire to reduce the number of cases of influenza or other infectious diseases occurring at the health care provision location. Vaccines commonly required by employers of medical professionals vary but often include influenza, hepatitis B, measles, mumps, rubella, chickenpox (varicella), tetanus, diphtheria, pertussis, and meningitis.

2. Exemption Provisions

Most employers’ mandatory vaccination policies include exemption and/or declination provisions that allow employees to seek exemption from some or all of the required vaccines. Even when an employer does not have an exemption policy, most health care employers will consider exemption requests on medical or religious grounds.

3. Medical Issues With Vaccinations

Some individuals have medical conditions that increase the risks associated with immunizations. For each type of vaccine, the CDC provides a list of medical conditions that increase the risks associated with receiving the vaccine. For example, with respect to most vaccines the CDC recommends against vaccination if an individual has had previous negative reactions to vaccines, such as mild to severe local swelling, fever, or vomiting. The CDC also recommends that pregnant women, nursing mothers, and persons who have had Guillain Barré syndrome should not receive many types of vaccinations. Regarding the flu vaccine, the CDC has new recommendations regarding egg allergies. Visit the CDC website for more information on this and other severe allergies.

4. Religious Issues With Vaccinations

Some individuals hold religious beliefs that prevent them from receiving vaccinations. Reasons cited by employees for refusing vaccination on this ground include a belief that no animal-derived substance should ever enter the body, or that no medications of any kind should ever be ingested.

5. Legal Issues for Employers With Mandatory Vaccination Policies

The primary legal issue for employers with mandatory vaccination policies is the potential for discrimination claims under the Americans With Disabilities Act or Title VII of the Civil Rights Act. Employees may assert these claims if an employer seeks to impose discipline or terminate an employee’s employment based on the employee’s refusal to receive a vaccination. As discussed more fully below, in some cases failure to exempt individuals from immunization when it is medically contraindicated or conflicts with their religious beliefs could run afoul of the ADA or Title VII. Tip 144

Tip 144—Mandatory Vaccination and ADA or Title VII

Staffing firms cannot automatically disqualify a candidate from a client assignment because the candidate refuses to be vaccinated.

6. Other Legal Issues

Employers are also at risk of other tort law claims. Employees who feel “forced” to be vaccinated could assert claims such as invasion of privacy or intentional infliction of emotional distress. Additionally, a recipient of the flu shot who suffers an adverse medical outcome as a result of the vaccine or who is harmed as a result of negligent handling of the immunization could also bring a tort claim.

7. EEOC Guidance Regarding Employee Requests for Exemption From Vaccination Requirements on Medical or Religious Grounds

As mentioned above, the primary potential legal issue for employers requiring vaccinations is disability or religious discrimination claims under the ADA or Title VII. In a March 5, 2012, informal discussion letter, the EEOC stated that even during a pandemic, employers cannot compel all of their employees to take the influenza vaccine regardless of their medical conditions or their religious beliefs:

Q: May an employer covered by the ADA and Title VII of the Civil Rights Act of 1964 compel all of its employees to take the influenza vaccine regardless of their medical conditions or their religious beliefs during a pandemic?

A: No. An employee may be entitled to an exemption from a mandatory vaccination requirement based on an ADA disability that prevents him from taking the influenza vaccine. This would be a reasonable accommodation barring undue hardship (significant difficulty or expense). Similarly, under Title VII of the Civil Rights Act of 1964, once an employer receives notice that an employee’s sincerely held religious belief, practice, or observance prevents him from taking the influenza vaccine, the employer must provide a reasonable accommodation unless it would pose an undue hardship as defined by Title VII (“more than de minimis cost” to the operation of the employer’s business, which is a lower standard than under the ADA).

Generally, ADA-covered employers should consider simply encouraging employees to get the influenza vaccine rather than requiring them to take it.

A copy of the March 5, 2012, EEOC Informal Discussion Letter is located on this webpage, eeoc.gov/eeoc/foia/letters/2012/religious_accommodation.html.

8. General Rule: Employers May Be Required to Accommodate Legitimate Exemption Requests Absent Undue Hardship

In a Dec. 5, 2012, informal discussion letter, EEOC offered guidance regarding the duty of employers of medical professionals to accommodate those medical professionals who refuse mandatory vaccinations. The EEOC advises that an employer “may be” required to excuse an individual from a mandatory vaccination policy if doing so “would not pose an undue hardship.” The requirement to excuse may arise from a requested religious accommodation under Title VII, or disability accommodation under the ADA. A copy of the Dec. 5, 2012, EEOC Informal Discussion Letter is available on this webpage, eeoc.gov/eeoc/foia/letters/2012/tiitle_vii_vaccination_polices_and_reasonable_accommodation.html.

For purposes of reasonable accommodation under Title VII, “undue hardship” means “anything more than a de minimis burden on the operation of the employer’s business.” The ADA, however, imposes a higher threshold. The EEOC has stated that under the ADA, an “undue hardship must be based on an individualized assessment of current circumstances that show that a specific reasonable accommodation would cause significant difficulty or expense.” Factors to consider include the nature and cost of the accommodation, the financial resources of the employer, and the impact on the facility. Thus, according to the EEOC, employers with mandatory vaccination policies have a duty to consider, and potentially grant, employee requests for exemption. Additionally, the EEOC instructs that employers are permitted to consider whether granting a requested exemption will pose an undue hardship.

9. The Employer May Request Evidence to Support an Exemption Request

The EEOC has also stated that where a religious accommodation is requested, the employer is permitted to request and obtain supporting information from the requesting party. Presumably, the right to request supporting evidence would also extend to exemption requests based on medical reasons. Tip 145

Tip 145—Supporting Evidence for Exemption Requests

Staffing firms that require evidence for exemptions should do so consistently.

In the Dec. 5, 2012, informal discussion letter, EEOC stated that supporting evidence for exemption requests based on religious grounds need not come from “a church official or member, but rather could be provided by others who are aware of the employee’s religious belief or practice.” An employee requesting an exemption must cooperate with an employer’s reasonable request or he may not be entitled to accommodation. The accommodation need not be provided if it causes the employer undue hardship in the circumstances, or the employer may impose other infection control measures on those excused from vaccination, such as a mask requirement, if not done for retaliatory or discriminatory reasons. See the Dec. 5, 2012, EEOC Informal Discussion Letter on the webpage, eeoc.gov/eeoc/foia/letters/2012/tiitle_vii_vaccination_polices_and_reasonable_accommodation.html.

10. Accommodation of Employees Exempt From Vaccination Requirements

If the employer decides that an employee’s request for exemption from vaccination requirements is legitimate, and that accommodation does not pose an “undue hardship,” the employer is obligated to offer the employee “a reasonable accommodation” that would allow the employee to remain employed without receiving the vaccination. An example of a reasonable accommodation suggested by the EEOC is requiring the unvaccinated employee to wear a face mask.

11. Summary of Employer’s Duty With Respect to Employee Request for Exemption From Mandatory Vaccination Policy

To summarize the EEOC’s guidance regarding an employer’s duty to an employee who has requested an exemption from a mandatory vaccination policy:

■   If an employee seeks to be exempted from immunization requirements on religious or medical grounds, it is permissible for the employer to request and receive supporting documentation regarding the employee’s medical or religious claims.

■   If the employer is satisfied that the employee’s claim is legitimate:

–   The employer must either offer the employee a reasonable accommodation, such as wearing a face mask, or

–   Refuse to accommodate the employee’s desire for an exemption based on the assertion that accommodation would impose an undue hardship.

G. Medical Information Privacy

Nearly everyone recognizes the sensitive nature of health and medical information. However, health information privacy and security are complex topics to navigate. Health care staffing professionals must have an understanding of how privacy laws impact their clients, their candidates, and their staffing firm’s internal operations.

1. HIPAA

The Health Insurance Portability and Accountability Act of 1996 was enacted on Aug. 21, 1996. HIPAA is a federal law that provides baseline privacy and security standards for medical information. The U.S. Department of Health and Human Services is the federal agency in charge of creating rules that implement HIPAA and also enforcing HIPAA. HHS has issued regulations—commonly referred to as the “Privacy Rule”—providing detailed standards for the protection of health information and for personal control of such information.

In general, HIPAA’s privacy and security requirements control how group health plans can use and disclose protected health information and require plans to take affirmative steps to keep protected health information secure. Plans also must provide notice when unsecured protected health information is accessed, used, or disclosed by unauthorized persons.

2. Covered Entities

The HIPAA rules apply to covered entities and business associates. Individuals, organizations, and firms that meet the definition of a covered entity under HIPAA must comply with the rules’ requirements to protect the privacy and security of health information. Covered entities must also provide individuals with certain rights with respect to their health information.

A covered entity is one of the following:

1. Health Care Provider: This includes health care professionals and entities such as doctors, clinics, nursing homes, pharmacies, and others—but only if they transmit any information in an electronic form in connection with a transaction for which HHS has adopted a standard, such as electronic billing and funds transfer. For example, an employer’s on-site medical clinic that does not conduct electronic transactions would not be covered by the Privacy Rule.

2. Health Plan: This includes individual and group plans that provide or pay the cost of medical care. Health plans include staffing firm-sponsored group health plans, government and church-sponsored health plans, and multi-employer health plans. Insured or self-insured staffing firm-sponsored plans that have 50 or more participants, and group health plans regardless of size that are administered by entities other than firms, are covered. Health care staffing firms that have group health plans with fewer than 50 plan participants and group health plans regardless of size that are administered solely by employers are not covered entities and are not subject to HIPAA’s privacy and security requirements.

3. Health Care Clearinghouse: This includes entities that process nonstandard health information they receive from another entity into a standard format, or vice versa. A billing service is an example of a covered health care clearinghouse.

Health care staffing firms will not qualify as a covered entity as they are not directly providing health care services. However, staffing firms that sponsor group health care plans may be a covered entity as set forth in 2. Health Plan.

3. Business Associates

Under amendments made by the American Recovery and Reinvestment Act of 2009, “business associates” of covered entities must comply with HIPAA’s security requirements and breach notification obligations. With respect to HIPAA’s privacy provisions, business associates must notify covered entities about breaches of unsecured protected health information involving individuals whose information business associates access, acquire, use or disclose.

If a covered entity engages a business associate to help it carry out its health care activities and functions, the covered entity must have a written “business associate agreement” with the business associate that establishes specifically what the business associate has been engaged to do and requires the business associate to comply with the rules’ requirements to protect the privacy and security of protected health information. Specifically, the agreement must contain provisions that require business associates to (1) comply with HIPAA privacy and security requirements; (2) report any breach to the covered entity; and (3) enter into a business associate agreement prescribed by the rules with any subcontractor that receives the covered entity’s protected health information. Further, the business associate agreement must contain appropriate termination provisions, authorizing termination of the business associate agreement if the covered entity determines that the business associate has violated a material term of the agreement, and providing that the business associate must return or destroy all protected health information received from the covered entity (or if such return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction of the information infeasible). In addition to these contractual obligations, business associates are directly liable for compliance with certain provisions of the HIPAA rules.

Business associate functions or activities on behalf of a covered entity include claims processing, data analysis, utilization review, and billing. Examples of business associates are:

■   Accountants

■   Actuaries

■   Attorneys

■   Claims processors

■   Consultants

■   Utilization review and disease management vendors

■   Group health care continuation coverage administrators under the federal Consolidated Omnibus Budget Reconciliation Act of 1985

If an entity does not meet the definition of a covered entity or business associate, it does not have to comply with the HIPAA rules. Typically, when a covered entity, such as a hospital, contracts with a health care staffing firm to provide temporary workers, the health care staffing firm is not a business associate of the covered entity. This is because HIPAA defines “workforce” to include employees, temporaries, volunteers, and contracted employees whose conduct is under the direct control of the covered entity—whether or not they are paid by the covered entity. A worker is generally under a covered entity’s direct control when the worker is subject to the day-to-day policies and procedures of the covered entity and under the direction and supervision of the covered entity’s management. Therefore, if a temporary worker placed by a health care staffing firm is working under the direct control of the covered entity, then that temporary worker is part of the covered entity’s workforce, for purposes of HIPAA, and it is not necessary for the covered entity and the staffing firm, or the covered entity and the temporary worker, to enter in a business associate agreement. In these cases, the covered entity is responsible for providing the temporary worker with training regarding the entity’s HIPAA policies and procedures, and the temporary worker is prohibited from disclosing protected health information to the health care staffing firm.

In rare cases, if the health care staffing firm will receive protected health information from the temporary worker it places at a covered entity, or if the worker is not under the direct control of the covered entity, the health care staffing firm would be regarded as a business associate of the covered entity. In these cases, the covered entity is required to enter into a business associate agreement with the staffing firm, and can require the staffing firm to inform the temporary worker of the worker’s obligations regarding protected health information. An agreement with each individual temporary worker is not required.

4. What Information Is Protected: Protected Health Information

The Privacy Rule protects all “individually identifiable health information” held or transmitted by a covered entity or its business associate, in any form or media, whether electronic, paper, or oral.

The Privacy Rule calls this information protected health information (PHI). Tip 146

Tip 146—HIPAA Expectations

Almost all facilities require HIPAA training as part of their orientation. Health care staffing firms need to understand HIPAA training expectations from their clients and document all training completed by their contract and temporary workers and their internal staff members.

“Individually identifiable health information” is information, including demographic data, that relates to:

■   The individual’s past, present, or future physical or mental health or condition

■   The provision of health care to the individual

■   The past, present, or future payment for the provision of health care to the individual, and that identifies the individual or for which there is a reasonable basis to believe it can be used to identify the individual.

Individually identifiable health information includes many common identifiers (e.g., name, address, birth date, and Social Security number). Genetic information also is considered to be individually identifiable health information. Health information is not considered to be individually identifiable health information if it does not identify individuals or if there is no reasonable basis to believe that it can identify specific individuals.

5. Exclusion—Employment Records

Under HIPAA, protected health information does not include employment records maintained by health care staffing firms to facilitate their business practices or comply with legal duties. Examples of employment records that are not covered by HIPAA are:

■   Employee drug test results

■   Fitness-for-duty examinations

■   Occupational safety and health records, including medical surveillance reports

■   Workers’ compensation records

■   Medical certifications under the federal Family and Medical Leave Act Tip 147

Tip 147—Employment Records Not Covered by HIPAA

Records required as a condition of employment in health care staffing are not covered by HIPAA, but may be covered by other privacy protections. Check your state laws for privacy protection of this type of information.

Example: A registered nurse’s records contain vaccine information, information necessary for placement.

6. The Privacy Rule

HIPAA’s privacy provisions define and limit the circumstances in which protected health information can be used or disclosed by covered entities.

Covered entities can use or disclose protected health information in the following circumstances:

■   To individuals who are the subject of the protected health information

■   For treatment, payment, or certain health care activities

■   Pursuant to valid authorizations

■   When individuals are notified in advance and can either agree to or prohibit use or disclosure of protected health information

When using, disclosing, or requesting protected health information, covered entities must take reasonable efforts to limit protected health information to the minimum necessary to accomplish the purpose.

7. Exceptions

HIPAA does not ban an employee of a covered entity or business associate from revealing information to his or her supervisor or to another management official. In a fact sheet, the Occupational Safety and Health Administration states that a covered a entity’s employees and business associates may disclose protected health information when reporting or complaining about a workplace safety or health issue. Specifically, OSHA states that they may disclose the protected health information to public health authorities—such as federal OSHA or a state agency operating under a federal OSHA-approved state plan—that are authorized to investigate a covered entity’s conduct, to an attorney retained to deal with a case involving such conduct, or to a health care accrediting organization. These disclosures are permitted if the employee has a good faith belief that the conditions being reported are unlawful or endanger employees, among other things. Employees who are crime victims may also disclose protected health information to a law enforcement official. This is permitted if the information is about the suspected perpetrator and the information is limited to that listed at 45 C.F.R. § 164.512(f)(2)(i). Also, an employee may report a serious and imminent threat to the health and safety of a person if the recipient of the report is reasonably able to prevent or diminish the threat. Examples of such recipients include law enforcement officials, OSHA, and union officials.

8. Valid Authorizations

A covered entity must obtain the individual’s written authorization for any use or disclosure of protected health information that is not for treatment, payment, or health care operations or otherwise permitted or required by the Privacy Rule. This authorization is distinct from any consent that covered entities might obtain for routine uses and disclosures of health information.

The authorization must be detailed enough to provide individuals with concrete information about and control over the uses and disclosure of their protected information. Any nonroutine uses and disclosures must be consistent with the terms of this authorization.

Although a valid authorization must provide specific details, covered entities can use one authorization form for all purposes. In other words, covered entities must obtain express written permission for each type of nonroutine use or disclosure of a patient’s protected health information, but they do not need to use different types of forms.

To be valid, authorizations must be written in plain language and contain:

■   Specific descriptions of protected health information to be used or disclosed

■   Names of individuals authorized to make requested use or disclosure

■   Names of individuals to whom covered entities can provide protected health information

■   Description of the purpose for use or disclosure of protected health information

■   Expiration date or event relating to individuals or purposes for use or disclosure

■   Signature of individuals and date

Authorizations also must contain adequate statements:

■   Notifying individuals of their right to revoke authorizations in writing

■   Regarding the covered entities’ ability or inability to condition the individuals’ treatment, payment, plan enrollment, or benefit eligibility on receipt of authorizations

■   Advising individuals of potential redisclosure of protected health information by recipients

9. The Security Rule

HIPAA’s “Security Rule” applies to protected health information in electronic form (e-PHI) that covered entities maintain or transmit.

Specifically, covered entities must:

■   Ensure the confidentiality, integrity, and availability of all e-PHI they create, receive, maintain or transmit;

■   Identify and protect against reasonably anticipated threats to the security or integrity of the information;

■   Protect against reasonably anticipated, impermissible uses or disclosures; and

■   Ensure compliance by their workforce.

Covered entities also must adopt reasonable and appropriate policies and procedures to implement security standards. Under HIPAA, security standards include administrative safeguards, physical safeguards, and technical safeguards.

10. The Breach Notification Rule

Covered entities must provide notice if unsecured protected health information (PHI) is or reasonably is believed to be accessed, acquired, or disclosed to unauthorized persons. “Unsecured” PHI is protected health information that is not secured through technologies or methodologies specified by the secretary of Health and Human Services. If covered entities use technologies or methodologies specified by HHS to make protected health information unusable, unreadable, or indecipherable, then such protected health information is considered secured and breach notification requirements are not applicable. For example, such safeguards might include shredding documents containing protected health information before discarding them, securing medical records with lock and key or pass code, and limiting access to keys or pass codes. The two methods specified by HHS to secure protected health information are encryption and destruction.

On Jan. 25, 2013, HHS published regulations that set out a risk assessment method that business associates and employer health plans must follow to determine if a privacy breach has occurred. The rules expressly favor disclosure of a breach unless the covered entity can demonstrate that there is a “low probability that the protected health information has been compromised.”

Covered entities must consider the following factors in good faith when determining if they meet the burden to not disclose:

■   The nature and extent of the PHI involved

■   The unauthorized person who impermissibly used or received the PHI

■   Whether the PHI was actually acquired or viewed

■   The extent to which the risk of breach has been mitigated

Covered entities must provide notice of breaches of unsecured protected health information promptly, but no later than 60 calendar days after breaches are discovered. Breaches are considered to be discovered on the first day that covered entities or business associates know or should know that breaches have occurred.

11. Plan Sponsor Obligations

Health care staffing firms that sponsor group health plans providing benefits solely through insurance contracts with health insurance issuers or HMOs and that do not create or receive protected health information, other than basic enrollment or summary information, are not subject to HIPAA’s privacy and security administrative requirements. However, if group health plan sponsors receive information in addition to basic enrollment or summary information, sponsors must include in their group health plan documents:

■   A description of permitted and required use and disclosure of protected health information by plan sponsors

■   A description of requirements for agents or subcontractors that receive protected health information to comply with restrictions and conditions imposed on plan sponsors

■   A statement that protected health information is not used or disclosed for employment-related actions or decisions or in connection with other employee benefits

■   A statement that group health plan sponsors must report to group health plans any improper use or disclosure of protected health information

■   A statement that protected health information received from plans is returned or destroyed when no longer needed

■   Information on how plan participants can access and amend their own health records and obtain information about any disclosures of their medical records

■   Identification of employees or classes of employees who can receive protected health information and describe policies that ensure only those designated individuals can access protected records

■   A description of corrective measures to remedy situations if employees violate restrictions governing use and disclosure of protected health information

12. GINA

Title II of the federal Genetic Information Nondiscrimination Act prohibits health care staffing firms from discriminating against employees and applicants based on genetic information. Health care staffing firms also cannot request, require, or purchase employees’, applicants’, or their family members’ genetic information, except under certain circumstances. GINA’s workplace antidiscrimination regulations do not apply to the use or disclosure of genetic information that is regulated under HIPAA as protected health information.

Covered entities and their business associates may not use or disclose genetic information for underwriting purposes, including determination of benefits and setting premiums. Genetic information is considered protected health information, which may not be disclosed by a covered entity or its business associates.

H. When Is Continuing Education Time Compensable?

Medical professionals may engage in continuing education classes, courses, or training for many reasons. For example, continuing education may be required by an employer as a condition of employment. State and private agencies often require continuing education to maintain licenses and certificates. Alternatively, medical professionals may choose to engage in continuing education to further personal professional goals. This section discusses when time spent by health care medical professionals at continuing education classes is compensable time.

1. Time Spent in Continuing Education Classes Is Evaluated in Accordance With a Four-Part Test

The Code of Federal Regulations sets forth a four-part test applicable to most nonexempt employees, including medical professionals, to determine whether time spent in a continuing education course or class must be paid time under the law. The Code provides that: “Attendance at lectures, meetings, training programs, and similar activities need not be counted as working time if the following four criteria are met”:

■   Attendance is outside of the employee’s regular working hours

■   Attendance is in fact voluntary

■   The course, lecture, or meeting is not directly related to the employee’s job

■   The employee does not perform any productive work during such attendance.

If any of the four criteria are not met, the employee must be compensated for the training time.

For time spent in continuing education activities to qualify as non-compensable, or not requiring payment, the time under consideration must satisfy all four criteria. Tip 148

Tip 148—Time Spent in a Continuing Education Course

It is the responsibility of the health care staffing firm, not the client, to compare training time against these four criteria to determine if a contract or temporary worker must be paid.

2. Outside of Regular Working Hours/No Productive Work Performed

For an employee’s attendance at a continuing education class to qualify as non-compensable time, the employee must attend the class outside of the employee’s regular working hours and the employee may not perform any productive work during the class.

To determine if an employee must be paid for training time the employer should first examine:

■   The days and hours during which the employee attended the class to determine if the class was during regular work hours or outside of regular work hours

■   The activities in which the employee engaged during the training program

If the training time was during regularly scheduled work hours or the employee was engaged in productive work, the employee must be paid for the training time.

If the training time was outside of work hours and the employee was not engaged in productive work the employer can move to the next criteria, voluntary attendance.

3. Voluntary Attendance

The crux of the “voluntary attendance” requirement is whether the employer, or a party acting on behalf of the employer, either directly or indirectly, required the employee to attend the class or course. Attendance is not considered voluntary if:

■   It was required by the employer

■   The employee was led to believe that his or her present employment would be adversely affected by not attending.

If attendance is required by the employer, any time spent by the employee attending the class must be paid as time worked. An exception to this is state-required training. In general, if state-required training is of a general nature, and not tailored to meet the particular needs of individual employers, the time spent completing the training can be classified as voluntary. For example, on Jan. 7, 2009, the acting administrator of the United States Department of Labor, Wage, and Hour Division, issued an opinion letter finding that time spent by child care center employees in state-mandated training was voluntary and not compensable because the in-house training was offered outside of regular work hours, it corresponded to courses offered by independent bona fide institutions, employees could choose to receive the training from other organizations instead of attending the employer-provided training, and the training was of general applicability as the employees could use it to gain or continue employment with any child care service provider.

4. Not Directly Related to the Employee’s Job

The final consideration is whether or not the class, course, or training is directly related to an employee’s job. It is considered directly job related if it is designed to make the employee handle his or her current job responsibilities more effectively. If the training content is intended to help the employee handle current responsibilities more effectively, the employee must be compensated. Again, all four criteria must be met for training time to not be compensated. Thus, training outside normal working hours is always compensable when it is directly related to the employee’s job, or when the class or training is required by the employer. It should also be noted that, in either situation, the time spent by the employee in the class or course is compensable whether or not the class was offered in house. One illustration of this situation is the Division’s decision in an April 21, 1986, Administrative Letter Ruling holding that health clerks employed by a school district were entitled to compensation for time spent in a first aid recertification training class outside of their normal working hours because the employer required the health clerks to renew their first aid certificates every three years.

5. Independent Training Is Not Compensable Time

Employers are not required to pay employees for time spent attending independent school, college, or independent trade school after hours, if the employee is attending on his own initiative even if the courses are related to his job.

6. Time Is Not Compensable Where Class Is for the Benefit of the Employee/Corresponds to Courses Offered by Bona Fide Institutions

The Code provides an exception to the requirement that the training not be directly related to the employee’s job where the training is for the benefit of the employee and corresponds to courses offered by independent bona fide institutions of learning: time spent in attending such lectures, training sessions, and courses of instruction is not regarded as hours worked. An example is when an employer establishes, for its employees’ benefit, courses that correspond to courses offered by independent bona fide institutions of learning. Voluntary attendance by an employee at such courses outside of working hours would not be hours worked even if they directly relate to his job, or are paid for by the employer.

7. Employer Provided/Paid Programs

Continuing education classes, courses, and trainings offered in house or otherwise provided by the employer can qualify as non-compensable if they meet the requirements of the four-part test, or correspond to classes, courses, or trainings offered by independent institutions that are of general applicability and benefit the employee. Thus, if the state requires continuing education of a general nature for nurses as a condition of practice of the profession, and the employer offers courses that fulfill this requirement but are not tailored to meet the employer’s particular needs, then such training is not compensable time under the Fair Labor Standards Act.

For example, in a July 31, 2001, opinion Letter, the Division analyzed whether nurses who attended out-of-town continuing education conferences, for which the hospital paid admission, travel, and lodging, engaged in compensable training activities. The Division determined that the compensability of the nurses’ time depended on whether attendance at the conferences trained the nurses for a new position (non-compensable), or trained them to perform their current duties more effectively (compensable).

8. Statutes May Mandate the Compensability of Continuing Education Time

In some cases, state codes or statutes also mandate that the employer compensate the employee for time spent on continuing education or training.

Appendix A

Directory of Federal and State Agencies

Contents

1. U.S. Equal Employment Opportunity Commission

2. State Fair Employment Practices Agencies

3. U.S. Department of Labor

4. State Departments of Labor

5. Office of Federal Contract Compliance Programs

6. U.S. Citizenship and Immigration Services

7. U.S. Immigration and Customs Enforcement

8. Office of Special Counsel for Immigration-Related Unfair Employment Practices

1. U.S. Equal Employment Opportunity Commission

Headquarters

131 M St., NE
Washington, DC 20507
202-663-4900

District, Area, Field, and Local Offices

Albuquerque Area Office
(Phoenix District)
505 Marquette NW, Suite 900
Albuquerque, NM 87102
505-248-5201

Atlanta District Office
100 Alabama St., SW, Suite 4R30
Atlanta, GA 30303
404-562-6800

Baltimore Field Office
(Philadelphia District)
GH Fallon Federal Bldg.
31 Hopkins Plaza, Suite 1432
Baltimore, MD 21201
410-209-2237

Birmingham District Office
Ridge Park Place
1130 22nd St. S., Suite 2000
Birmingham, AL 35205
205-212-2148

Boston Area Office
(New York District)
John F. Kennedy Federal Bldg.
475 Government Center
Boston, MA 02203
617-565-3200

Buffalo Local Office
(New York District)
Olympic Towers
300 Pearl St., Suite 450
Buffalo, NY 14202
716-551-4441

Charlotte District Office
129 West Trade St., Suite 400
Charlotte, NC 28202
704-344-6682

Chicago District Office
500 West Madison St., Suite 2000
Chicago, IL 60661
312-353-2713

Cincinnati Area Office
(Indianapolis District)
John W. Peck Federal Office Bldg.
550 Main St., 10th Floor
Cincinnati, OH 45202
513-684-2851

Cleveland Field Office
(Philadelphia District)
Anthony J. Celebrezze Federal Bldg.
1240 E. 9th St., Suite 3001
Cleveland, OH 44199
216-522-2001

Dallas District Office
207 S. Houston St., 3rd Floor
Dallas, TX 75202
214-253-2700

Denver Field Office
(Phoenix District)
303 E. 17th Ave., Suite 410
Denver, CO 80203
303-866-1300

Detroit Field Office
(Indianapolis District)
Patrick V. McNamara Bldg.
477 Michigan Ave., Room 865
Detroit, MI 48226
313-226-4600

El Paso Area Office
(Dallas District)
100 N. Stanton St., Suite 600
El Paso, TX 79901
915-534-6700

Fresno Local Office
(San Francisco District)
2500 Tulare St., Suite 2601
Fresno, CA 93721
559-487-5793

Greensboro Local Office
(Charlotte District)
1500 Pinecroft Rd., Suite 200
Greensboro, NC 27407
336-547-4188

Greenville Local Office
(Charlotte District)
301 N. Main St., Suite 1402
Greenville, SC 29601-9916
864-241-4400

Honolulu Local Office
(Los Angeles District)
300 Ala Moana Blvd., Room 7-127
Honolulu, HI 96850-0051
808-541-3120

Houston District Office
Mickey Leland Bldg.
1201 Louisiana St., 6th Floor
Houston, TX 77002
713-651-4900

Indianapolis District Office
101 West Ohio St., Suite 1900
Indianapolis, IN 46204-4203
317-226-7212

Jackson Area Office
(Birmingham District)
Dr. A. H. McCoy Federal Bldg.
100 W. Capitol St., Suite 338
Jackson, MS 39269
601-948-8412

Kansas City Area Office
(St. Louis District)
400 State Ave., Suite 905
Kansas City, KS 66101
913-551-5655

Las Vegas Local Office
(Los Angeles District)
333 Las Vegas Blvd. S., Suite 8112
Las Vegas, NV 89101
702-388-5013

Little Rock Area Office
(Memphis District)
820 Louisiana St., Suite 200
Little Rock, AR 72201
501-324-5060

Los Angeles District Office
Roybal Federal Bldg.
255 E. Temple St., 4th Floor
Los Angeles, CA 90012
213-894-1000

Louisville Area Office
(Indianapolis District)
600 Dr. Martin Luther King Jr. Pl., Suite 268
Louisville, KY 40202
502-582-6082

Memphis District Office
1407 Union Ave., 9th Floor
Memphis, TN 38104
901-544-0115

Miami District Office
Miami Tower
100 S.E. 2nd St., Suite 1500
Miami, FL 33131
305-808-1740

Milwaukee Area Office
(Chicago District)
Reuss Federal Plaza
310 W. Wisconsin Ave., Suite 500
Milwaukee, WI 53203-2292
414-297-1111

Minneapolis Area Office
(Chicago District)
330 S. Second Ave., Suite 720
Minneapolis, MN 55401-2224
612-335-4040

Mobile Local Office
(Birmingham District)
63 S. Royal St., Suite 504
Mobile, AL 36602
251-690-2590

Nashville Area Office
(Memphis District)
220 Athens Way, Suite 350
Nashville, TN 37228-9940
615-736-5820

Newark Area Office
(New York District)
Two Gateway Center, Suite 1703
283-299 Market St.
Newark, NJ 07102-5233
973-645-6383

New Orleans Field Office
(Houston District)
500 Poydras St., Suite 809
New Orleans, LA 70130
800-669-4000

New York District Office
33 Whitehall St., 5th Floor
New York, NY 10004
212-336-3620

Norfolk Local Office
(Charlotte District)
Federal Bldg.
200 Granby St., Suite 739
Norfolk, VA 23510
800-669-4000

Oakland Local Office
(San Francisco District)
1301 Clay St., Suite 1170-N
Oakland, CA 94612-5217
510-637-3230

Oklahoma City Area Office
(St. Louis District)
251 Dean A. McGee Ave., Suite 524
Oklahoma City, OK 73102
405-231-4911

Philadelphia District Office
801 Market St., Suite 1300
Philadelphia, PA 19107-3127
215-440-2600

Phoenix District Office
3300 N. Central Ave., Suite 690
Phoenix, AZ 85012-2504
602-640-5000

Pittsburgh Area Office
(Philadelphia District)
William S. Moorhead Federal Bldg.
1000 Liberty Ave., Suite 1112
Pittsburgh, PA 15222
800-669-4000

Raleigh Area Office
(Charlotte District)
434 Fayetteville St., Suite 700
Raleigh, NC 27601-1701
919-856-4064

Richmond Local Office
(Charlotte District)
400 N. Eight St., Suite 350
Richmond, VA 23219
804-771-2200

San Antonio Field Office
(Dallas District)
Legacy Oaks, Bldg. A
5410 Fredericksburg Rd., Suite 200
San Antonio, TX 78229
210-281-7600

San Diego Local Office
(Los Angeles District)
555 W Beech St., Suite 504
San Diego, CA 92101
619-557-7235

San Francisco District Office
450 Golden Gate Ave. 5 West,
P.O. Box 36025
San Francisco, CA 94102-3661
800-669-4000

San Jose Local Office
(San Francisco District)
96 N. Third St., Suite 250
San Jose, CA 95112
408-291-7352

San Juan Local Office
(Miami District)
525 F.D. Roosevelt Ave.
Plaza Las Americas, Suite 1202
San Juan, PR 00918-8001
787-771-1464

Savannah Local Office
(Atlanta District)
7391 Hodgson Memorial Dr., Suite 200
Savannah, GA 31406-2579
912-652-4234

Seattle Field Office
(San Francisco District)
Federal Office Bldg.
909 First Ave., Suite 400
Seattle, WA 98104-1061
206-220-6883

St. Louis District Office
Robert A. Young Federal Bldg.
1222 Spruce St., Room 8.100
St. Louis, MO 63103
314-539-7800

Tampa Field Office
(Miami District)
501 E. Polk St., Suite 1000
Tampa, FL 33602
813-228-2310

Washington Field Office
131 M St., NE
4th Floor, Suite 4NWO2F
Washington, DC 20507-0100
202-289-6200

2. State Fair Employment Practices Agencies

Alaska

State Commission for Human Rights
800 A St., Suite 204
Anchorage, AK 99501-3669
907-274-4692

Arizona

Civil Rights Division
Attorney General’s Office
1275 W. Washington St.
Phoenix, AZ 85007
602-542-5263

California

Department of Fair Employment and Housing
2218 Kausen Dr., Suite 100
Elk Grove, CA 95758
916-478-7251

Colorado

Department of Regulatory Agencies
Civil Rights Division
1560 Broadway, Suite 1545
Denver, CO 80202
303-894-7855

Connecticut

Commission on Human Rights and Opportunities
450 Columbus Blvd.
Hartford, CT 06103
860-541-3400

Delaware

Department of Labor Office of Discrimination
4425 N. Market St.
Wilmington, DE 19802
302-761-8001

District of Columbia

DC Office of Human Rights
441 4th St., NW, Suite
570 N. Washington, DC 20001
202-727-4559

Florida

Commission on Human Relations
4075 Esplanade Way, Room 110
Tallahassee, FL 32399
850-488-7082

Georgia

Human Relations Commission
55 Trinity Ave.
Atlanta, GA 30303
404-330-6023

Hawaii

Civil Rights Commission
830 Punchbowl St., Room 411
Honolulu, HI 96813
808-586-8636

Idaho

Human Rights Commission
317 W. Main St. 2nd Floor
Boise, ID 83735-0660
208-334-2873

Illinois

Department of Human Rights
James R. Thompson Center
100 W. Randolph St., 10th Floor
Chicago, IL 60601
312-814-6200

Indiana

Civil Rights Commission
100 N. Senate Ave.
Indiana Government Center N., Room N103
Indianapolis, IN 46204
317-232-2600

Iowa

Civil Rights Commission
Grimes State Office Bldg.
400 E. 14th St.
Des Moines, IA 50319-0201
515-281-4121

Kansas

Human Rights Commission
Landon State Office Bldg.
900 SW Jackson St., Suite 568-S
Topeka, KS 66612-1258
785-296-3206

Kentucky

Commission on Human Rights
Heyburn Bldg.
332 W. Broadway, 14th Floor
Suite 700
Louisville, KY 40202
502-595-4024

Louisiana

Louisiana Workforce Commission
1001 N. 23rd St.
Baton Rouge, LA 70802
225-342-3111

Maine

Human Rights Commission
State House
19 Union St.
Augusta, ME 04333
207-624-6290

Maryland

Commission on Civil Rights
6 Saint Paul St., Suite 900
Baltimore, MD 21202-1631
410-767-8600

Massachusetts

Commission Against Discrimination
McCormack State Office Bldg.
1 Ashburton Pl., Room 601
Boston, MA 02108
617-994-6000

Michigan

Department of Civil Rights
Capitol Tower Bldg.
110 W. Michigan Ave., Suite 800
Lansing, MI 48933
517-335-3165

Minnesota

Department of Human Rights
Freeman Bldg.
15 W. Kellogg Blvd., Suite 240
Saint Paul, MN 55155 651-539-1100

Missouri

Commission on Human Rights
3315 W. Truman Blvd., Room 212
P.O. Box 1129
Jefferson City, MO 65102-1129
573-751-3325

Montana

Human Rights Commission Department of Labor and Industry
P.O. Box 8011
Helena, MT 59604-8011
406-444-6543

Nebraska

Nebraska Equal Opportunity Commission
Nebraska State Office Bldg.
301 Centennial Mall South, 5th Floor
P.O. Box 94934
Lincoln, NE 68509-4934
402-471-2024

Nevada

Equal Rights Commission
1820 E. Sahara Avenue, Suite 314
Las Vegas, NV 89104
702-486-7161

New Hampshire

Commission for Human Rights
2 Industrial Park Dr., Bldg. One
Concord, NH 03301-8501
603-271-2767

New Jersey

Division on Civil Rights
31 Clinton St., 3rd Floor
Newark, NJ 07102
973-648-2700

New Mexico

Human Rights Bureau
1596 Pacheco St., Suite 103
Santa Fe, NM 87505
505-827-6838

New York

State Division of Human Rights
One Fordham Plaza, 4th Floor
Bronx, NY 10458
718-741-8318

North Carolina

Human Relations Commissions
1318 Mail Service Center
Raleigh, NC 27699-1301
919-807-4420

North Dakota

Department of Labor and Human Rights
600 E. Boulevard Ave., Dept. 406
Bismarck, ND 58505-0340
701-328-2660

Ohio

Civil Rights Commission
30 E. Broad St., Fifth Floor
Columbus, OH 43215
614-466-2785

Oklahoma

Office of Civil Rights Enforcement
313 NE 21st St.
Oklahoma City, OK 73105
405-521-3921

Oregon

Bureau of Labor and Industries Civil Rights Division
800 NE Oregon St., Suite 1045
Portland, OR 97232
971-673-0761

Pennsylvania

Human Relations Commission Executive Offices
333 Market St., 8th Floor
Harrisburg, PA 17101-2210
717-787-9780

Puerto Rico

Department of Labor and Human Resources Antidiscrimination Unit
Edificio Prudencio Rivera Martinez
505 Muñoz Rivera Ave.
Hayo Rey, PR 00918
787-754-5353

Rhode Island

Commission for Human Rights
180 Westminster St., 3rd Floor
Providence, RI 02903
401-222-2661

South Carolina

Human Affairs Commission
1026 Sumter St., Suite 101
Columbia, SC 29201
803-737-7800

South Dakota

Division on Human Rights (Labor & Management)
South Dakota Department of Labor and Regulation
123 W. Missouri Ave.
Pierre, SD 57501
605-773-3681

Tennessee

Human Rights Commission
312 Rosa L. Parks Ave., 23rd Floor
Nashville, TN 37243
615-741-5825

Texas

Texas Workforce Commission Civil Rights Division
101 E. 15th St.
Austin, TX 78778-0001
512-463-2222

Utah

Antidiscrimination & Labor Division
160 E. 300 South, 3rd Floor
P.O. Box 146640
Salt Lake City, UT 84114-6640
801-530-6801

Vermont

Human Rights Commission
14-16 Baldwin St.
Montpelier, VT 05633-6301
802-828-1625

Virginia

Division of Human Rights Office of the Attorney General
202 North Ninth St.
Richmond, VA 23219
804-225-2292

Virgin Islands

Division of Labor Relations
4401 Sion Farm STE1 Christiansted,
St. Croix, VI 00820-4245
340-773-1994

Washington

Washington State Human Rights Commission
711 S. Capitol Way, Suite 402
Olympia, WA 98504-2490
360-753-6770

West Virginia

Human Rights Commission
1321 Plaza E., Room 108A
Charleston, WV 25301-1400
304-558-2616

Wisconsin

Department of Workforce Development Equal Rights Division
201 E. Washington Ave., Room A100
P.O. Box 8928
Madison, WI 53703
608-266-6860

Wyoming

Department of Workforce Services Labor Standards Division
1510 E. Pershing Blvd., West Wing, # 150
Cheyenne, WY 82001
307-777-7261

3. U.S. Department of Labor

National Office

U.S. Department of Labor
Frances Perkins Bldg.
200 Constitution Ave., NW
Washington, DC 20210
866-4-USA-DOL

Regional Offices (Wage and Hour Division)

Northeast Region
(Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Puerto Rico, Rhode Island, Vermont, Virgin Islands, Virginia, and West Virginia)
The Curtis Center, Suite 850 W.
170 S. Independence Mall W.
Philadelphia, PA 19106-3317
267-687-4031

Southeast Region
(Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee)
Harris Tower, Suite 650
233 Peachtree St. NE
Atlanta, GA 30303
678-237-0488

Midwest Region
(Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, and Wisconsin)
230 S. Dearborn St., Room 530
Chicago, IL 60604
312-596-7208

Southwest Region
(Arkansas, Colorado, Louisiana, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah, and Wyoming)
Federal Bldg., Suite 800
525 S. Griffin St.
Dallas, TX 75202-5007
214-749-2021

Western Region
(Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, and Washington)
90 7th St., Suite 13-100
San Francisco, CA 94103
415-241-3572

4. State Departments of Labor

Alabama

Department of Labor
649 Monroe St.
Montgomery, AL 36131
334-242-8055

Alaska

Department of Labor and Workforce Development
P.O. Box 11149
Juneau, AK 99811
1111 West 8th St.
Juneau, AK 99801
907-465-2700

Arizona

State Labor Department
800 W. Washington St.
St. Phoenix, AZ 85007
602-542-4515

Arkansas

Department of Labor
10421 W. Markham St.
Little Rock, AR 72205
501-682-4500

California

Department of Industrial Relations
455 Golden Gate Ave.
10th Floor
San Francisco, CA 94102
415-703-5300

Colorado

Colorado Department of Labor and Employment
633 17th St., Suite 201
Denver, CO 80202-3660
303-318-8000

Connecticut

Department of Labor
200 Folly Brook Blvd.
Wethersfield, CT 06109-1114
860-263-6000

Delaware

Department of Labor
4425 N. Market St.
Wilmington, DE 19802
302-761-8001

District of Columbia

Department of Employment Services
4058 Minnesota Ave., NE
Washington, DC 20019
202-724-7000

Florida

Department of Business and Professional Regulation
2601 Blair Stone Rd.
Tallahassee, FL 32399-1027
850-487-1395

Georgia

Department of Labor
148 Andrew Young International Blvd., NE
Atlanta, GA 30303-1751
404-232-7300

Guam

Department of Labor
P.O. Box 9970
Tamuning, GU 96931-9970
671-475-7044

Hawaii

Department of Labor and Industrial Relations
830 Punchbowl St., # 321
Honolulu, HI 96813
808-586-8844

Idaho

Department of Commerce and Labor
317 W. Main St.
Boise, ID 83735
208-332-3570

Illinois

Department of Labor
160 N. LaSalle St., Suite C-1300
Chicago, IL 60601
312-793-2800

Indiana

Department of Labor
402 W. Washington St.
Room W195
Indianapolis, IN 46204
317-232-2655

Iowa

Iowa Workforce Development
1000 E. Grand Ave.
Des Moines, IA 50319
866-239-0843

Kansas

Department of Labor
401 SW Topeka Blvd.
Topeka, KS 66603
785-296-5000

Kentucky

Department of Labor
1047 U.S. Hwy. 127 S., Suite 4
Frankfort, KY 40601-4381
502-564-3070

Louisiana

Workforce Commission
1001 N. 23rd S.
Baton Rouge, LA 70802
225-342-3111

Maine

Department of Labor
54 State House Station
Augusta, ME 04333
207-623-7900

Maryland

Department of Labor Licensing and Regulation
500 N. Calvert St., Suite 401
Baltimore, MD 21202
410-230-6001

Massachusetts

Department of Labor and Work Force Development
1 Ashburton Pl., Suite 2112
Boston, MA 02108
617-626-7122

Michigan

Department of Licensing and Regulatory Affairs
611 W. Ottawa
P.O. Box 30004
Lansing, MI 48909
517-335-9700

Minnesota

Department of Labor and Industry
443 Lafayette Rd. N.
Saint Paul, MN 55155
651-284-5005

Mississippi

Department of Employment Security
1235 Echelon Pkwy.
P.O. Box 1699
Jackson, MS 39215-1699
601-321-6000

Missouri

Department of Labor and Industrial Relations
3315 W. Truman Blvd., Room 214
P.O. Box 599
Jefferson City, MO 65102-0599
573-751-2461

Montana

Department of Labor and Industry
P.O. Box 1728
Helena, MT 59624-1728
406-444-2840

Nebraska

Department of Labor
1111 O St., Suite 222
Lincoln, NE 68508
402-471-2275

Nevada

Business and Industry
3300 W. Sahara Ave., Suite 425
Las Vegas, NV 89102
702-486-2750

New Hampshire

Department of Labor
95 Pleasant St.
Concord, NH 03301
603-271-3176

New Jersey

Department of Labor and Workforce Development
1 John Fitch Plaza
P.O. Box 110
Trenton, NJ 08625-0110
609-292-2323

New Mexico

Department of Workforce Solutions
401 Broadway, NE
P.O. Box 1928
Albuquerque, NM 87102
505-841-8405

New York

Department of Labor
W.A. Harriman Campus, Bldg. 12, Room 500
Albany, NY 12240
518-457-9000

North Carolina

Department of Labor
4 W. Edenton St.
Raleigh, NC 27601-1092
800-625-2267

North Dakota

Department of Labor
State Capitol Bldg.
600 E. Boulevard Ave., Dept. 406
Bismarck, ND 58505-0340
701-328-2660

Ohio

Department of Commerce
77 S. High St., 23rd Floor
Columbus, OH 43215-6123
614-466-3636

Oklahoma

Department of Labor
3017 N. Stiles, Suite 100
Oklahoma City, OK 73105
405-521-6100

Oregon

Bureau of Labor and Industries
800 NE Oregon St., Suite 1045
Portland, OR 97232
971-673-0761

Pennsylvania

Department of Labor & Industry
651 Boas St.
Harrisburg, PA 1712
717-787-5279

Puerto Rico

Department of Labor and Human Resources
Edificio Prudencio Rivera Martinez
505 Munoz Rivera Ave.
Hato Rey, PR 00918
787-754-5353

Rhode Island

Department of Labor and Training
1511 Pontiac Ave.
Cranston, RI 02920
401-462-8870

South Carolina

Department of Labor, Licensing, and Regulations
Synergy Center—Kingstree Bldg.
110 Center View Dr.
Columbia, SC 29211-1329
803-896-4300

South Dakota

Department of Labor
123 W. Missouri Ave.
Pierre, SD 57501-0405
605-773-3101

Tennessee

Department of Labor and Workforce Development
220 French Landing Dr.
Nashville, TN 37243
615-741-6642

Texas

Texas Workforce Commission
101 E. 15th St.
Austin, TX 78778
512-463-2222

Utah

Labor Commission of Utah
160 E. 300 S., 3rd Floor
Salt Lake City, UT 84114-6600
801-530-6800

Vermont

Department of Labor
5 Green Mountain Dr.
Montpelier, VT 05601-0488
802-828-4000

Virgin Islands

Department of Labor
4401 Sion Farm STE1 Christiansted,
St. Croix, VI 00820-4245
340-773-1994

Virginia

Department of Labor and Industry
Main Street Centre
600 E. Main St., Suite 207
Richmond, VA 23219-4101
804-371-2327

Washington

Department of Labor and Industries
P.O. Box 44000
Olympia, WA 98504-4000
360-902-5800

West Virginia

Division of Labor
1900 Kanawha Blvd. East
State Capitol Complex
Bldg. 3, Room 200
Charleston, WV 25305
304-558-7890

Wisconsin

Department of Workforce Development
201 E. Washington Ave.
Madison, WI 53707-7946
608-266-3131

Wyoming

Department of Workforce Services
Herschler Building
1510 E. Pershing Blvd.
West Wing, # 150
Cheyenne, WY 82002
307-777-7261

5. Office of Federal Contract Compliance Programs

National Office

OFCCP/Employment Standards Administration
U.S. Department of Labor
200 Constitution Ave., NW
Washington, DC 20210
800-397-6251

Regional Offices

Northeast Region
(New Jersey, New York, Puerto Rico, Virgin Islands, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont)
201 Varick St., Room 750
New York, NY 10014
646-264-3170

Mid-Atlantic Region
(Delaware, District of Columbia, Maryland, Pennsylvania, Virginia, West Virginia)
Curtis Center, Suite 650 S.
170 S. Independence Mall West
Philadelphia, PA 19106-3317
215-861-5765

Southeast Region
(Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee)
Atlanta Federal Center
61 Forsyth Street SW
Room 7B75
Atlanta, GA 30303-8931
404-893-4545

Midwest Region
(Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, Wisconsin)
230 S. Dearborn St., Room 570
Chicago, IL 60604-1520
312-596-7010

Southwest and Rocky Mountain Region
(Arkansas, Colorado, Louisiana, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah, Wyoming)
Federal Building, Room 840
525 South Griffin St.
Dallas, TX 75202-5092
972-850-2550

Pacific Region
(Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, Washington)
90 7th Street
Suite #18-300
San Francisco, CA 94103-1516
415-625-7800

6. U.S. Citizenship and Immigration Services

111 Massachusetts Avenue, NW
MS 2260
Washington, DC 20529-2260
800-375-5283

7. U.S. Immigration and Customs Enforcement

500 12th St., SW
Washington, DC 20536
703-603-3400

8. Office of Special Counsel for Immigration-Related Unfair Employment Practices

U.S. Department of Justice
Civil Rights Division
950 Pennsylvania Ave., NW
Washington, DC 20530
202-514-4609

Appendix B

Record-Keeping Requirements of Selected Federal Laws

The following table sets forth record retention periods under some of the major federal employment-related laws. Other federal laws, as well as state and local laws, may have different retention periods. Therefore, ASA urges that staffing professionals seek the advice of legal counsel regarding the existence and requirements of any such other laws.

Statute

Records To Be Retained

Period of Retention

Fair Labor Standards Act of 1938

Basic records containing employee information, payrolls, individual contracts or collective bargaining agreements, applicable certificates and notices of wage-hour administrator, and sales and purchase records

Three years

Supplementary basic records including employment and earnings records; wage rate tables; work time schedules; order, shipping, and billing records; records of additions to or deductions from wages paid; documentation of basis for payment of any wage differential to employees of the opposite sex in the same establishment

Two years

Certificate of age

Until termination of employment

Written training agreements

Duration of training program

Internal Revenue Code

Tax information
(identification information, remuneration paid, date of payment, FICA and FUTA taxes, type of service paid for, etc.)

Four years

Title VII of the Civil Rights Act of 1964

Any personnel or employment record made or kept by employer on all regular and temporary or seasonal employees, including application forms and records having to do with hiring, promotion, demotion, transfer, layoff or termination, rates of pay or other terms of compensation, and selection for training or apprenticeship

One year from date of making the record or taking the personnel action involved, whichever occurs later

Personnel records relevant to charge of discrimination or action brought by either the EEOC or the U.S. Attorney General against employer, including, for example, records relating to charging party and to all other employees holding similar positions; application forms or test papers completed by unsuccessful applicants and by all other candidates for same position

Until final disposition of action or charge

Employers with 100 staff employees: Employer Information Report EEO-1

Most recently filed report retained

Americans With Disabilities Act of 1990

The record-keeping requirements of the ADA are identical to the Title VII requirements described above, except that no EEO-1 reports are required for ADA

Executive Order 11246

Federal contractors, subcontractors: written affirmative action programs and supporting documentation, including required utilization analysis and evaluation; other records and documents relating to compliance with applicable EEO nondiscrimination and affirmative action requirements, including records and documents on nature and use of tests, validations of tests, and test results as required; and records relating to compliance with construction industry EEO plans and requirements

Two years from date of making personnel record or the personnel action, whichever occurs later (but contractors with less than 150 employees or a contract less than $150,000, only one year)

Age Discrimination in Employment Act of 1967

Payroll records containing each employee’s name, address, date of birth, occupation, rate of pay, and compensation earned per week

Three years

Personnel records relating to (1) job applications, résumés, or other replies to job advertisements, including applications for temporary positions and records pertaining to failure to hire; (2) promotion, demotion, transfer, selection for training, layoff, recall, or discharge; (3) job orders submitted to employment agency or union; (4) test papers in connection with employer-administered aptitude or other employment test; (5) physical examination results; (6) job advertisements or notices to employees regarding openings, promotions, training programs, or opportunities for overtime work

One year from date of personnel action to which record relates

Employee benefit plans; written seniority or merit rating system

Period during which plan or system is in effect plus one year

Vocational Rehabilitation Act of 1973

Federal contractors, subcontractors: for handicapped applicants and employees, complete and accurate employment records; and records regarding complaints and actions taken under the act

One year

Vietnam Era Veterans’ Readjustment Act of 1974

Federal contractors, subcontractors: copies of reports to state employment service regarding number of individuals and veterans hired, and related documentation such as personnel records respecting job openings, recruitment, and placement

One year after final payment made under the contract

Records regarding complaints and actions taken under the act

Two years

Forms I-9

Later of three years, or one year from date of termination

Immigration Reform and Control Act of 1986

Optional: copies of documents presented by employee for purposes of establishing identity and work authorization

None specified; it is suggested that they be retained as long as the corresponding Form I-9 is retained (which is three years following date of hire or one year following termination)

Family and Medical Leave Act of 1993

Basic payroll and identifying employee data, rate or basis of pay and terms of compensation, daily and weekly hours worked per pay period, additions to or deductions from wages, and total compensation paid

Three years for all documents related to FMLA

Dates of FMLA leave (if less than one full day, the hours of the leave)

Copies of employee FMLA leave notices given to employer and copies of all notices given to employees as required under the FMLA

Documents describing employee benefits or employer policies and practices regarding the taking of paid and unpaid leaves

Records of any dispute between the employer and employee regarding designation of leave as FMLA leave, including any written statement from the employer or employee of reasons for the designation and for the disagreement

Appendix C

EEOC Guidelines on Application of EEO Laws to Contingent Workers

date: Dec. 3, 1997

1. SUBJECT: Enforcement Guidance: Application of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms.

2. PURPOSE: This document provides guidance regarding the application of the antidiscrimination statutes to temporary, contract, and other contingent employees.

3. EFFECTIVE DATE: Upon receipt.

4. EXPIRATION DATE: As an exception to EEOC Order 205.001, Appendix B, Attachment 4, Section a(5), this Notice will remain in effect until rescinded or superseded.

5. ORIGINATOR: Title VII/EPA/ADEA Division, Office of Legal Counsel.

6. INSTRUCTIONS: File after Section 605 of Volume II of the Compliance Manual.

/s/

Gilbert F. Casellas
Chairman

Executive Summary

This guidance addresses the application of the federal employment discrimination statutes to individuals placed in job assignments by temporary employment agencies, contract firms, and other firms that hire workers and place them in job assignments with the firms’ clients. The term “staffing firm” is used in this document to refer to these types of firms.

Staffing firm workers are generally covered under the antidiscrimination statutes. This is because they typically qualify as “employees” of the staffing firm, the client to whom they are assigned, or both. Thus, staffing firms and the clients to whom they assign workers may not discriminate against the workers on the basis of race, color, religion, sex, national origin, age, or disability.

The guidance makes clear that a staffing firm must hire and make job assignments in a nondiscriminatory manner. It also makes clear that the client must treat the staffing firm worker assigned to it in a nondiscriminatory manner, and that the staffing firm must take immediate and appropriate corrective action if it learns that the client has discriminated against one of the staffing firm workers. The document also explains that staffing firms and their clients are responsible for ensuring that the staffing firm workers are paid wages on a nondiscriminatory basis. Finally, the guidance describes how remedies are allocated between a staffing firm and its client when the EEOC finds that both have engaged in unlawful discrimination.

Table of Contents

Introduction

Staffing Service Work Arrangements

Coverage Issues

Discriminatory Assignment Practices

Discrimination at Work Site

Discriminatory Wage Practices

Allocation of Remedies

Charge Processing Instructions

Introduction

This guidance addresses the application of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans With Disabilities Act, and the Equal Pay Act to individuals placed in job assignments by temporary employment agencies and other staffing firms, i.e., “contingent workers.” The term “contingent workers” generally refers to workers who are outside an employer’s “core” workforce, such as those whose jobs are structured to last only a limited period of time, are sporadic, or differ in any way from the norm of full-time, long-term employment.

This guidance focuses on a large subgroup of the contingent workforce—those who are hired and paid by a “staffing firm,” such as a temporary employment agency or contract firm, but whose working conditions are controlled in whole or in part by the clients to whom they are assigned.

Recent statistics compiled by the National Association of Temporary and Staffing Services (NATSS) show that the temporary help industry currently employs more than 2.3 million individuals.[1] That number represents a 100% increase since 1991, when 1.15 million individuals were employed in temporary help jobs. NATSS statistics also show that the professional segment of the temporary help industry (including occupations in accounting, law, sales, and management) has risen significantly.

A 1995 survey by the Bureau of Labor Statistics showed that workers paid by temporary employment agencies were more likely to be female and African American than workers in traditional job arrangements,[2] while workers provided by contract firms were disproportionately male.[3] BLS found that workers paid by temporary help agencies were heavily concentrated in administrative support and laborer occupations and earned 60% of the traditional worker wage.[4] The largest proportion of contract workers was employed in the services industry, and female contract workers earned slightly less than traditional workers while male contract workers earned more. BLS also found that contract and temporary workers had lower rates of health insurance and pension coverage than traditional workers, and that the majority of temporary workers would have preferred traditional work arrangements.

Staffing firms may assume that they are not responsible for any discrimination or harassment that their workers confront at the clients’ work sites. Similarly, some clients of staffing firms may assume that they are not the employers of temporary or contract workers assigned to them, and that they therefore have no EEO obligations toward these workers. However, as this guidance explains, both staffing firms and their clients share EEO responsibilities toward these workers.

The Commission has addressed in previous guidance several of the coverage issues discussed in this document.[5] However, because use of contingent workers is increasing, it is important to set out an updated and unified policy that more specifically explains how the antidiscrimination laws apply to this segment of the workforce.

This document provides guidance concerning the following issues:

■   Coverage under the EEO laws, including coverage of workers assigned to federal agencies;

■   Liability of staffing firms and/or clients for discriminatory hiring, assignment, or wage practices;

■   Liability of staffing firms and/or clients for unlawful discrimination or harassment at the assigned work site; and

■   Allocation of damages where both the staffing firm and its client violate EEO laws.

Staffing Service Work Arrangements

The activities of the following types of staffing firms are addressed in this guidance[6]:

Temporary Employment Agencies

Unlike a standard employment agency, a temporary employment agency employs the individuals that it places in temporary jobs at its clients’ work sites. The agency recruits, screens, hires, and sometimes trains its employees. It sets and pays the wages when the worker is placed in a job assignment, withholds taxes and Social Security, and provides workers’ compensation coverage. The agency bills the client for the services performed.

While the worker is on a temporary job assignment, the client typically controls the individual’s working conditions, supervises the individual, and determines the length of the assignment.

Contract Firms

Under a variety of arrangements, a firm may contract with a client to perform a certain service on a long-term basis and place its own employees, including supervisors, at the client’s work site to carry out the service. Examples of contract firm services include security, landscaping, janitorial, data processing, and cafeteria services.

Like a temporary employment agency, a contract firm typically recruits, screens, hires, and sometimes trains its workers. It sets and pays the wages when the worker is placed in a job assignment, withholds taxes and social security, and provides workers’ compensation coverage.

The primary difference between a temporary agency and a contract firm is that a contract firm takes on full operational responsibility for performing an ongoing service and supervises its workers at the client’s work site.

Other Types of Staffing Firms

There are many variants on the staffing firm/client model. For example, “facilities staffing” is an arrangement in which a staffing firm provides one or more workers to staff a particular client operation on an ongoing basis, but does not manage the operation.

Under another model, a client of a staffing firm puts its workers on the firm’s payroll, and the firm leases the workers back to the client. The purpose of this arrangement is to transfer responsibility for administering payroll and benefits from the client to the staffing firm. A staffing firm that offers this service does not recruit, screen, or train the workers.

The term “staffing firm” is used in this document to describe generically these types of firms, although more specific terms are used where necessary for purposes of clarity.

Coverage Issues

This section sets forth criteria for determining whether a staffing firm worker qualifies as an “employee” within the meaning of the antidiscrimination statutes or an independent contractor; whether the staffing firm and/or its client qualifies as the worker’s employer(s); and whether the staffing firm or its client can be liable for discriminating against the worker even if it does not qualify as the worker’s employer. This section also discusses coverage of staffing firm workers assigned to jobs in the federal government and coverage of workers assigned to jobs in connection with welfare programs. Finally, this section explains the method for counting workers of a staffing firm or its client to determine whether either entity has the minimum number of employees to be covered under the applicable antidiscrimination statute.

1. Are staffing firm workers “employees” within the meaning of the federal employment discrimination laws?

Yes, in the great majority of circumstances.[7] The threshold question is whether a staffing firm worker is an “employee” or an “independent contractor.” The worker is a covered employee under the antidiscrimination statutes if the right to control the means and manner of her work performance rests with the firm and/or its client rather than with the worker herself. The label used to describe the worker in the employment contract is not determinative. One must consider all aspects of the worker’s relationship with the firm and the firm’s client.[8] As the Supreme Court has emphasized, there is “no shorthand formula or magic phrase that can be applied to find the answer…all incidents of the relationship must be assessed with no one factor being decisive.”[9] Factors that indicate that the worker is a covered employee include:[10]

a)  the firm or the client has the right to control when, where, and how the worker performs the job;

b)  the work does not require a high level of skill or expertise;

c)  the firm or the client rather than the worker furnishes the tools, materials, and equipment;

d)  the work is performed on the premises of the firm or the client;

e)  there is a continuing relationship between the worker and the firm or the client;

f)  the firm or the client has the right to assign additional projects to the worker;

g)  the firm or the client sets the hours of work and the duration of the job;

h)  the worker is paid by the hour, week, or month rather than for the agreed cost of performing a particular job;

i)  the worker has no role in hiring and paying assistants;

j)  the work performed by the worker is part of the regular business of the firm or the client;

k)  the firm or the client is itself in business;

l)  the worker is not engaged in his or her own distinct occupation or business;

m)  the firm or the client provides the worker with benefits such as insurance, leave, or workers’ compensation;

n)  the worker is considered an employee of the firm or the client for tax purposes (i.e., the entity withholds federal, state, and social security taxes);

o)  the firm or the client can discharge the worker; and

p)  the worker and the firm or client believe that they are creating an employer–employee relationship.

This list is not exhaustive. Other aspects of the relationship between the parties may affect the determination of whether an employer–employee relationship exists. Furthermore, not all or even a majority of the listed criteria need be met. Rather, the fact-finder must make an assessment based on all of the circumstances in the relationship between the parties.

This list is not exhaustive. Other aspects of the relationship between the parties may affect the determination of whether an employer–employee relationship exists. Furthermore, not all or even a majority of the listed criteria need be met. Rather, the fact-finder must make an assessment based on all of the circumstances in the relationship between the parties.

Example 1:

A temporary employment agency hires a worker and assigns him to serve as a computer programmer for one of the agency’s clients. The agency pays the worker a salary based on the number of hours worked as reported by the client. The agency also withholds Social Security and taxes and provides workers’ compensation coverage. The client establishes the hours of work and oversees the individual’s work. The individual uses the client’s equipment and supplies and works on the client’s premises. The agency reviews the individual’s work based on reports by the client. The agency can terminate the worker if his or her services are unacceptable to the client. Moreover, the worker can terminate the relationship without incurring a penalty. In these circumstances, the worker is an “employee.”

2. Is a staffing firm worker who is assigned to a client an employee of the firm, its client, or both?

Once it is determined that a staffing firm worker is an “employee,” the second question is who is the worker’s employer. The staffing firm and/or its client will qualify as the worker’s employer(s) if, under the factors described in Question 1, one or both businesses have the right to exercise control over the worker’s employment. As noted above, no one factor is decisive, and it is not necessary even to satisfy a majority of factors. The determination of who qualifies as an employer of the worker cannot be based on simply counting the number of factors. Many factors may be wholly irrelevant to particular facts. Rather, all of the circumstances in the worker’s relationship with each of the businesses should be considered to determine if either or both should be deemed his or her employer. If either entity qualifies as the worker’s employer, and if that entity has the statutory minimum number of employees (See Question 6), then it can be held liable for unlawful discriminatory conduct against the worker. If both the staffing firm and its client have the right to control the worker, and each has the statutory minimum number of employees, they are covered as “joint employers.”[11]

a. Staffing Firm

The relationship between a staffing firm and each of its workers generally qualifies as an employer–employee relationship because the firm typically hires the worker, determines when and where the worker should report to work, pays the wages, is itself in business, withholds taxes and Social Security, provides workers’ compensation coverage, and has the right to discharge the worker. The worker generally receives wages by the hour or week rather than by the job and often has a continuing relationship with the staffing firm. Furthermore, the intent of the parties typically is to establish an employer–employee relationship.[12] In limited circumstances, a staffing firm might not qualify as an employer of the workers that it assigns to a client. For example, in some circumstances, a client puts its employees on the staffing firm’s payroll solely in order to transfer the responsibility of administering wages and insurance benefits. This is often referred to as employee leasing. If the firm does not have the right to exercise any control over these workers, it would not be considered their “employer.”[13]

b. Client

A client of a temporary employment agency typically qualifies as an employer of the temporary worker during the job assignment, along with the agency. This is because the client usually exercises significant supervisory control over the worker.[14]

Example 2:

Under the facts of Example 1, above, the temporary employment agency and its client qualify as joint employers of the worker because both have the right to exercise control over the worker’s employment.

Example 3:

A staffing firm hires charging party (CP) and sends her to perform a long-term accounting project for a client. Her contract with the staffing firm states that she is an independent contractor. CP retains the right to work for others, but spends substantially all of her work time performing services for the client, on the client’s premises. The client supervises CP, sets her work schedule, provides the necessary equipment and supplies, and specifies how the work is to be accomplished. CP reports the number of hours she has worked to the staffing firm. The firm pays her and bills the client for the time worked. It reviews her work based on reports by the client and has the right to terminate her if she is failing to perform the requested services. The staffing firm will replace her with another worker if her work is unacceptable to the client.

In these circumstances, despite the statement in the contract that she is an independent contractor, both the staffing firm and the client are joint employers of CP.[15]

Clients of contract firms and other types of staffing firms also qualify as employers of the workers assigned to them if the clients have sufficient control over the workers, under the standards set forth in Question 1, above.[16] For example, the client is an employer of the worker if it supplies the work space, equipment, and supplies, and if it has the right to control the details of the work to be performed, to make or change assignments, and to terminate the relationship. On the other hand, the client would not qualify as an employer if the staffing firm furnishes the job equipment and has the exclusive right, through on-site managers, to control the details of the work, to make or change assignments, and to terminate the workers.

Example 4:

A staffing firm provides janitorial services for its clients. It hires the workers and places them on each client’s premises under the supervision of the contract firm’s own managerial employees. The firm’s manager sets the work schedules, assigns tasks to the janitors, provides the equipment they need to do the job, and supervises their work performance. The client has no role in controlling the details of the work, making assignments, or setting the hours or duration of the work. Nor does the client have authority to discharge the worker. In these circumstances, the staffing firm is the worker’s exclusive employer; its client is not a joint employer.

Example 5:

A staffing firm provides landscaping services for clients on an ongoing basis. The staffing firm selects and pays the workers, provides health insurance, and withholds taxes. The firm provides the equipment and supplies necessary to do the work. It also supervises the workers on the clients’ premises. Client A reserves the right to direct the staffing firm workers to perform particular tasks at particular times or in a specified manner, although it does not generally exercise that authority. Client A evaluates the quality of the workers’ performance and regularly reports its findings to the firm. It can require the firm to remove the worker from the job assignment if it is dissatisfied. The firm and the Client A are joint employers.

3. Can a staffing firm or its client be liable for unlawfully discriminating against a staffing firm worker even if it does not qualify as the worker’s employer?

An entity that has enough employees to qualify as an employer under the applicable EEO statute can be held liable for discriminating against an individual who is not its employee. The antidiscrimination statutes not only prohibit an employer from discriminating against its own employees, but also prohibit an employer from interfering with an individual’s employment opportunities with another employer.[17] Thus, a staffing firm that discriminates against its client’s employee or a client that discriminates against a staffing firm’s employee is liable for unlawfully interfering in the individual’s employment opportunities.[18]

Example 6:

A staffing firm assigned one of its employees to maintain and repair a client’s computers. The firm supplied all the tools and direction for the repairs. The technician was on the client’s premises only sporadically over a three-to four-week period and worked independently while there. The client did not report to the firm about the number of hours worked or about the quality of the work. The client had no authority to make assignments or require work to be done at particular times. After a few visits, the client asked the contract firm to assign someone else, stating that it was not satisfied with the worker’s computer repair skills. However, the worker believes that the true reason for the client’s action was racial bias.

The client does not qualify as a joint employer of the worker because it had no ongoing relationship with the worker, did not pay the worker or firm based on the hours worked, and had no authority over hours, assignments, or other aspects of the means or manner by which the work was achieved. However, if the client’s request to replace the worker was due to racial bias, and if the client had 15 or more employees, it would be liable for interfering in the worker’s employment opportunities with the staffing firm.

Example 7:

A company puts its employees on the payroll of a staffing firm solely in order to transfer the responsibility of administering wages and insurance benefits for the company’s workers. The staffing firm administers a health insurance policy for its client’s workers that does not cover AIDS-related illness. Two workers file ADA charges against the staffing firm and the client. The staffing firm claims that it is not an employer of the workers and therefore falls outside ADA coverage.

The staffing firm does not qualify as a joint employer of the workers because it does not have the requisite degree of control—it did not hire the workers; establish their wage rates or hours; control the conditions of work; manage personnel disputes; or have the right to fire the workers. Nevertheless, the firm shares liability with its client for the discriminatory health insurance plan if it has 15 or more employees of its own to fall under the coverage of the ADA.[19] This is because the firm’s administration of the insurance plan interferes in the workers’ access to employment opportunities or benefits.[20]

4. Do the same coverage principles apply when a staffing firm assigns a worker to a federal agency?

The principles regarding joint employer coverage are the same. Thus, a federal agency qualifies as a joint employer of an individual assigned to it if it has the requisite control over that worker, as discussed in Questions 1 and 2. If so, and if the agency discriminates against the individual, it is liable whether or not the individual is on the federal payroll.[21]

In contrast to private employers, a federal agency that does not qualify as a joint employer of the worker assigned to it cannot be found liable for discrimination under a “third party interference” theory. This is because Title VII, the ADEA, and Section 501 of the Rehabilitation Act only permit claims against the federal government by “employees or applicants for employment.”[22]

5. Are workers participating in work-related activities in connection with welfare programs protected by the federal employment discrimination laws? If so, who is the employer of such a worker? What types of claims might arise?

a. Employee Status

Welfare recipients participating in work-related activities[23] are protected by the federal antidiscrimination statutes if they are “employees” within the meaning of the federal employment discrimination laws.[24] See Question 1. The simple fact of participation in one of these activities is not dispositive of the question of whether the federal employment discrimination laws apply. Rather, the same analysis applies that is used to determine whether any other worker is covered by the federal employment discrimination laws. Under the criteria that have been set out, welfare recipients would likely be considered employees in most of the work activities described in the new welfare law, including unsubsidized and subsidized public and private sector employment, work experience, and on-the-job training programs.[25] On the other hand, individuals engaged in activities such as vocational education, job search assistance, and secondary school attendance would probably not be covered.[26]

b. Employer Status

While some workers participating in these programs will have a single employer, others may have joint employers. For example, a state or local welfare agency may function as a staffing firm and the “direct” employer may function as the client. In some cases, a state or local welfare agency may contract with a temporary employment agency to place the welfare recipients in job assignments. The determination of whether any or all of these entities are employers of the worker is based on the same criteria set forth in answer to Questions 1 and 2 that apply to any other employment situation. The fact that an entity does not pay the worker a salary does not, by itself, defeat a finding of an employment relationship. Moreover, even if an entity is not the worker’s employer, it can be found liable under the employment discrimination laws based on the interference theory explained in the answer to Question 3.

c. Types of Claims

Types of claims that may arise include, for example, harassment, discriminatory assignments, discriminatory termination, failure to provide reasonable accommodation to persons covered under the Americans With Disabilities Act, and retaliation.

6. Which workers are counted when determining whether a staffing firm or its client is covered under Title VII, the ADEA, or the ADA?

The staffing firm and the client each must count every worker with whom it has an employment relationship.[27] Although a worker assigned by a staffing firm to a client may not appear on the client’s payroll, (s)he must be counted as an employee of both entities if they qualify as joint employers.[28] Questions 1 and 2, above, set forth the legal standards for determining whether a worker has an employment relationship with either the staffing firm or its client, or both.

The Supreme Court has made clear that a respondent must count each employee from the day that the employment relationship begins until the day that it ends, regardless of whether the employee is present at work or on leave on each working day during that period.[29] Thus, a client of a staffing firm must count each worker assigned to it from the first day of the job assignment until the last day. The staffing firm also must count the worker as its employee during every period in which the worker is sent on a job assignment.

Staffing firms are typically covered under the antidiscrimination statutes, because their permanent staff plus the workers that they send to clients generally exceed the minimum statutory threshold. Clients may or may not be covered, depending on their size. In cases where questions are raised regarding coverage, the investigator should ask the respondent to name and provide records regarding every individual who performed work for it, including all individuals assigned by staffing firms and any temporary, seasonal, or other contingent workers hired directly by the respondent. If the investigator has questions about the documents produced and cannot otherwise obtain the necessary information, he or she may consider deposing the respondent. The investigator should then determine which of the named individuals qualified as employees of the respondent rather than independent contractors, according to the standards set forth in Questions 1 and 2, above.

Discriminatory Assignment Practices

A staffing firm is obligated, as an employer, to make job assignments in a nondiscriminatory manner.[30] It also is obligated as an employment agency to make job referrals in a nondiscriminatory manner. The staffing firm’s client is liable if it sets discriminatory criteria for the assignment of workers. The following question and answer explore these issues in detail.

7. If a worker is denied a job assignment by a staffing firm because its client refuses to accept the worker for discriminatory reasons, is the staffing firm liable? Is the client?

a. Staffing Firm

The staffing firm is liable for its discriminatory assignment decisions. Liability can be found on any of the following bases: 1) as an employer of the workers assigned to clients (for discriminatory job assignments); 2) as a third-party interferer (for discriminatory interference in the workers’ employment opportunities with the firm’s client); and/or 3) as an employment agency for (discriminatory job referrals).[31] The fact that a staffing firm’s discriminatory assignment practice is based on its client’s requirement is no defense. Thus, a staffing firm is liable if it honors a client’s discriminatory assignment request or if it knows that its client has rejected workers in a protected class for discriminatory reasons and for that reason refuses to assign individuals in that protected class to that client. Furthermore, the staffing firm is liable if it administers on behalf of its client a test or other selection requirement that has an adverse impact on a protected class and is not job-related for the position in question and consistent with business necessity.
42 U.S.C. § 2000e-2(k).

b. Client

A client that rejects workers for discriminatory reasons is liable either as a joint employer or third-party interferer if it has the requisite number of employees to be covered under the applicable antidiscrimination statute.

Example 8:

A staffing firm that provides job placements for nurses receives a job order from an individual client for a white nurse to provide her with home-based nursing care. The firm agrees to refer only white nurses for the job. The firm is violating Title VII, both as an employment agency for its discriminatory referral practice and as an employer for the discriminatory job assignment. The client is not covered by Title VII because she does not have 15 or more employees.

Example 9:

A temporary employment agency receives a job order for a temporary receptionist. The client requires that the individual assigned to it speak English fluently because a large part of the job entails communication with English-speaking persons who call the client or who come to the client’s work place. The agency assigns an Asian-American individual who speaks English fluently, but with an accent. The client insists that the agency replace her with someone who can speak unaccented English. The agency complies with that request and sends an individual who speaks English fluently with no accent.

The Asian-American individual files a charge with the EEOC. The investigator determines that English fluency was necessary for the job. However, he further determines that CP’s accent does not interfere with her ability to communicate and that she has effectively performed similar jobs. The investigator properly concludes that both the client and the staffing firm are liable for terminating CP on the basis of her national origin.

Example 10:

A staffing firm provides machine operators to its clients. One of its clients requires that all workers assigned to it pass a certain paper and pencil test. The firm administers the test to its available workers and refers only those who pass the test. An African-American individual who is denied an assignment with the client files charges against both the staffing firm and its client, alleging that administration of the test results in the disproportionate exclusion of African-Americans. An investigation shows that the test does have an adverse impact on African-Americans and does not accurately measure the skills that are necessary for job performance. Therefore, both the staffing firm and its client are in violation of Title VII.

Discrimination at Work Site

A client of a staffing firm is obligated to treat the workers assigned to it in a nondiscriminatory manner. Where the client fails to fulfill this obligation, and the staffing firm knows or should know of the client’s discrimination, the firm must take corrective action within its control.[32] The following questions and answers explore these issues in detail.

8. If a client discriminates against a worker assigned by a staffing firm, who is liable?

a. Client

If the client qualifies as an employer of the worker (See Questions 1 and 2), it is liable for discriminating against the worker on the same basis that it would be liable for discriminating against any of its other employees.

Even if the client does not qualify as an employer of the worker, it is liable for discriminating against that individual if the client’s misconduct interferes with the worker’s employment opportunities with the staffing firm, and if the client has the minimum number of employees to be covered under the applicable discrimination statute. See Question 3.

b. Staffing Firm

The firm is liable if it participates in the client’s discrimination. For example, if the firm honors its client’s request to remove a worker from a job assignment for a discriminatory reason and replace him or her with an individual outside the worker’s protected class, the firm is liable for the discriminatory discharge. The firm also is liable if it knew or should have known about the client’s discrimination and failed to undertake prompt corrective measures within its control.[33]

The adequacy of corrective measures taken by a staffing firm depends on the particular facts. Corrective measures may include, but are not limited to: 1) ensuring that the client is aware of the alleged misconduct; 2) asserting the firm’s commitment to protect its workers from unlawful harassment and other forms of prohibited discrimination; 3) insisting that prompt investigative and corrective measures be undertaken; and 4) affording the worker an opportunity, if (s)he so desires, to take a different job assignment at the same rate of pay. The staffing firm should not assign other workers to that work site unless the client has undertaken the necessary corrective and preventive measures to ensure that the discrimination will not recur. Otherwise, the staffing firm will be liable along with the client if a worker later assigned to that client is subjected to similar misconduct.[34]

Example 11:

A temporary receptionist placed by a temporary employment agency is subjected to severe and pervasive unwelcome sexual comments and advances by her supervisor at the assigned work site. She complains to the agency, and the agency informs its client of the allegation. The client refuses to investigate the matter, and instead asks the agency to replace the worker with one who is not a “troublemaker.” The agency tells the worker that it cannot force the client to take corrective action, finds the worker a different job assignment, and sends another worker to complete the original job assignment.

The client is liable as an employer of the worker for harassment and for retaliatory discharge.

The temporary employment agency also is liable for the harassment and retaliatory discharge because it knew of the misconduct and failed to undertake adequate corrective action. Informing the client of the harassment complaint was not sufficient—the agency should have insisted that the client investigate the allegation of harassment and take immediate and appropriate corrective action. The agency should also have asserted the right of its workers to be free from unlawful discrimination and harassment, and declined to assign any other workers until the client undertook the necessary corrective and preventive measures. The agency unlawfully participated in its client’s discriminatory misconduct when it acceded to the client’s request to replace the worker with one who was not a “troublemaker.” If the replacement worker is subjected to similar harassment, the agency and the client will be subject to additional liability.

Example 12:

A staffing firm provides computer services for a company that has more than 15 employees. The staffing firm assigns an individual to work onsite for that client. When the client discovers that the worker has AIDS, it tells the staffing firm to replace him because the client’s employees fear infection. The staffing firm alerts the client that they are both prohibited from discriminating against the worker, and that such a discharge would violate the ADA. The client nevertheless continues to insist that the firm remove the worker from the work assignment and replace him with someone else. The staffing firm has no choice but to remove the worker. However, it declines to replace him with another worker to complete the assignment because to do so would constitute acquiescence in the discrimination. Furthermore, the firm offers the worker a different job assignment at the same rate of pay. The client is liable for the discriminatory discharge, either as an employer or third party interferer. The staffing firm is not liable because it took immediate and appropriate corrective action within its control.

9. If a staffing firm sends its employee on a job assignment with a federal agency and the individual is subjected to discrimination while on the assignment, is the federal agency liable? Is the staffing firm? What procedures should the individual follow in filing a complaint?

The federal agency is liable for discriminating against the worker if it qualifies as an employer of the worker. If the federal agency does not qualify as an employer of the staffing firm worker under the criteria in Questions 1 and 2, it will not be liable for discriminating against that worker under the statutes enforced by the EEOC. A federal agency is liable for employment discrimination under these statutes only where it has sufficient control to be deemed an employer of the worker. See Question 4.

The staffing firm is liable if it participated in the federal agency’s discrimination or if it knew or should have known of the discrimination and failed to intervene, under the principles discussed in Question 8, above.

If the staffing firm worker seeks to pursue a complaint against the federal agency as his or her employer, (s)he should contact an EEO counselor at the federal agency within 45 days of the date of the alleged discrimination. If the individual also seeks to pursue a claim against the staffing firm, (s)he should file a separate charge with an EEOC field office. In such circumstances, the EEOC investigator should alert the individual as to the different time frames and procedures in the federal and private sectors.[35] The investigator should also contact the EEO office of the federal agency once the individual files the federal sector complaint in order to coordinate the federal and private sector investigations.[36]

Discriminatory Wage Practices

A staffing firm may not discriminate in the payment of wages on the basis of race, sex, religion, national origin, age, or disability. Its clients share that obligation.

10. If a staffing firm assigns a male and female to a client to perform substantially equal work, and the female is paid a lower wage than the male, would the firm and/or the client be subject to Equal Pay Act or Title VII liability?

Under the EPA, men and women must receive equal pay for equal work.[37] The jobs need not be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Specifically, a sex-based wage disparity violates the EPA if the jobs are in the same establishment, require substantially equal skill, effort, and responsibility, are performed under similar working conditions, and if no statutory defense applies. Wage differences that are not based on sex, but on bona fide distinctions between temporary and permanent workers, can be justified under the EPA as based on a “factor other than sex.”[38] Both the staffing firm and its client are liable for a violation of the Equal Pay Act if they both qualify as “employers” of the worker bringing the complaint.[39]

A violation of the EPA also constitutes a violation of Title VII as long as there is Title VII coverage.[40] Furthermore, a sex-based wage disparity violates Title VII even if the jobs are not substantially equal under EPA standards, if there is other evidence of wage discrimination.[41] Moreover, an entity with 15 or more employees is liable under Title VII for wage discrimination even if it does not qualify as an employer of the worker assigned to it, if the wage discrimination interferes in the worker’s employment opportunities.

Example 13:

A temporary employment agency assigned CP (female) to a temporary job as a hospital aide. CP discovered that the agency had also assigned a male to a temporary job as an “orderly” at the same hospital at a higher wage. CP files charges against the agency and the hospital, alleging that her job and that of the male orderly were substantially equal, and that the wage disparity violated the Equal Pay Act and Title VII. CP’s charge against the hospital also challenges a disparity between her wages and those of permanent male aides and orderlies at the hospital.

The investigator determines that the temporary employment agency and the hospital were joint employers of CP and that both entities had control over the rates of pay for the hospital aide and orderly jobs. The investigator also determines that the temporary aide and orderly jobs were substantially equal under EPA standards, and that no defense applies. Therefore, he finds that the agency and the hospital are both liable under the EPA and Title VII on the claim that the temporary aide and orderly should have received the same wage. The investigator further determines that the wage differential between the temporary and permanent aide and orderly jobs was based on a factor other than sex, since the hospital paid all its temporary workers less than permanent workers filling the same jobs, regardless of sex. Therefore, “no cause” is found on this latter claim.

Allocation of Remedies

11. If the Commission finds reasonable cause to believe that both a staffing firm and its client have engaged in unlawful discrimination, how are back wages and damages allocated between the respondents?

Where the combined discriminatory actions of a staffing firm and its client result in harm to the worker, the two respondents are jointly and severally liable for back pay, front pay, and compensatory damages. This means that the complainant can obtain the full amount of back pay, front pay, and compensatory damages from either one of the respondents alone or from both respondents combined.[42] Punitive damages under Title VII and the ADA,[43] and liquidated damages under the ADEA,[44] are individually assessed against and borne by each respondent in accordance with its respective degree of malicious or reckless misconduct.[45] This is because punitive damages are designed not to compensate the victim for his or her harm, but to punish the respondent.[46] Of course, no respondent can be required to pay a sum of future pecuniary damages, damages for emotional distress, and punitive damages, in excess of its applicable statutory cap. The investigator should contact the legal unit in his or her office for advice in determining how to allocate damages between the parties.

Computation of Monetary Relief

The first step is to compute lost wages (including back and front pay); compensatory damages for both pecuniary loss and emotional distress; and punitive damages.[47] This computation should be made without regard to the statutory caps on damages,[48] and, except for punitive damages, without regard to either respondent’s ability to pay.[49] This initial computation will establish the charging party’s total wage and other compensable losses, as well as the full calculation of punitive damages.

Back Pay, Front Pay, and Past Pecuniary Damages

The next step is to determine the allocation between the respondents of back and front pay and past pecuniary damages. The charging party can obtain the full amount of these remedies because he or she is not subject to the statutory caps. The Commission can pursue the entire amount from either the staffing firm or the client, or from both combined.[50] However, the total amount actually paid cannot exceed the sum of back and front wages and past pecuniary damages owed to the worker.

Application of the Statutory Cap on Damages

The final step is to determine each respondent’s liability for compensatory and punitive damages subject to the statutory caps. The total amount paid by a respondent for compensatory damages for emotional distress and future pecuniary harm, and for punitive damages, cannot exceed its statutory cap. Thus, while the initial determination of the appropriate amount of compensatory and/or punitive damages is made without regard to the caps, the caps may affect the allocation of damages between two respondents as well as the total damages paid to the charging party. In applying the caps to the actual allocation of damages, the following principles apply:

For compensatory damages subject to the caps, each respondent is responsible for any portion of the total damages up to its cap.

For punitive damages, each respondent is only responsible for the damages which have been assessed against it and only up to its applicable statutory cap.

After the fact-finder has determined the amount of compensatory damages for emotional distress and future pecuniary harm, and the amount of punitive damages for which either or both respondents are liable, these amounts should be allocated between the two respondents in order to yield the maximum payable relief for the charging party.

If the total compensatory damages are within the sum of the two respondents’ caps, the damages should be allocated to assure that the full amount is paid.

If one or both respondents are liable for punitive damages as well as compensatory damages, and the total sum of damages is within the applicable caps, the damages should be allocated, both between the respondents, and between compensatory and punitive damages for each respondent, to assure full payment. Thus, each respondent should pay the full amount of punitive damages for which it is liable, and any portion of the compensatory damages up to its statutory cap.

If the sum of damages exceeds the sum of the applicable caps, the damages should be allocated, both between the respondents and between compensatory and punitive damages for each respondent, to maximize the payment to the charging party.

Example 14:

CP was assigned by Staff Serve to work as a security guard at a store called Value, U.S.A. (“Value”). CP was subjected to persistent and egregious racial epithets by two supervisory employees of the store. CP complained several times to both a higher level manager at Value and to a supervisor at Staff Serve, but neither took any action to address the problem. After being subjected to egregious racial epithets that involved his family, CP informed the manager at Value and the supervisor at Staff Serve that the situation was intolerable. These individuals told CP to stop complaining and to live with these epithets as the price of holding the job. CP stopped reporting to work and asked Staff Serve to assign him elsewhere, but the firm failed to do so. CP was unable to find work for eight months.

CP files a charge against Staff Serve and Value. The investigator determines that both are liable for the racial harassment and constructive discharge. The investigator further determines that CP is due $40,000 in back pay and $60,000 in damages for emotional distress and that Staff Serve and Value are jointly and severally liable for these amounts. Although Value’s conduct was at least as egregious as Staff Serve’s, the investigator determines that Value’s financial position is relatively weak, and that a punitive damage award of $30,000 against Value is appropriate, as compared with $50,000 for Staff Serve.

Staff Serve employs 137 employees (counting its regular staff people and the workers it has sent on assignment), and is subject to the $100,000 damages cap. Value employs 45 workers and is subject to the $50,000 cap on damages.

In conciliation, the investigator determines that Staff Serve and Value should work out a division of the $40,000 in back pay, for which they are jointly and severally liable. The investigator further determines that the damages should be allocated as follows: Staff Serve should pay $40,000 and Value $20,000 in compensatory damages, and Staff Serve should pay $50,000 and Value $30,000 in punitive damages. CP can thus obtain the full amount of damages due him, with neither respondent’s liability exceeding its cap.

Example 15:

Same facts as in Example 14, but CP only names Staff Serve as a respondent because Value has gone bankrupt. The sum of compensatory and punitive damages assessed by the Commission is $110,000 ($60,000 for emotional distress and $50,000 in punitive damages assessed against Staff Serve). The Commission pursues $100,000 in combined damages due to Staff Serve’s statutory cap. The Commission and Staff Serve may agree to deduct the $10,000 in excess of the caps from either the emotional distress or the punitive damages. The Commission also pursues the full $40,000 in back pay from Staff Serve, which is not subject to the cap.

Example 16:

Same facts as Example 14, except that both Staff Serve and Value are subject to the $50,000 cap. CP could obtain only a total of $100,000 in damages, even though the sum of compensatory and punitive damages was $140,000. The investigator works with CP and the respondents to determine how to allocate the damages between compensatory and punitive damages.

The full amount of back pay remains payable since it is not subject to the caps.

Charge Processing Instructions

When a charge is filed by a worker who was hired by a temporary agency, contract firm, or other staffing firm and who alleges discrimination by the staffing firm or the firm’s client, consider the following questions (refer to the questions and answers in the guidance for detailed information).

I. Coverage

1. Is the charging party (CP) an employee or an independent contractor? (Q&A 1)

Determine whether the right to control the means and manner of CP’s work performance rested with the staffing firm and/or the client or with the worker herself. Consider the factors listed in Question and Answer 1 of this guidance and all other aspects of CP’s relationship to the firm and its client.

If CP is an independent contractor, dismiss the charge for lack of jurisdiction. If CP is an employee, determine who qualifies as his or her employer. It is possible that both the staffing firm and its client qualify as joint employers. In that regard consider the following:

2. Is CP an employee of the staffing firm? (Q&A 2(a))

Consider the factors listed in Question 1 as they apply to the relationship between CP and the staffing firm.

3. Is CP an employee of the firm’s client? (Q&A 2(b))

Consider the factors listed in Question 1 as they apply to the relationship between CP and the client.

Even if the client does not qualify as CP’s employer, it is still covered under the applicable antidiscrimination statute if it interfered on a discriminatory basis with CP’s employment opportunities with the staffing firm and has the requisite number of employees. (Q&A 3) The same is true if the staffing firm does not qualify as CP’s employer. However, a federal agency can only be held liable as an employer, not as a third-party interferer. (Q&A 4)

If CP is a welfare recipient alleging discrimination in a work-related activity connected with a welfare program, the above considerations apply to determine coverage. (Q&A 5) In such circumstances, the state or local welfare agency may function as a staffing firm and the employer for whom CP performed work as the client.

4. If there is a question about coverage, does the staffing firm and/or the client have the minimum number of employees to be covered under the applicable antidiscrimination statute? (Q&A 6)

Ask the respondent to name and provide records regarding each individual who performed work for it during the applicable time period, including individuals assigned by staffing firms and any temporary, seasonal, or other contingent workers hired directly by the respondent. Determine which of these individuals qualified as employees rather than independent contractors.

II. Assignment Practices (Q&A 7)

If CP alleges that a staffing firm declined to assign him or her to its client for discriminatory reasons, consider the following questions:

5. Does the evidence show that the staffing firm denied CP a job assignment for discriminatory reasons?

If so, the staffing firm is liable as an employer of CP for its discriminatory assignment practice, as a third-party interferer, and/or as an employment agency for its discriminatory referral practice.

6. Does the evidence show that the client set discriminatory criteria for assignments by the staffing firm?

If so, the client is liable either as a joint employer of CP or a third-party interferer.

III. Discrimination at Work Site (Q&A 8, 9)

If CP alleges that he or she was subjected to discrimination while performing a job assignment for the staffing firm’s client, consider the following questions:

1. Client: Does the evidence show that the client discriminated against CP?

If so, the client is liable as CP’s employer or as a third-party interferer. However, if the client is a federal agency it can only be held liable as an employer.

1.  Staffing firm:

a)  Does the evidence show that the staffing firm participated in its client’s discrimination, e.g., by honoring the client’s discriminatory request to replace CP with someone outside his or her protected class?

b)  Does the evidence show that the staffing firm knew or should have known of its client’s discrimination and failed to take immediate and appropriate corrective measures within its control?

If the answer to (a) or (b) is “yes,” the staffing firm is liable for its discrimination.

IV. Discriminatory Wage Practices (Q&A 10)

If CP alleges that the staffing firm paid discriminatory wages for his or her work for the firm’s client, consider the following:

1. Is there an Equal Pay Act violation?

Did the staffing firm assign a person of the opposite sex to the same client to perform substantially equal work and pay that individual a higher wage?

If so, the staffing firm is liable for the EPA violation. The client also can be found liable if it qualified as CP’s joint employer.

2. Is there a violation of Title VII, the ADEA, or the ADA?

A violation of the EPA also constitutes a violation of Title VII as long as there is Title VII coverage.

A sex-based wage disparity violates Title VII even if the jobs are not substantially equal under EPA standards, if there is other evidence of wage discrimination. Title VII also prohibits wage discrimination based on race, national origin, and religion.

If the respondent committed wage discrimination in violation of Title VII, the ADEA, or the ADA, it is liable as CP’s employer or as a third-party interferer.

V. Allocation of Remedies (Q&A 11)

If both the staffing firm and its client have unlawfully discriminated against CP, remedies can be allocated as follows:

1. CP can obtain the full amount of back pay, front pay, and compensatory damages from either respondent, or from both combined.

2. Punitive damages under Title VII and the ADA, and liquidated damages under the ADEA, are individually assessed against each respondent according to its degree of malicious or reckless misconduct.

3. The total amount paid by a respondent for future pecuniary damages, damages for emotional distress, and punitive damages cannot exceed its statutory cap.

4. Damages should be allocated between the respondents in a way that maximizes the payable relief to CP. Contact the legal unit for advice in determining the allocation.

Notes

1.    June 18, 1997, News Release of the National Association of Temporary and Staffing Services.

2.    Seasonal and temporary foreign employees performing work for companies in this country form another category of the contingent workforce. The Commission intends to address at a future date particular issues regarding coverage of these workers.

3.    Bureau of Labor Statistics, U.S. Dept. of Labor, Report 900, Contingent and Alternative Employment Arrangements (August 1995).

4.    For a discussion of wage data for contingent workers, see Steven Hipple and Jay Stewart, Earnings and benefits of workers in alternative work arrangements, Monthly Labor Review 46 (October 1996).

5.    See Policy Statement on control by third parties over the employment relationship between an individual and his/her direct employer, Compliance Manual Section 605, Appendix F (BNA) 605:0087 (5/20/87); Policy Statement on the concepts of integrated enterprise and joint employer, Compliance Manual Section 605, Appendix G (BNA) 605:0095 (5/6/87); Policy Statement on Title VII Coverage of Independent Contractors, Compliance Manual Section 605, Appendix H (BNA) 605:0105 (9/4/87); and Policy Statement: What constitutes an employment agency under Title VII, how should charges against employment agencies be investigated, and what remedies can be obtained for employment agency violations of the Act, Compliance Manual (BNA) N:3935 (9/20/91).

The above-referenced policy documents set forth some general principles regarding coverage under the antidiscrimination statutes, and they remain in effect. The current guidance explains more specifically how the coverage principles apply to employees who are hired by staffing firms and placed in job assignments with the firms’ clients.

6.    For a detailed explanation of the various types of staffing service work arrangements, see Edward A. Lenz, Co-Employment—A Review of Customer Liability Issues in the Staffing Services Industry, 10 The Labor Lawyer 195, 196–99 (1994).

7.    See, infra, cases cited in notes 12, 14, and 15.

8.    The coverage principles set forth here apply not only to employees who are hired by staffing firms and assigned to the firms’ clients, but also to temporary, seasonal, part-time, and other contingent workers who are hired directly by employers.

9.    Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318, 324 (1992) (quoting NLRB v. United Ins. Co. of America, 390 U.S. 254, 258 (1968)) (emphasis added).

10.   The listed factors are drawn from Darden, 503 U.S. at 323–324 (quoting Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751–752 (1989)); Rev. Ruling 8741, 1987-1 Cum. Bull. 296 (cited in Darden, 503 U.S. at 325); and Restatement (Second) of Agency § 220(2) (1958) (cited in Darden, 503 U.S. at 325). The Court in Darden held that the “common law” test governs who qualifies as an “employee” under the Employee Retirement Income Security Act of 1974. That test, as described by the Court, is indistinguishable from the “hybrid test” for determining an employment relationship adopted by the EEOC in the Policy Statement on Title VII Coverage of Independent Contractors, Compliance Manual Section 605, Appendix G (BNA) 605:0105 (9/4/87). Although the Supreme Court has not had occasion to address the standards that govern who is an “employee” under Title VII, the ADEA, and the ADA, the rationale in Darden should apply. This is because the Erisa definition of “employee” that the Court interpreted in Darden is identical to the definition of “employee” in Title VII, the ADEA, and the ADA.

Courts have stated that the definition of “employee” is broader under the Fair Labor Standards Act (FLSA), of which the Equal Pay Act is a part, than under the other EEO statutes. However, there is no significant functional difference between the tests. Under the FLSA, employees are those who, as a matter of economic reality, are dependent upon the business to which they render service. See 29 C.F.R. § 1620.8 (1996); Hodgson v. Griffin & Brand of McAllen, Inc., 471 F.2d 235 (5th Cir.) (under FLSA’s “economic realities” test, fruit and vegetable company qualified as joint employer of harvest workers supplied by crew leaders), reh’g denied, 472 F.2d 1405 (5th Cir.), cert. denied, 414 U.S. 819 (1973). All three tests (common law, hybrid, and economic realities) consider similar factors and often result in the same conclusions as to “employee” status.

11.   For additional guidance on criteria for determining whether two or more entities are joint employers of a charging party, see EEOC’s Policy Statement on the concepts of integrated enterprise and joint employer, Compliance Manual Section 605, Appendix G (BNA) 605:0095 (5/6/87).

12.   For cases holding that a staffing firm is an “employer” of the employees it sends on job assignments, see Magnuson v. Peak Technical Services, Inc., 808 F. Supp. 500, 508 (E.D. Va. 1992) (personnel firm that provided employees to clients pursuant to service contracts and the employee that it assigned to one of its clients “clearly had the type of direct employer–employee relationship that is typically the subject of Title VII lawsuits”), aff’d mem., 40 F.3d 1244 (4th Cir. 1994); Amarnare v. Merrill, Lynch, Pierce, Fenner & Smith, 611 F. Supp. 344, 349 (D.C.N.Y. 1984) (employee paid by “Mature Temps” employment agency and assigned to Merrill Lynch for temporary job assignment was employee of both Mature Temps and Merrill Lynch during period of assignment), aff’d mem., 770 F.2d 157 (2d Cir. 1985). Cf. NLRB v. Western Temporary Services, Inc., 821 F.2d 1258, 1266–67 (7th Cir. 1987) (NLRB correctly determined that temporary employment service and its client were joint employers of temporary employee); Maynard v. Kenova Chemical Company, 626 F.2d 359, 362 (4th Cir. 1980) (temporary employee injured while working on defendant’s premises could not sue defendant in tort because he was employee of both defendant and temp agency, and workers’ compensation provided sole remedy).

The Commission disagrees with the rulings of the District Court of Delaware in Williams v. Caruso, 966 F. Supp. 287 (D. Del. 1997), and Kellam v. Snelling Personnel Services, 866 F. Supp. 812 (D. Del. 1994), aff’d mem., 65 F.3d 162 (3d Cir. 1996). In Williams, the court ruled that a temporary employment agency was not a Title VII employer of a temporary employee whom it hired and placed in a job assignment. The court followed its earlier reasoning in Kellam, in which it declined to count the employees assigned by a temporary employment agency as its employees on the ground that the agency did not supervise the employees on a day-to-day basis. In the Commission’s view, the court in both cases placed undue emphasis on daily supervision of job tasks and underestimated the significance of other factors indicating an employment relationship.

13.   See, e.g., Astrowsky v. First Portland Mortgage Corp., 887 F. Supp. 332 (D. Me. 1995) (holding that employee leasing firm was not a joint employer of employees that it leased back to original employer; firm only processed pay checks and made tax withholdings but did not exercise any control over employees; original employer remained exclusive employer of the employees for purposes of EEO coverage).

14.   See Reynolds v. CSX Transportation, Inc., 115 F.3d 860 (11th Cir. 1997) (finding that temporary employment agency’s client qualified as employer of employee assigned to it and upholding jury award for retaliation by client); King v. Booz-Allen & Hamilton, Inc., No. 83 Civ. 7420 (MJL), 1987 WL 11546, n.3 (S.D.N.Y. May 21, 1987) (finding that plaintiff who was paid by temporary employment agency and assigned to work at Booz-Allen was an employee of Booz-Allen); Amarnare, 611 F. Supp. at 349 (finding that temporary employment agency’s client qualified as joint employer of employee assigned to it).

15.   See Rev. Rul. 87-41, 1987-1 Cum. Bull. 296, 298–99, cited in Nationwide Mutual Insurance Company v. Darden, 503 U.S. 318, 324 (1992) (concluding on above facts that the staffing firm was the individual’s employer, but not addressing the status of the client vis-à-vis the employee).

16.   For examples of cases finding that a client of a staffing firm can qualify as a joint employer of the employee assigned to it, see Poff v. Prudential Insurance Co. of America, 882 F. Supp. 1534 (E.D. Pa. 1995) (where plaintiff was hired by computer services contractor and assigned to work on site at insurance company, issue of fact existed as to whether insurance company exercised sufficient control over the manner and means by which plaintiff’s work was accomplished to qualify as employer); Magnuson, 808 F. Supp. at 508–10 (where car company contracted with staffing firm for plaintiff’s services and assigned her to work at its car dealership, genuine issue of fact was raised as to whether car company, dealership, and staffing firm all qualified as her joint employers); Guerra v. Tishman East Realty, 52 Fair Empl. Prac. Cas. (BNA) 286 (S.D.N.Y. 1989) (security guard employed by management firm who worked in building owned by insurance company could seek to prove that insurance company exercised sufficient control over him to qualify as his “employer”); EEOC v. Sage Realty, 507 F. Supp. 599 (S.D.N.Y. 1981) (building management company that contracted with cleaning company for services of building lobby attendant qualified as joint employer of lobby attendant; contractor carried lobby attendant on its payroll but management company supervised her day-to-day work).

For examples of cases finding that the client did not qualify as a joint employer of the contract employee because the client did not have sufficient control over the employee, see Rivas v. Federacion de Asociaciones Pecuarias, 929 F.2d 814 (1st Cir. 1991) (client of shipping services contractor was not a joint employer of employees who unloaded ships; although client set time for ship unloading, had some disciplinary authority over foremen, and directed order of unloading, contractor selected, scheduled, and supervised the employees and handled disciplinary matters); King v. Dalton, 895 F. Supp. 831 (E.D. Va. 1995) (Navy was not joint employer of employee assigned by contract firm to work on project due to insufficient direct supervisory control over the daily details of the plaintiff’s work).

17.   See 42 U.S.C. § 2000e-2(a) (Title VII), 29 U.S.C. § 623(a) (ADEA), and 42 U.S.C. § 12112(a) (ADA), which do not limit their protections to a covered employer’s own employees, but rather protect an “individual” from discrimination. Section 503 of the ADA, 42 U.S.C. § 12203(b), additionally makes it unlawful to “interfere with any individual in the exercise or enjoyment of … any right granted or protected by this chapter.” The EPA, 29 U.S.C. § 206, limits its protections to an employer’s own employees, and therefore third-party interference theory does not apply.

For cases allowing staffing firm employees to bring claims against the firms’ clients as third-party interferers, see King v. Chrysler Corp., 812 F. Supp. 151 (E.D. Mo. 1993) (cashier employed by company that operated cafeteria on automobile company’s premises could sue automobile company for failing to take sufficient corrective action to remedy sexually hostile work environment; Title VII does not specify that employer committing an unlawful employment practice must employ the injured individual); Fairman v. Saks Fifth Avenue, 1988 U.S. Dist. LEXIS 13087 (W.D. Mo. 1988) (plaintiff who was employed by cleaning contractor to perform cleaning duties at store and who was allegedly discharged due to her race could proceed with Title VII action against store; store claimed that it was not plaintiff’s employer because it did not pay her wages, supervise her, or terminate her; however, even if the store was not plaintiff’s employer, it could be sued for improperly interfering with her employment opportunities with the cleaning contractor); Amarnare, 611 F. Supp. at 349 (temporary employee assigned by “Mature Temps” to work for Merrill Lynch could challenge discrimination by Merrill Lynch either on basis that Merrill Lynch was her joint employer or that Merrill Lynch interfered with her employment opportunities with Mature Temps).

18.   See Policy Statement on control by third parties over the employment relationship between an individual and his/her direct employer, Compliance Manual Section 605, Appendix F (BNA) 605:0087 (5/20/87).

19.   While Title I of the ADA only applies to entities with 15 or more employees, the Commission has not yet addressed the scope of the interference provision in Section 503, which applies to all titles of the ADA and does not contain a specific coverage limitation. See n. 17.

20.   See Carparts Distribution Ctr. v. Automotive Wholesalers, 37 F.3d 12, 17–18 (1st Cir. 1994) (trade association and its administering trust for health benefit plan provided by plaintiff’s employer were sued under Title I for limiting coverage of AIDS; court held that defendants were covered under Title I if they functioned as plaintiff’s employer with respect to his health care coverage or if they affected plaintiff’s access to employment opportunities); Spirt v. Teachers Insurance and Annuity Ass’n, 691 F.2d 1054, 1063 (2d Cir. 1982) (association that managed retirement plans for college and university employees could be found liable for using sex-based mortality tables to calculate benefits; although association was not plaintiff’s “employer” in any commonly understood sense, the term “employer” under Title VII encompasses any party who significantly affects employee’s access to employment opportunities), vacated and remanded sub nom Long Island University v. Spirt, 463 U.S. 1223 (1983), reinstated on remand, 735 F.2d 23 (2d Cir.), cert. denied, 469 U.S. 883 (1984).

21.   See Mares v. Marsh, 777 F.2d 1066 (5th Cir. 1985) (in determining whether individual is a federal employee for purposes of Title VII coverage, key issue is extent to which government exercises control over that individual). For guidance on procedures in handling joint federal sector/private sector complaints, see Question 9.

22.   42 U.S.C. § 20003-16(a) (Title VII); 29 U.S.C. § 633(a) (ADEA); 29 U.S.C. § 794a (Rehabilitation Act, incorporating remedies, procedures, and rights set forth in 42 U.S.C. § 2000e-16). See King v. Dalton, 895 F. Supp. at 836 n.7 (plain terms of § 2000e16 require a plaintiff to be an employee of the defendant agency); Spirides v. Reinhardt, 613 F.2d 826, 829 (D.C. Cir. 1979) (§ 2000e-16 “cover[s] only those individuals in a direct employment relationship with a government employer”).

23.   A variety of work and work-related activities may be required as a condition of receipt of welfare, food stamps, or other benefits. Under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, P.L. 104-193, 110 Stat. 2105 (1996), for example, welfare recipients may be required to perform work activities which are defined to include unsubsidized employment, subsidized private or public sector employment, work experience, on-the-job training, job search and job readiness assistance, community service programs, vocational educational or job skills training, educational activities, or child care services. Section 103 of Welfare Reform Act, 110 Stat. 2133, amending Part A of Title IV of Social Security Act, 42 U.S.C. § 601, et seq. See also Section 824 of Welfare Reform Act, 110 Stat. 2323, amending Section 6 of Food Stamp Act of 1977, 7 U.S.C. § 2015.

24.   The Balanced Budget Act of 1997, P.L. 105-33, 111 Stat. 251 (1997), requires each state that receives a grant from the Secretary of Labor as a “welfare-to-work state” to establish a procedure for handling complaints by participants in work activities who allege certain violations, including gender discrimination. The act does not pre-empt application of Title VII, the ADEA, the ADA, or the EPA. See Morton v. Mancari, 417, U.S. 535, 550 (1973). Therefore, welfare recipients who perform work activities and qualify as “employees” are covered under the antidiscrimination statutes enforced by the EEOC.

25.   Title VII specifically makes it unlawful to discriminate in admission to or employment in any program established to provide apprenticeship or other training. 42 U.S.C. § 2000e-2(d). The ADA and the ADEA also prohibit discrimination in job training and apprenticeship programs. 42 U.S.C. § 12112(a); 29 C.F.R. § 1625.21.

26.   The Commission notes that other federal statutes prohibit discrimination in federally assisted education and training programs. See, e.g., Title VI of the Civil Rights Act of 1964, 42 U.S.C.§ 2000d, et seq.; Title IX of the Education Amendments of 1972, 42 U.S.C.§ 1681, et seq., and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794. Complaints about discrimination in education or other non-employment programs should be referred to the Offices for Civil Rights in the federal agencies that fund such programs.

27.   Title VII and the ADA apply to any employer who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. 42 U.S.C. § 2000e(b). The ADEA applies to any employer who has 20 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. 29 U.S.C. § 630(b). Counting issues do not arise in EPA claims because that act applies to any employer who has more than one employee engaged in commerce or in the production of goods for commerce, unless an exception applies. 29 C.F.R. § 1620.1–1620.7.

28.   Cf. 29 C.F.R. § 825.106(d) (1996) (under the Family and Medical Leave Act, employees jointly employed by two employers must be counted by both employers, whether or not they are maintained on both employers’ payrolls, in determining employer coverage and employee eligibility).

29.   EEOC & Walters v. Metropolitan Educ. Enterprises, 117 S. Ct. 660 (1997). For guidance on how to count employees when determining whether a respondent satisfies the jurisdictional prerequisite for coverage, see Enforcement Guidance on Equal Employment Opportunity Commission & Walters v. Metropolitan Educational Enterprises, 117 S. Ct. 660 (1997), Compliance Manual (BNA) N:2351 (5/2/97).

30.   Staffing firms and their clients are subject to the same record preservation requirements as other employers that are covered by the antidiscrimination statutes. They therefore must preserve all personnel records that they have made relating to job assignments or any other aspect of a staffing firm employee’s employment for a period of one year from the date of the making of the record or the personnel action involved, whichever occurs later. Personnel records relevant to a discrimination charge or an action brought by the EEOC or the U.S. Attorney General must be preserved until final disposition of the charge or action. 29 C.F.R. § 1602.14, 1627.3(b). The Commission can pursue an enforcement action where the respondent fails to keep records pertaining to all its contingent and noncontingent employees and applicants for employment.

31.   Section 701(c) of Title VII defines the term “employment agency” as “any person regularly undertaking with or without compensation to procure employees for an employer or to procure for employees opportunities to work for an employer and includes an agent of such a person.” For further guidance, see Policy Guidance: What constitutes an employment agency under Title VII, how should charges against employment agencies be investigated, and what remedies can be obtained for employment agency violations of the Act?, Compliance Manual (BNA) N:3935 (9/29/91).

32.   The questions and answers in this section assume that the staffing firm is an “employer” of the employee.

33.   See EEOC Guidelines on Sexual Harassment, 29 C.F.R. § 1604.11(3) (1996) (an employer is liable for harassment of its employee by a nonemployee if it knew or should have known of the misconduct and failed to take immediate and appropriate corrective action within its control). See also Caldwell v. ServiceMaster Corp. and Norrell Temporary Services, 966 F. Supp. 33 (D.D.C. 1997) (joint employer temporary agency is liable for discrimination against temporary employee by agency’s client if agency knew or should have known of the discrimination and failed to take corrective measures within its control); Magnuson v. Peak Technical Servs., 808 F. Supp. 500, 511–14 (E.D. Va. 1992) (where plaintiff was subjected to sexual harassment by her supervisor during a job assignment, three entities could be found liable: staffing firm that paid her salary and benefits, automobile company that contracted for her services, and retail car dealership to which she was assigned; staffing firm and automobile company were held to standard for harassment by nonemployees, under which an entity is liable if it had actual or constructive knowledge of the harassment and failed to take immediate and appropriate corrective action within its control); EEOC v. Sage Realty, 507 F. Supp. 599, 612–613 (S.D.N.Y. 1981) (cleaning contractor and joint employer building management company found jointly liable for sex discrimination against lobby attendant on contractor’s payroll where management company required attendant to wear revealing costume that subjected her to harassment by passersby, and where plaintiff was discharged for refusing to continue wearing outfit; court rejected contractor’s argument that management company was exclusively liable because it had set the costume requirement; contractor knew of plaintiff’s complaints of harassment, and there was no evidence that it was powerless to remedy the situation); cf. Capitol EMI Music, Inc., 311 N.L.R.B. No. 103, 143 L.R.R.M. (BNA) 1331 (May 28, 1993) (in joint employer relationships in which one employer supplies employees to the other, National Labor Relations Board holds both joint employers liable for unlawful employee termination or other discriminatory discipline if the nonacting joint employer knew or should have known that the other employer acted against the employee for unlawful reasons and the former has acquiesced in the unlawful action by failing to protest it or to exercise any contractual right it might possess to resist it).

34.   Cf. Paroline v. Unisys Corp., 879 F.2d 100, 107 (4th Cir. 1989) (employer is liable where it anticipated or reasonably should have anticipated that plaintiff would be subjected to sexual harassment yet failed to take action reasonably calculated to prevent it; “[a]n employer’s knowledge that a male employee has previously harassed female employees other than the plaintiff will often prove highly relevant in deciding whether the employer should have anticipated that the plaintiff too would become a victim of the male employee’s harassing conduct”), vacated in part on other grounds, 900 F.2d 27 (4th Cir. 1990).

35.   If the federal agency refuses to accept the complaint based on a belief that the staffing firm employee is not its employee, the employee can file an appeal with the Commission’s Office of Federal Operations.

36.   If the federal agency does not wish to coordinate the investigations, then the EEOC office should proceed independently. If the federal agency refuses to provide documents or testimony requested by the EEOC investigator, the Commission can issue a subpoena to compel production of the evidence.

37.   The EPA applies to any employer that has more than one employee engaged in commerce or in the production of goods for commerce, unless a statutory exception applies. 29 U.S.C. § 203(s).

38.   See Compliance Manual Section 708.5(3) (BNA) 708:0023. As that subsection explains, in determining whether a wage differential between temporary and permanent employees is based on a factor other than sex, the following issues should be considered: 1) whether the wage differential is applied uniformly to males and females; 2) whether the differential conforms with the nature and duration of the job; and 3) whether the differential conforms with a nondiscriminatory customary practice within the industry and establishment.

39.   See 29 C.F.R. § 1620.8 (1996) (two or more employers may be jointly or severally responsible for compliance with EPA requirements applicable to employment of a particular employee). For guidance on elements of an EPA claim, see Compliance Manual Sections 704 and 708 (BNA) 704:001 and 708:001, et seq. Cf., 29 C.F.R. § 791.2 (1996) (regulations issued by Wage and Hour Division, Department of Labor, on Joint Employment Relationship under FLSA) (joint employers are individually and jointly responsible for compliance with FLSA, including overtime requirements).

The EPA, unlike Title VII, the ADA, and the ADEA, only permits claims by employees against their employers, not against third-party interferers.

40.   If the EEOC determines that the client had no involvement in or control over the wages paid to the employee, it may decline to pursue relief against the client.

41.   For guidance on wage discrimination claims under Title VII, see Compliance Manual Section 633 (BNA) 633:001, et seq. Title VII prohibits wage discrimination on the basis of race, national origin, and religion, as well as sex.

42.   However, even where there is joint liability, neither a charging party nor the Commission is obliged to pursue a claim against both entities; nor does one party have a right to bring the other into the proceeding, or a right of contribution from the other. See Northwest Airlines Inc. v. Transport Workers Union of America, 451 U.S. 77, 91–95 (1981); EEOC v. Gard Corp. v. Tall Services Inc. 795 F. Supp. 1070, 1071–72 (D. Kan. 1992).

43.   Punitive damages are not available against federal, state, and local government agencies.

44.   Liquidated damages under the ADEA are punitive in nature. Trans World Airlines v. Thurston, 469 U.S. 111, 125 (1985). Therefore, each respondent individually bears a liquidated damages award under the ADEA.

45.   See Hafner v. Brown, 983 F.2d 570, 573 (4th Cir. 1992) (holding under 42 U.S.C. § 1983 that compensatory damages are joint and several but punitive damages are borne by each defendant individually); Erwin v. County of Manitowoc, 872 F.2d 1292, 1296 (7th Cir. 1989) (same); Bosco v. Serhant, 836 F.2d 271, 280–81 (7th Cir. 1987) (tort principles require joint and several liability for compensatory damages but not punitive damages), cert. denied, 108 S. Ct. 2824 (1988); Hurley v. Atlantic City Police Dept., 933 F. Supp. 396, 420–23 (D.N.J. 1996) (reaching same conclusion in a Title VII case).

46.   The respondents are also jointly and severally liable for liquidated damages in EPA claims because such damages are compensatory in nature. Laffey v. Northwest Airlines, 740 F.2d 1071, 1096 (D.C. Cir. 1984), cert. denied, 469 U.S. 1181 (1985); Marshall v. Bruner, 668 F.2d 748, 753 (3d Cir. 1982).

47.   Compensatory and punitive damages are available in Title VII and ADA cases, and in retaliation cases under the ADEA and the EPA. The ADEA and EPA damages, which are not subject to statutory caps, are available pursuant to a 1977 amendment to the Fair Labor Standards Act that authorizes both legal and equitable relief for retaliation claims. 29 U.S.C. § 216(b). See Moskowitz v. Trustees of Purdue University, 5 F.3d 279, 283–84 (7th Cir. 1993) (FLSA amendment allows common law damages where plaintiff is retaliated against for exercising his rights under ADEA); Soto v. Adams Elevator Equip. Co., 941 F.2d 543, 551 (7th Cir. 1991) (FLSA amendment authorizes compensatory and punitive damages for retaliation claims under EPA, in addition to lost wages and liquidated damages).

48.   42 U.S.C. § 1981a(c)(2).

49.   The financial position of the respondent is a relevant factor in assessing punitive damages. City of Newport v. Fact Concerts, Inc., 453 U.S. 47, 270 (1981).

For guidance on the various factors to consider in calculating compensatory and punitive damages, see Enforcement Guidance: Compensatory and Punitive Damages Available under § 102 of the Civil Rights Act of 1991, Compliance Manual (BNA) N:6071 (7/14/92).

50.   See EEOC v. Sage Realty, 507 F. Supp. 599, 612–13 (finding two joint employers responsible for harassment of employee and holding them jointly and severally liable for back pay).

Appendix D

EEOC Enforcement Guidance on Pre-Employment Disability-Related Inquiries

ADA Enforcement Guidance: Pre-Employment Disability-Related Questions and Medical Examinations

Introduction

Under the Americans With Disabilities Act of 1990,[1] an employer may ask disability-related questions and require medical examinations of an applicant only after the applicant has been given a conditional job offer. This Enforcement Guidance explains these ADA provisions.[2]

Background

In the past, some employment applications and interviews requested information about an applicant’s physical and/ or mental condition. This information was often used to exclude applicants with disabilities before their ability to perform the job was even evaluated.

For example, applicants may have been asked about their medical conditions at the same time that they were engaging in other parts of the application process, such as completing a written job application or having references checked. If an applicant was then rejected, s/he did not necessarily know whether s/he was rejected because of disability, or because of insufficient skills or experience or a bad report from a reference.

As a result, Congress established a process within the ADA to isolate an employer’s consideration of an applicant’s nonmedical qualifications from any consideration of the applicant’s medical condition.

The Statutory and Regulatory Framework

Under the law, an employer may not ask disability-related questions and may not conduct medical examinations until after it makes a conditional job offer to the applicant.[3] This helps ensure that an applicant’s possible hidden disability (including a prior history of a disability) is not considered before the employer evaluates an applicant’s nonmedical qualifications. An employer may not ask disability-related questions or require a medical examination pre-offer even if it intends to look at the answers or results only at the post-offer stage.

Although employers may not ask disability-related questions or require medical examinations at the pre-offer stage, they may do a wide variety of things to evaluate whether an applicant is qualified for the job, including the following:

■   Employers may ask about an applicant’s ability to perform specific job functions. For example, an employer may state the physical requirements of a job (such as the ability to lift a certain amount of weight, or the ability to climb ladders), and ask if an applicant can satisfy these requirements.

■   Employers may ask about an applicant’s nonmedical qualifications and skills, such as the applicant’s education, work history, and required certifications and licenses.

■   Employers may ask applicants to describe or demonstrate how they would perform job tasks.

Once a conditional job offer is made, the employer may ask disability-related questions and require medical examinations as long as this is done for all entering employees in that job category. If the employer rejects the applicant after a disability-related question or medical examination, investigators will closely scrutinize whether the rejection was based on the results of that question or examination.

If the question or examination screens out an individual because of a disability, the employer must demonstrate that the reason for the rejection is “job-related and consistent with business necessity.”[4]

In addition, if the individual is screened out for safety reasons, the employer must demonstrate that the individual poses a “direct threat.” This means that the individual poses a significant risk of substantial harm to him/herself or others, and that the risk cannot be reduced below the direct threat level through reasonable accommodation.[5]

Medical information must be kept confidential.[6] The ADA contains narrow exceptions for disclosing specific, limited information to supervisors and managers, first aid and safety personnel, and government officials investigating compliance with the ADA. Employers may also disclose medical information to state workers’ compensation offices, state second injury funds, or workers’ compensation insurance carriers in accordance with state workers’ compensation laws[7] and may use the medical information for insurance purposes.[8]

The Pre-Offer Stage

What Is a Disability-Related Question?

Definition: “Disability-related question” means a question that is likely to elicit information about a disability.

At the pre-offer stage, an employer cannot ask questions that are likely to elicit information about a disability. This includes directly asking whether an applicant has a particular disability. It also means that an employer cannot ask questions that are closely related to disability.[9]

On the other hand, if there are many possible answers to a question and only some of those answers would contain disability-related information, that question is not “disability related.”[10]

Below are some commonly asked questions about this area of the law.

May an employer ask whether an applicant can perform the job?

Yes. An employer may ask whether applicants can perform any or all job functions, including whether applicants can perform job functions “with or without reasonable accommodation.”[11]

May an employer ask applicants to describe or demonstrate how they would perform the job (including any needed reasonable accommodations)?

Yes. An employer may ask applicants to describe how they would perform any or all job functions, as long as all applicants in the job category are asked to do this.

Employers should remember that, if an applicant says that s/he will need a reasonable accommodation to do a job demonstration, the employer must either:

■   provide a reasonable accommodation that does not create an undue hardship; or

■   allow the applicant to simply describe how s/he would perform the job function.

May an employer ask a particular applicant to describe or demonstrate how s/he would perform the job, if other applicants aren’t asked to do this?

When an employer could reasonably believe that an applicant will not be able to perform a job function because of a known disability, the employer may ask that particular applicant to describe or demonstrate how s/he would perform the function. An applicant’s disability would be a “known disability” either because it is obvious (for example, the applicant uses a wheelchair), or because the applicant has voluntarily disclosed that s/he has a hidden disability.

May an employer ask applicants whether they will need reasonable accommodation for the hiring process?

Yes. An employer may tell applicants what the hiring process involves (for example, an interview, timed written test, or job demonstration), and may ask applicants whether they will need a reasonable accommodation for this process.

May an employer ask an applicant for documentation of his/her disability when the applicant requests reasonable accommodation for the hiring process?

Yes. If the need for accommodation is not obvious, an employer may ask an applicant for reasonable documentation about his/her disability if the applicant requests reasonable accommodation for the hiring process (such as a request for the employer to reformat an examination, or a request for an accommodation in connection with a job demonstration). The employer is entitled to know that the applicant has a covered disability and that s/he needs an accommodation.

So, the applicant may be required to provide documentation from an appropriate professional, such as a doctor or a rehabilitation counselor, concerning the applicant’s disability and functional limitations.

A. May an employer ask applicants whether they will need reasonable accommodation to perform the functions of the job?

In general, an employer may not ask questions on an application or in an interview about whether an applicant will need reasonable accommodation for a job. This is because these questions are likely to elicit whether the applicant has a disability (generally, only people who have disabilities will need reasonable accommodations).

Example:

An employment application may not ask, “Do you need reasonable accommodation to perform this job?”

Example:

An employment application may not ask, “Can you do these functions with ____ without ____ reasonable accommodation? (Check One)”

Example:

An applicant with no known disability is being interviewed for a job. He has not asked for any reasonable accommodation, either for the application process or for the job. The employer may not ask him, “Will you need reasonable accommodation to perform this job?”

However, when an employer could reasonably believe that an applicant will need reasonable accommodation to perform the functions of the job, the employer may ask that applicant certain limited questions. Specifically, the employer may ask whether s/he needs reasonable accommodation and what type of reasonable accommodation would be needed to perform the functions of the job.[12] The employer could ask these questions if:

■   the employer reasonably believes the applicant will need reasonable accommodation because of an obvious disability;

■   the employer reasonably believes the applicant will need reasonable accommodation because of a hidden disability that the applicant has voluntarily disclosed to the employer; or

■   an applicant has voluntarily disclosed to the employer that s/he needs reasonable accommodation to perform the job.

Example:

An individual with diabetes applying for a receptionist position voluntarily discloses that she will need periodic breaks to take medication. The employer may ask the applicant questions about the reasonable accommodation such as how often she will need breaks, and how long the breaks must be. Of course, the employer may not ask any questions about the underlying physical condition.

Example:

An applicant with a severe visual impairment applies for a job involving computer work. The employer may ask whether he will need reasonable accommodation to perform the functions of the job. If the applicant answers “no,” the employer may not ask additional questions about reasonable accommodation (although, of course, the employer could ask the applicant to describe or demonstrate performance). If the applicant says that he will need accommodation, the employer may ask questions about the type of required accommodation such as, “What will you need?” If the applicant says he needs software that increases the size of text on the computer screen, the employer may ask questions such as, “Who makes that software?” “Do you need a particular brand?” or “Is that software compatible with our computers?” However, the employer may not ask questions about the applicant’s underlying condition. In addition, the employer may not ask reasonable accommodation questions that are unrelated to job functions such as, “Will you need reasonable accommodation to get to the cafeteria?”

An employer may only ask about reasonable accommodation that is needed now or in the near future. An applicant is not required to disclose reasonable accommodations that may be needed in the more distant future.

May an employer ask whether an applicant can meet the employer’s attendance requirements?

Yes. An employer may state its attendance requirements and ask whether an applicant can meet them. An employer also may ask about an applicant’s prior attendance record (for example, how many days the applicant was absent from his/her last job). These questions are not likely to elicit information about a disability because there may be many reasons unrelated to disability why someone cannot meet attendance requirements or was frequently absent from a previous job (for example, an applicant may have had daycare problems).

An employer also may ask questions designed to detect whether an applicant abused his/her leave because these questions are not likely to elicit information about a disability.

Example:

An employer may ask an applicant, “How many Mondays or Fridays were you absent last year on leave other than approved vacation leave?”

However, at the pre-offer stage, an employer may not ask how many days an applicant was sick, because these questions relate directly to the severity of an individual’s impairments. Therefore, these questions are likely to elicit information about a disability.

May an employer ask applicants about their certifications and licenses?

Yes. An employer may ask an applicant at the pre-offer stage whether s/he has certifications or licenses required for any job duties. An employer also may ask an applicant whether s/he intends to get a particular job-related certification or license, or why s/he does not have the certification or license. These questions are not likely to elicit information about an applicant’s disability because there may be a number of reasons unrelated to disability why someone does not have—or does not intend to get—a certification/license.

May an employer ask applicants about their arrest or conviction records?

Yes. Questions about an applicant’s arrest or conviction records are not likely to elicit information about disability because there are many reasons unrelated to disability why someone may have an arrest/conviction record.[13]

May an employer ask questions about an applicant’s impairments?

Yes, if the particular question is not likely to elicit information about whether the applicant has a disability. It is important to remember that not all impairments will be disabilities; an impairment is a disability only if it substantially limits a major life activity. So, an employer may ask an applicant with a broken leg how she broke her leg. Since a broken leg normally is a temporary condition which does not rise to the level of a disability, this question is not likely to disclose whether the applicant has a disability. But, such questions as “Do you expect the leg to heal normally?” or “Do you break bones easily?” would be disability related. Certainly, an employer may not ask a broad question about impairments that is likely to elicit information about disability, such as, “What impairments do you have?”

May an employer ask whether applicants can perform major life activities, such as standing, lifting, walking, etc.?

Questions about whether an applicant can perform major life activities are almost always disability related because they are likely to elicit information about a disability. For example, if an applicant cannot stand or walk, it is likely to be a result of a disability. So, these questions are prohibited at the pre-offer stage unless they are specifically about the ability to perform job functions.

May an employer ask applicants about their workers’ compensation history?

No. An employer may not ask applicants about job-related injuries or workers’ compensation history. These questions relate directly to the severity of an applicant’s impairments. Therefore, these questions are likely to elicit information about disability.

May an employer ask applicants about their current illegal use of drugs?

Yes. An employer may ask applicants about current illegal use of drugs[14] because an individual who currently illegally uses drugs is not protected under the ADA (when the employer acts on the basis of the drug use).[15]

May an employer ask applicants about their lawful drug use?

No, if the question is likely to elicit information about disability. Employers should know that many questions about current or prior lawful drug use are likely to elicit information about a disability, and are therefore impermissible at the pre-offer stage. For example, questions like, “What medications are you currently taking?” or “Have you ever taken AZT?” certainly elicit information about whether an applicant has a disability.

However, some innocuous questions about lawful drug use are not likely to elicit information about disability.

Example:

During her interview, an applicant volunteers to the interviewer that she is coughing and wheezing because her allergies are acting up as a result of pollen in the air. The interviewer, who also has allergies, tells the applicant that he finds “Lemebreathe” (an over-the-counter antihistamine) to be effective, and asks the applicant if she has tried it. There are many reasons why someone might have tried “Lemebreathe” which have nothing to do with disability. Therefore, this question is not likely to elicit information about a disability.

May an employer ask applicants about their lawful drug use if the employer is administering a test for illegal use of drugs?

Yes, if an applicant tests positive for illegal drug use. In that case, the employer may validate the test results by asking about lawful drug use or possible explanations for the positive result other than the illegal use of drugs.

Example:

If an applicant tests positive for use of a controlled substance, the employer may lawfully ask questions such as, “What medications have you taken that might have resulted in this positive test result? Are you taking this medication under a lawful prescription?”

May an employer ask applicants about their prior illegal drug use?

Yes, provided that the particular question is not likely to elicit information about a disability. It is important to remember that past addiction to illegal drugs or controlled substances is a covered disability under the ADA (as long as the person is not a current illegal drug user), but past casual use is not a covered disability. Therefore, the question is fine as long as it does not go to past drug addiction.

Example:

An employer may ask, “Have you ever used illegal drugs?” “When is the last time you used illegal drugs?” or “Have you used illegal drugs in the last six months?” These questions are not likely to tell the employer anything about whether the applicant was addicted to drugs.

However, questions that ask how much the applicant used drugs in the past are likely to elicit information about whether the applicant was a past drug addict. These questions are therefore impermissible at the pre-offer stage.

Example:

At the pre-offer stage, an employer may not ask an applicant questions such as, “How often did you use illegal drugs in the past?” “Have you ever been addicted to drugs?” “Have you ever been treated for drug addiction?” or “Have you ever been treated for drug abuse?”

May an employer ask applicants about their drinking habits?

Yes, unless the particular question is likely to elicit information about alcoholism, which is a disability. An employer may ask an applicant whether s/he drinks alcohol, or whether s/he has been arrested for driving under the influence because these questions do not reveal whether someone has alcoholism. However, questions asking how much alcohol an applicant drinks or whether s/he has participated in an alcohol rehabilitation program are likely to elicit information about whether the applicant has alcoholism.

May an employer ask applicants to “self-identify” as individuals with disabilities for purposes of the employer’s affirmative action program?

Yes. An employer may invite applicants to voluntarily self-identify for purposes of the employer’s affirmative action program if:

■   the employer is undertaking affirmative action because of a federal, state, or local law (including a veterans’ preference law) that requires affirmative action for individuals with disabilities (that is, the law requires some action to be taken on behalf of such individuals); or

■   the employer is voluntarily using the information to benefit individuals with disabilities.

Employers should remember that state or local laws sometimes permit or encourage affirmative action. In those cases, an employer may invite voluntary self-identification only if the employer uses the information to benefit individuals with disabilities.

Are there any special steps an employer should take if it asks applicants to “self-identify” for purposes of the employer’s affirmative action program?

Yes. If the employer invites applicants to voluntarily self-identify in connection with providing affirmative action, the employer must do the following:

■   state clearly on any written questionnaire, or state clearly orally (if no written questionnaire is used), that the information requested is used solely in connection with its affirmative action obligations or efforts; and

■   state clearly that the information is being requested on a voluntary basis, that it will be kept confidential in accordance with the ADA, that refusal to provide it will not subject the applicant to any adverse treatment, and that it will be used only in accordance with the ADA.

In order to ensure that the self-identification information is kept confidential, the information must be on a form that is kept separate from the application.

May an employer ask third parties questions it could not ask the applicant directly?

No. An employer may not ask a third party (such as a service that provides information about workers’ compensation claims, a state agency, or an applicant’s friends, family, or former employers) any questions that it could not directly ask the applicant.

What Is a Medical Examination?

Definition: A “medical examination” is a procedure or test that seeks information about an individual’s physical or mental impairments or health.

At the pre-offer stage, an employer cannot require examinations that seek information about physical or mental impairments or health. It is not always easy to determine whether something is a medical examination. The following factors are helpful in determining whether a procedure or test is medical:

■   Is it administered by a health care professional or someone trained by a health care professional?

■   Are the results interpreted by a health care professional or someone trained by a health care professional?

■   Is it designed to reveal an impairment or physical or mental health?

■   Is the employer trying to determine the applicant’s physical or mental health or impairments?

■   Is it invasive (for example, does it require the drawing of blood, urine, or breath)?

■   Does it measure an applicant’s performance of a task, or does it measure the applicant’s physiological responses to performing the task?

■   Is it normally given in a medical setting (for example, a health care professional’s office)?

■   Is medical equipment used?

In many cases, a combination of factors will be relevant in figuring out whether a procedure or test is a medical examination. In some cases, one factor may be enough to determine that a procedure or test is medical.

Example:

An employer requires applicants to lift a 30-pound box and carry it 20 feet. This is not a medical examination; it is just a test of whether the applicant can perform this task. But, if the employer takes the applicant’s blood pressure or heart rate after the lifting and carrying, the test would be a medical examination because it is measuring the applicant’s physiological response to lifting and carrying, as opposed to the applicant’s ability to lift and carry.

Example:

A psychological test is designed to reveal mental illness, but a particular employer says it does not give the test to disclose mental illness (for example, the employer says it uses the test to disclose just tastes and habits). But, the test also is interpreted by a psychologist, and is routinely used in a clinical setting to provide evidence that would lead to a diagnosis of a mental disorder or impairment (for example, whether an applicant has paranoid tendencies, or is depressed). Under these facts, this test is a medical examination.

Below are some commonly asked questions about the ADA’s restrictions on pre-offer medical examinations.

May an employer require applicants to take physical agility tests?

Yes. A physical agility test, in which an applicant demonstrates the ability to perform actual or simulated job tasks, is not a medical examination under the ADA.[16]

Example:

A police department tests police officer applicants’ ability to run through an obstacle course designed to simulate a suspect chase in an urban setting. This is not a medical examination.

May an employer require applicants to take physical fitness tests?

Yes. A physical fitness test, in which an applicant’s performance of physical tasks—such as running or lifting—is measured, is not a medical examination.[17]

However, if an employer measures an applicant’s physiological or biological responses to performance, the test would be medical.

Example:

A messenger service tests applicants’ ability to run one mile in 15 minutes. At the end of the run, the employer takes the applicants’ blood pressure and heart rate. Measuring the applicant’s physiological responses makes this a medical examination.

May an employer ask an applicant to provide medical certification that s/he can safely perform a physical agility or physical fitness test?

Yes. Although an employer cannot ask disability-related questions, it may give the applicant a description of the agility or fitness test and ask the applicant to have a private physician simply state whether s/he can safely perform the test.

May an employer ask an applicant to assume liability for injuries incurred in performing a physical agility or physical fitness test?

Yes. An employer may ask an applicant to assume responsibility and release the employer of liability for injuries incurred in performing a physical agility or fitness test.

May an employer give psychological examinations to applicants?

Yes, unless the particular examination is medical. This determination would be based on some of the factors listed above, such as the purpose of the test and the intent of the employer in giving the test. Psychological examinations are medical if they provide evidence that would lead to identifying a mental disorder or impairment (for example, those listed in the American Psychiatric Association’s most recent Diagnostic and Statistical Manual of Mental Disorders).

Example:

An employer gives applicants the RUOK Test (hypothetical), an examination that reflects whether applicants have characteristics that lead to identifying whether the individual has excessive anxiety, depression, and certain compulsive disorders (DSM-listed conditions). This test is medical.

On the other hand, if a test is designed and used to measure only things such as honesty, tastes, and habits, it is not medical.

Example:

An employer gives the IFIB Personality Test (hypothetical), an examination designed and used to reflect only whether an applicant is likely to lie. This test, as used by the employer, is not a medical examination.

May an employer give polygraph examinations to applicants?

Although most employers are prohibited by federal and state laws from giving polygraph examinations, some employers are not prohibited from giving these examinations. Under the ADA, polygraph examinations are not medical examinations.[18] Many times, however, polygraph examinations contain disability-related questions, such as questions about what lawful medications the applicant is taking. Employers cannot ask disability-related questions as part of a pre-offer examination, even if the examination is not itself “medical.”

May an employer give vision tests to applicants?

Yes, unless the particular test is medical. Evaluating someone’s ability to read labels or distinguish objects as part of a demonstration of the person’s ability to do the job is not a medical examination. However, an ophthalmologist’s or optometrist’s analysis of someone’s vision is medical. Similarly, requiring an individual to read an eye chart would be a medical examination.

May an employer give applicants tests to determine illegal use of controlled substances?

Yes. The ADA specifically states that, for purposes of the ADA, tests to determine the current illegal use of controlled substances are not considered medical examinations.

May an employer give alcohol tests to applicants?

No. Tests to determine whether and/or how much alcohol an individual has consumed are medical, and there is no statutory exemption.

The Post-Offer Stage

After giving a job offer to an applicant, an employer may ask disability-related questions and perform medical examinations. The job offer may be conditioned on the results of post-offer disability-related questions or medical examinations.

At the “post-offer” stage, an employer may ask about an individual’s workers’ compensation history, prior sick leave usage, illnesses/diseases/impairments, and general physical and mental health. Disability-related questions and medical examinations at the post-offer stage do not have to be related to the job.[19]

If an employer asks post-offer disability-related questions, or requires post-offer medical examinations, it must make sure that it follows certain procedures:

■   all entering employees in the same job category must be subjected to the examination/inquiry, regardless of disability[20]; and

■   medical information obtained must be kept confidential.[21]

Below are some commonly asked questions about the post-offer stage.

What is considered a real job offer?

Since an employer can ask disability-related questions and require medical examinations after a job offer, it is important that the job offer be real. A job offer is real if the employer has evaluated all relevant nonmedical information that it reasonably could have obtained and analyzed prior to giving the offer. Of course, there are times when an employer cannot reasonably obtain and evaluate all nonmedical information at the pre-offer stage. If an employer can show that is the case, the offer would still be considered a real offer.

Example:

It may be too costly for a law enforcement employer wishing to administer a polygraph examination to administer a pre-offer examination asking nondisability-related questions, and a post-offer examination asking disability-related questions. In this case, the employer may be able to demonstrate that it could not reasonably obtain and evaluate the nonmedical polygraph information at the pre-offer stage.

Example:

An applicant might state that his current employer should not be asked for a reference check until the potential employer makes a conditional job offer. In this case, the potential employer could not reasonably obtain and evaluate the nonmedical information from the reference at the pre-offer stage.

Do offers have to be limited to current vacancies?

No. An employer may give offers to fill current vacancies or reasonably anticipated openings.

May an employer give offers that exceed the number of vacancies or reasonably anticipated openings?

Yes. The offers will still be considered real if the employer can demonstrate that it needs to give more offers in order to actually fill vacancies or reasonably anticipated openings. For example, an employer may demonstrate that a certain percentage of the offerees will likely be disqualified or will withdraw from the pool.

Example:

A police department may be able to demonstrate that it needs to make offers to 50 applicants for 25 available positions because about half of the offers will likely be revoked based on post-offer medical tests and/ or security checks, and because some applicants may voluntarily withdraw from consideration.

Of course, an employer must comply with the ADA when taking people out of the pool to fill actual vacancies. The employer must notify an individual (orally or in writing) if his/her placement into an actual vacancy is in any way adversely affected by the results of a post-offer medical examination or disability-related question.

If an individual alleges that disability has affected his/her placement into an actual vacancy, the EEOC will carefully scrutinize whether disability was a reason for any adverse action. If disability was a reason, the EEOC will determine whether the action was job-related and consistent with business necessity.

After an employer has obtained basic medical information from all individuals who have been given conditional offers in a job category, may it ask specific individuals for more medical information?

Yes, if the follow-up examinations or questions are medically related to the previously obtained medical information.[22]

Example:

At the post-offer stage, an employer asks new hires whether they have had back injuries, and learns that some of the individuals have had such injuries. The employer may give medical examinations designed to diagnose back impairments to persons who stated that they had prior back injuries, as long as these examinations are medically related to those injuries.

At the post-offer stage, may an employer ask all individuals whether they need reasonable accommodation to perform the job?

Yes. If, at the post-offer stage, someone requests reasonable accommodation to perform the job, may the employer ask him/her for documentation of his/her disability?

Yes. If someone requests reasonable accommodation so s/he will be able to perform a job and the need for the accommodation is not obvious, the employer may require reasonable documentation of the individual’s entitlement to reasonable accommodation. So, the employer may require documentation showing that the individual has a covered disability, and stating his/her functional limitations.

Example:

An entering employee states that she will need a 15-minute break every two hours to eat a snack in order to maintain her blood sugar level. The employer may ask her to provide documentation from her doctor showing that: (1) she has an impairment that substantially limits a major life activity; and (2) she actually needs the requested breaks because of the impairment.

Confidentiality

An employer must keep any medical information on applicants or employees confidential, with the following limited exceptions:

■   Supervisors and managers may be told about necessary restrictions on the work or duties of the employee and about necessary accommodations;

■   First aid and safety personnel may be told if the disability might require emergency treatment;

■   Government officials investigating compliance with the ADA must be given relevant information on request[23];

■   Employers may give information to state workers’ compensation offices, state second injury funds or workers’ compensation insurance carriers in accordance with state workers’ compensation laws[24]; and

■   Employers may use the information for insurance purposes.[25]

Below are some commonly asked questions about the ADA’s confidentiality requirements.

May medical information be given to decision makers involved in the hiring process?

Yes. Medical information may be given to—and used by—appropriate decision makers involved in the hiring process so they can make employment decisions consistent with the ADA. In addition, the employer may use the information to determine reasonable accommodations for the individual. For example, the employer may share the information with a third party, such as a health care professional, to determine whether a reasonable accommodation is possible for a particular individual. The information certainly must be kept confidential.

Of course, the employer may only share the medical information with individuals involved in the hiring process (or in implementing an affirmative action program) who need to know the information. For example, in some cases, a number of people may be involved in evaluating an applicant. Some individuals may simply be responsible for evaluating an applicant’s references; these individuals may have no need to know an applicant’s medical condition and therefore should not have access to the medical information.

Can an individual voluntarily disclose his/her own medical information to persons beyond those to whom an employer can disclose such information?

Yes, as long as it’s really voluntary. The employer cannot request, persuade, coerce, or otherwise pressure the individual to get him/her to disclose medical information.

Does the employer’s confidentiality obligation extend to medical information that an individual voluntarily tells the employer?

Yes. For example, if an applicant voluntarily discloses bipolar disorder and the need for reasonable accommodation, the employer may not disclose the condition or the applicant’s need for accommodation to the applicant’s references.

Can medical information be kept in an employee’s regular personnel file?

No. Medical information must be collected and maintained on separate forms and in separate medical files.[26] An employer should not place any medical-related material in an employee’s nonmedical personnel file. If an employer wants to put a document in a personnel file, and that document happens to contain some medical information, the employer must simply remove the medical information from the document before putting it in the personnel file.

Does the confidentiality obligation end when the person is no longer an applicant or employee?

No, an employer must keep medical information confidential even if someone is no longer an applicant (for example, s/he wasn’t hired) or is no longer an employee.

Is an employer required to remove from its personnel files medical information obtained before the ADA’s effective date?

No.

Appendix to Enforcement Guidance

date: Oct. 10, 1995

1. SUBJECT: Enforcement Guidance: Pre-employment Disability-Related Questions and Medical Examinations.

2. PURPOSE: This document provides the EEOC’s position under the Americans With Disabilities Act of 1990, on preemployment disability-related questions and medical examinations.

3. EFFECTIVE DATE: Upon receipt.

4. EXPIRATION DATE: As an exception to EEOC Order 205.001, Appendix B, Attachment 4, § a(5), this Notice will remain in effect until rescinded or superseded.

5. ORIGINATOR: ADA Division, Office of Legal Counsel.

6. INSTRUCTIONS: File after Section 902 of Volume II of the Compliance Manual.

/s/

Gilbert F. Casellas
Chairman
distribution: CM Holders

Index

Affirmative Action   ... 374

Alcohol   ... 373

Alcohol Tests   ... 376

Alcoholism   ... 374

Arrest or Conviction Records   ... 372

Attendance   ... 372

Broken Leg   ... 372

Confidentiality   ... 377

Controlled Substances   ... 374

Describe or Demonstrate   ... 371

Direct Threat   ... 370

Disability-Related Question   ... 370

Documentation   ... 371

Drinking Habits   ... 374

Drug Addiction   ... 373

Drug Use   ... 373

Illegal Drug Use   ... 373

Impairments   ... 372

Information Obtained Before the ADA   ... 378

Job Functions   ... 370

Lawful Drug Use   ... 373

Liability for Injuries   ... 375

Licenses   ... 372

Major Life Activities   ... 373

Medical Examination   ... 370, 374

Medical Files   ... 378

Need for Accommodation   ... 371

Physical Agility   ... 375

Physical Fitness   ... 375

Polygraph Examinations   ... 375

Pool   ... 376

Post-Offer Stage   ... 376

Pre-Offer Stage   ... 370

Psychological Examinations   ... 375

Real Job Offer   ... 376

Reasonable Accommodation   ... 370, 371

References   ... 370, 377

Self-Identify   ... 374

Sick   ... 372

Statutory and Regulatory Framework   ... 370

Third Parties   ... 374

Vacancies   ... 376

Vision Tests   ... 375

Voluntarily Disclose   ... 371, 377

Voluntary Self-Identification   ... 374

Workers’ Compensation   ... 370, 373, 376

Notes

1.    Codified as amended at 42 U.S.C. §§ 12101–17, 12201–13 (Supp. V 1994).

2.    The analysis in this guidance also applies to federal sector complaints of non-affirmative action employment discrimination arising under section 501 of the Rehabilitation Act of 1973. 29 U.S.C.A. § 791(g) (West Supp. 1994). In addition, the analysis applies to complaints of non-affirmative action employment discrimination arising under section 503 and employment discrimination under section 504 of the Rehabilitation Act. 29 U.S.C.A. §§ 793(d), 794(d) (West Supp. 1994).

3.    42 U.S.C. § 12112(d)(2); 29 C.F.R. §§ 1630.13(a), 1630.14(a),(b).

4.    42 U.S.C. § 12112(b); 29 C.F.R. §§ 1630.10, 1630.14(b)(3).

5.    42 U.S.C. § 12113(b); See 29 C.F.R. pt. 1630 app. § 1630.2(r).

6.    29 C.F.R. § 1630.14(b)(1)(i-iii).

7.    See 42 U.S.C. § 12201(b); 29 C.F.R. pt. 1630 app. § 1630.14(b).

8.    See 42 U.S.C. § 12201(c); 29 C.F.R. pt. 1630 app. § 1630.14(b). For example, an employer may submit medical information to the company’s health insurance carrier if the information is needed to administer a health insurance plan in accordance with § 501(c) of the ADA.

9.    Of course, an employer can always ask about an applicant’s ability to perform the job.

10.    Sometimes, applicants disclose disability-related information in responding to an otherwise lawful pre-offer question. Although the employer has not asked an unlawful question, it still cannot refuse to hire an applicant based on disability unless the reason is “job-related and consistent with business necessity.”

11.    However, an employer cannot ask a question in a manner that requires the individual to disclose the need for reasonable accommodation. For example, as described later in this guidance, an employer may not ask, “Can you do these functions with without reasonable accommodation? (Check One)”

12.    It should be noted that an employer might lawfully ask questions about the need for reasonable accommodation on the job and then fail to hire the applicant. The rejected applicant may then claim that the refusal to hire was based on the need for accommodation. Under these facts, the EEOC will consider the employer’s pre-offer questions as evidence that the employer knew about the need for reasonable accommodation, and will carefully scrutinize whether the need to provide accommodation was a reason for rejecting the applicant.

13.    However, investigators should be aware that Title VII of the Civil Rights Act of 1964, as amended, applies to such questions and that nothing in this Enforcement Guidance relieves an employer of its obligations to comply with Title VII. The Commission has previously provided guidance for investigators to follow concerning an employer’s use of arrest/conviction records. See Policy Guidance No. N-915-061 (9/7/90) (“Policy Guidance on the Consideration of Arrest Records in Employment Decisions under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. (1982)”); EEOC Compliance Manual, Vol. II, Appendices 604-A (“Conviction Records”) and 604-B (“Conviction Records–Statistics”).

14.    “Drug” means a controlled substance, as defined in schedules I through V of Section 202 of the Controlled Substances Act (21 U.S.C. § 812). 29 C.F.R. § 1630.3(a)(1).

15.    42 U.S.C. § 12114(a); 29 C.F.R. § 1630.3(a).

16.    Of course, an employer cannot use a test in violation of other federal civil rights statutes. For example, if a test has an adverse impact under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., it must be shown to be job-related and consistent with business necessity.

17.    Although physical agility tests and physical fitness tests are not “medical” examinations, these tests are still subject to other parts of the ADA. For example, if a physical fitness test that requires applicants to run one mile in 10 minutes screens out an applicant on the basis of disability, the employer must be prepared to demonstrate that the test is “job-related and consistent with business necessity.”

18.    A polygraph examination purportedly measures whether a person believes s/he is telling the truth in response to a particular inquiry. The examination does not measure health or impairments. Rather, it just measures relative changes in physiological responses of the test taker.

19.    But, if an individual is screened out because of disability, the employer must show that the exclusionary criterion is job-related and consistent with business necessity. 42 U.S.C. § 12112(b); 29 C.F.R. §§ 1630.10, 1630.14(b)(3).

20.    42 U.S.C. § 12112(d)(3); 29 C.F.R. § 1630.14(b)(1),(2).

21.    Id.

22.    Once again, if an examination or inquiry screens out someone because of disability, the exclusionary criteria must be “job-related and consistent with business necessity.” Where safety considerations are the reason, the individual can only be screened out because s/he poses a “direct threat.”

23.    29 C.F.R. § 1630.14(b)(1)(i-iii).

24.    See 42 U.S.C. § 12201(b); 29 C.F.R. pt. 1630 app. § 1630.14(b).

25.    See 42 U.S.C. § 12201(c); 29 C.F.R. pt. 1630 app. § 1630.14(b). For example, an employer may submit medical information to the company’s health insurance carrier if the information is needed to administer a health insurance plan in accordance with § 501(c) of the ADA.

26.    A notation that an individual has taken sick leave or had a doctor’s appointment is not confidential medical information. Of course, documentation of the individual’s diagnosis or symptoms would be medical information.

Appendix E

Sample Policies, Forms, Contracts, and Language

With the exception of item 14 (which is an official U.S. Department of Labor document), the sample policies, forms, contracts, and language included in this Appendix E are not intended as legal advice. They provide suggested language only, and modifications may be necessary or desirable in particular cases. Accordingly, ASA strongly urges that staffing professionals seek the advice of competent legal counsel before using these forms, policies, or contracts, or any of their provisions.

1.   Equal Employment Opportunity Policy

2.   Employee Acknowledgment and Pledge To Comply With Company’s Equal Employment Opportunity Policy

3.   Prohibition of Harassment Policy

4.   Alcohol and Drug-Free Workplace Policy

5.   Release and Consent Form for Substance-Abuse Testing

6.   Applicant Authorization and Consent Form for Employment References and Education Verification

7.   FCRA Compliance Letters and Documents

a.   Notification of Background Check (Pursuant to the Fair Credit Reporting Act)

b.   Applicant Authorization and Release of Information (Pursuant to the Fair Credit Reporting Act)

c.   Letter to Applicant to Be Used Before Taking Adverse Action

d.   Summary of Consumer Rights Under the Fair Credit Reporting Act

e.   Letter to Applicant to Be Used After Taking Adverse Action

8.   Arbitration Agreement

9.   Application for Employment for Temporary Employee

10.  Employment Agreement With Temporary Employee

11.  Application for Employment for Regular Employee

12.  Employment Agreement With Regular Employee

13.  Family and Medical Leave Act Policy

14.  FMLA ‘Poster’ (U.S. Department of Labor Publication)

15. OSHA Fact Sheet: HIPAA and OSHA Whistleblower Complaints

1

Equal Employment Opportunity Policy

The following policy is generic and may not comply with the laws of all states; it may not be appropriate for, or be sufficient to protect the interests of, all staffing firms. This policy should be used only as a guideline; you should consult with a qualified attorney for legal advice.

[COMPANY NAME] (hereinafter “COMPANY”) is an equal opportunity employer. COMPANY provides equal employment opportunity to all employees and applicants without regard to age, race, creed, color, religion, national origin, sex, disability, veteran status, or any other protected status in accordance with applicable federal, state, and local laws.

This policy governs all areas of employment at COMPANY, including recruiting, hiring, training, assignments, promotions, compensation, benefits, discipline, and terminations.

In addition, COMPANY does not discriminate against any temporary employee or applicant in work assignments, does not invite or honor discriminatory job orders or requests by clients, and does not “code” applications or other documents to record the status of any applicant or employee.

To ensure equal opportunities to qualified individuals with a disability, COMPANY will make reasonable accommodations for the known physical or mental limitations of an otherwise qualified individual unless an undue hardship on the operation of the business would result. Any applicant or employee who requires an accommodation in order to perform the essential functions of the job should contact the Human Resource Department to request such an accommodation.

Any employee who violates this policy will be subject to discipline up to and including termination. If you believe you have been or are being discriminated against or harassed in violation of applicable federal or state law or in violation of COMPANY’s policies, you should follow the procedures set forth in COMPANY’S policy against discrimination and harassment.

2

Employee Acknowledgment and Pledge To Comply With Company’s Equal Employment Opportunity Policy

The following policy is generic and may not comply with the laws of all states; it may not be appropriate for, or be sufficient to protect the interests of, all staffing firms. This policy should be used only as a guideline; you should consult with a qualified attorney for legal advice.

I, [EMPLOYEE NAME], hereby acknowledge that [COMPANY NAME] (hereinafter “COMPANY”) is an equal opportunity employer, and that I have received a copy of the company’s written equal employment opportunity (EEO) policy. I understand that it is the company’s policy to make all employment decisions without regard to age, race, creed, color, religion, national origin, sex, disability, veteran status, or any other protected status in accordance with applicable federal, state, and local laws.

I also acknowledge that in furtherance of its goals of equal employment opportunities for all employees and applicants, COMPANY refuses to accept or honor client requests that would require the company to discriminate against any individual because of that individual’s membership in a protected class.

As a condition of my employment and continued employment with COMPANY, I agree to personally abide by the company’s EEO policy of nondiscrimination in all aspects of my job.

3

Prohibition of Harassment Policy

The following policy is generic and may not comply with the laws of all states; it may not be appropriate for, or be sufficient to protect the interests of, all staffing firms. This policy should be used only as a guideline; you should consult with a qualified attorney for legal advice.

[COMPANY NAME] (hereinafter “COMPANY”), in accordance with federal and state discrimination laws, prohibits illegal discrimination and harassment in the workplace. It is a violation of company policy, as well as applicable federal and state laws, for any employee to discriminate or harass a fellow employee or applicant for employment on the basis of race, color, sex, national origin, religion, age, disability, or other protected status. Any employee who engages in discrimination or harassment prohibited by this policy will be subject to discipline up to and including termination.

Prohibited harassment includes, but is not limited to, the following:

1. Verbal harassment (oral or written), such as making a joke or comment that refers to a certain ethnic group, race, sex, nationality, age, disability, sexual preference, religion, or belief; epithets; derogatory comments; vulgar or profane words and expressions; or slurs

2. Physical harassment, such as unwelcome touching, assaulting, blocking, impairing, or otherwise physically interfering with an individual’s normal work or movement

3. Visual harassment, such as derogatory gestures, posters, cartoons, emails, or drawings

4. Sexual harassment, such as unwelcome sexual advances or requests for sexual favors; verbal, visual, or physical conduct of a sexual nature, such as name calling, obscene jokes, sexually suggestive comments, or insulting sounds; graphic or verbal communications of a sexual nature about a person’s anatomy, including through the use of email; and displaying in the workplace sexually suggestive objects, posters, drawings, or pictures

Reporting Incidents of Discrimination or Harassment

Regular Employees

Any employee who believes that he or she has been subject to discrimination or harassment by a supervisor, fellow employee, client, vendor, or any other person in connection with his or her employment by COMPANY should immediately report the situation to his or her manager. If the complaint involves the employee’s manager or if the employee for any reason would prefer not to discuss the matter with his or her manager, the employee should report the matter to [NAME OF DESIGNATED FEMALE] and [NAME OF DESIGNATED MALE].

Temporary Employees

Any temporary employee who believes that he or she has been subject to discrimination or harassment by a supervisor, fellow employee, client, vendor, or any other person in connection with his or her employment by COMPANY should immediately report the situation to his or her placement counselor. If the complaint involves the employee’s placement counselor or if the employee for any reason would prefer not to discuss the matter with his or her placement counselor, the temporary employee should report the matter to [NAME OF DESIGNATED FEMALE] and [NAME OF DESIGNATED MALE]. Always contact COMPANY first, not the client. We are your employer and are better able to handle these situations.

Response to Complaints

All complaints of discrimination or harassment, whether written or oral, will be investigated promptly. Any investigation of such complaints will be treated as confidentially as possible. No employee will be punished or will suffer any adverse employment action as a result of bringing any harassment complaint to the attention of COMPANY or for assisting in an investigation.

Once COMPANY has completed its investigation, COMPANY will make a decision regarding the complaint and inform both the employee and the alleged harasser of COMPANY’s conclusions. If COMPANY determines that an employee engaged in conduct in violation of this policy, appropriate disciplinary action will be taken against the offending employee, up to and including termination of employment.

Please contact [NAME OF POLICY ADMINISTRATOR] if you have any questions about this policy.

4

Alcohol and Drug-Free Workplace Policy

The following policy is generic and may not comply with the laws of all states; it may not be appropriate for, or be sufficient to protect the interests of, all staffing firms. This policy should be used only as a guideline; you should consult with a qualified attorney for legal advice.

Drug and Alcohol Use

[COMPANY NAME] (hereinafter “COMPANY”) is committed to providing a safe, healthy, and productive work environment for all employees, clients, and customers. Employees who use illegal drugs or abuse legal drugs or alcohol tend to be less productive, less reliable, and prone to greater performance and attendance problems resulting in the potential for increased costs, delays, and risks, not only to our business, but also to our customers. In the interest of promoting a safer, healthier, and more productive environment, COMPANY has adopted the policy that all employees must be drug and alcohol-free in the workplace. That is, employees must be free from detectable amounts of controlled substances, other mind-altering substances, or their metabolites without regard to apparent impairment. Violations of this policy may result in discipline up to and including termination.

An important goal for COMPANY is to ensure that employees who have substance abuse problems receive assistance while at the same time doing whatever we can to ensure that our workplace is operating efficiently and safely. Early recognition and treatment are critical to successful rehabilitation and to the minimization of business, personal, family, and social disruption. Employees with substance abuse problems are strongly encouraged to voluntarily obtain assistance before performance or other work-related issues arise. Employees may use the Employee Assistance Program for this purpose.

Drug Use

COMPANY prohibits the use, possession, manufacture, distribution, sale, or being under the influence of illicit drugs on all Company property, on Company business, at Company-sponsored events, or during working hours. This prohibition includes all forms of narcotics, depressants, stimulants, or hallucinogens whose sale, purchase, transfer, distribution, use, or possession is prohibited or restricted by law.

The legal use of prescribed drugs is permitted on the job if such use does not impair the employee’s ability to work safely and does not endanger other employees.

Alcohol Use

Unauthorized use of alcohol, possession of alcohol, or being under the influence of alcohol on all Company property or while on Company business is also prohibited.

Refusal to Consent to Testing

Refusing to sign COMPANY’s Release and Consent Form for Substance Abuse Testing when required, or refusal to submit to drug or alcohol testing in accordance with the Company’s policies, will be grounds for discipline up to and including immediate termination. Any employee who tampers with, falsifies, substitutes, or alters a urine sample or breath test, or who attempts to do so, shall be subject to discipline up to and including termination.

Testing

To the extent permitted by applicable state law, COMPANY may test for drugs and/or alcohol in the following circumstances:

■   During the pre-employment period;

■   Prior to assignment with certain clients that require drug and alcohol tests;

■   When there is reasonable suspicion of prohibited drug or alcohol use;

■   After an accident that results in injury to the employee or a fellow employee or that causes property damage when there is reasonable suspicion of prohibited drug or alcohol use; or

■   As a follow-up to treatment and/or as part of a last-chance agreement with an employee.

An employee may be removed from the workforce pending the test results. If the test results are negative, the employee will be returned to work and paid for any lost time.

The company will adhere to all applicable local and state laws in the administration of testing pursuant to this policy.

Inspections

Whenever COMPANY has reasonable suspicion to believe that an employee may be in possession of alcohol, drugs, or drug paraphernalia on company property, COMPANY may search such property or may request that the employee empty the contents of his or her personal effects or allow inspection of the employee’s personal vehicle on company property.

Confidentiality

All information concerning drug and/or alcohol testing referrals and testing results, and/or treatment and rehabilitation of an employee, will be kept confidential to the greatest extent possible.

5

Release and Consent Form for Substance-Abuse Testing

The following sample release and consent form for substance-abuse testing is generic and may not comply with the laws of all states; it may not be appropriate for, or be sufficient to protect the interests of, all staffing firms. This policy should be used only as a guideline; you should consult with a qualified attorney for legal advice.

[COMPANY NAME] (hereinafter “COMPANY”) is committed to providing a safe, healthy, and productive work environment for all employees and customers. COMPANY has adopted a policy providing for drug and alcohol testing to ensure that the workplace is safe and free of illegal drugs and alcohol. In addition, certain clients of COMPANY require that employees assigned to it successfully pass a substance abuse test.

Applicant Testing

COMPANY requires all applicants who receive a conditional offer of employment to submit to a drug and alcohol test. In addition, employees interested in being considered for assignments with a client who requires drug and alcohol testing will be required to submit to a drug and alcohol test.

Reasonable Suspicion Testing

In addition, if COMPANY has reasonable suspicion to believe that an employee is under the influence of alcohol or illegal drugs, the employee may be subject to drug and alcohol testing.

Confidentiality

All information concerning drug and/or alcohol testing and related information will be maintained in a confidential file and shall be kept confidential to the greatest extent possible.

Release of Claims

I hereby release and forever discharge COMPANY, its clients, the laboratory, and the agents and employees of any of them, of and from any and all lawsuits, proceedings, claims, or causes of action arising from the test or tests, and from any action or inaction of COMPANY or its clients based on the results of the testing.

Consent to Testing

I hereby acknowledge that taking this drug and alcohol test is voluntary and I am doing so of my own free will. I consent to the release by the laboratory designated by COMPANY or its clients of the results of the drug and alcohol test or tests to COMPANY. I further understand that, should the results of said test prove positive, my application for employment and/or request to be considered for assignment with certain clients may be rejected or a conditional offer of employment or assignment may be rescinded.

6

Applicant Authorization and Consent Form for Employment References and Education Verification

The following sample applicant authorization and consent form for employment references and education verification is generic and may not comply with the laws of all states; it may not be appropriate for, or be sufficient to protect the interests of, all staffing firms. This policy should be used only as a guideline; you should consult with a qualified attorney for legal advice.

I have applied for employment with [COMPANY NAME] (hereinafter “COMPANY”). As part of that application process, I have been requested to provide references and information regarding my background from former employers, civilian or military institutions, and educational institutions.

The purpose and procedures used in this investigation have been fully described to me, and I completely understand the reasons and potential uses of such investigation. I authorize COMPANY to use any and all information acquired to make decisions regarding my employment.

I understand and agree that if any material facts are discovered that differ from those facts stated by me on my employment application, at my interview, or at any time prior to my commencing employment at COMPANY, I will no longer be eligible for consideration for employment and/or any offer of employment may be withdrawn. Furthermore, I understand and agree that if facts are later discovered that are inconsistent with or differ from facts I furnished before taking the job, that will be grounds for discipline up to and including termination.

I hereby authorize and request my references, former employers, and educational institutions that I attended to provide to COMPANY the information it requests about me, my employment, and my educational background. I release and discharge COMPANY, its employees and agents, and all persons or organizations that may provide information regarding me in accordance with this authorization, of and from any liability arising out of such inquiries by COMPANY or any response to such inquiry.

7

FCRA Compliance Letters and Documents

a. Notification of Background Check (Pursuant to the Fair Credit Reporting Act)

To:

Please be advised that a consumer report will be obtained from a consumer reporting agency for the purpose of evaluating you for employment or for retention as an employee.

This report may contain information related to your character, mode of living, past employment, education, criminal history, credit reports, driving record, and other information available from federal, state, and other agencies. Prior to the procurement of such a report, you will receive a form for your signature that authorizes the release of information.

b. Applicant Authorization and Release of Information (Pursuant to the Fair Credit Reporting Act)

The purpose of this notice and authorization form is to inform you that in connection with your application for employment with [COMPANY NAME] (hereinafter “COMPANY”) or, if hired, at any time during your employment for the purpose of evaluating you for retention, promotion, or reassignment at COMPANY, COMPANY may conduct a background check, including obtaining or having prepared an investigative consumer report, which may include information about your prior employment, military record, education, credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, criminal background, or mode of living.

Upon request, you will be informed whether or not a consumer report was requested, and if a report was requested, you will be informed of the name and address of the consumer reporting agency that furnished the report.

Should COMPANY decide not to hire you or take some other adverse employment action against you, based wholly or in part on information obtained from a consumer report, COMPANY will notify you of this fact and provide you with a copy of the consumer report relied on along with a description of your rights under federal and state law. I hereby authorize COMPANY to obtain an investigative consumer report, which may include information regarding my prior employment, military record, education, credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, criminal background, or mode of living, and to use information from such report(s) for employment purposes.

I hereby acknowledge that I have read the above statements and understand the same. I understand that, if hired, this authorization shall remain on file and shall serve as an ongoing authorization for COMPANY to procure consumer reports at any time during my employment with COMPANY. I acknowledge that a telephonic facsimile or copy of this release shall be as valid as the original.

c. Letter to Applicant to Be Used Before Taking Adverse Action

[DATE]
CONFIDENTIAL TO BE OPENED BY ADDRESSEE ONLY
[NAME OF APPLICANT]
[ADDRESS]
[CITY, STATE, ZIP]

Dear Applicant:

We write to inform you that in evaluating your application for employment we have received the enclosed consumer report. This notification is provided because an adverse decision may be based, in whole or in part, on this report.

The report was prepared by [NAME OF CREDIT REPORTING AGENCY] pursuant to an authorization signed by you at the time of your application. A copy of the authorization and a summary of your rights as a consumer are enclosed. Please note that [NAME OF CREDIT REPORTING AGENCY] is unable to provide you with specific reasons for any adverse action and is not responsible for any employment-related determination.

If you have any questions regarding this report or believe that it may contain incorrect information, you may contact [NAME OF CREDIT REPORTING AGENCY], which will respond to your inquiry. You have the right to dispute the accuracy or completeness of any information in your report and to get an additional free report from the company that supplied the credit or other background information if you ask for it within 60 days. The agency’s mailing address and phone number are listed below.

[NAME OF CREDIT REPORTING AGENCY]
[ADDRESS OF AGENCY]
[CITY, STATE, ZIP OF AGENCY]
[PHONE NUMBER OF AGENCY]

Sincerely,

[NAME]
[TITLE]
[COMPANY]

Enclosures

d. Summary of Consumer Rights Under the Fair Credit Reporting Act

The following is a reproduction of information supplied by the Consumer Financial Protection Bureau on its website at https://www.consumerfinance.gov/.

The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. There are many types of consumer reporting agencies, including credit bureaus and specialty agencies (such as agencies that sell information about check writing histories, medical records, and rental history records). Here is a summary of your major rights under the FCRA. For more information, including information about additional rights, go to www.consumerfinance.gov/learnmore or write to: Consumer Financial Protection Bureau, 1700 G Street N.W., Washington, DC 20552.

■   You must be told if information in your file has been used against you. Anyone who uses information from a CRA to take action against you—such as denying an application for credit, insurance, or employment—must tell you, and give you the name, address, and phone number of the CRA that provided the consumer report.

■   You have the right to know what is in your file. You may request and obtain all the information about you in the files of a consumer reporting agency (your “file disclosure”). You will be required to provide proper identification, which may include your Social Security number. In many cases, the disclosure will be free. You are entitled to a free file disclosure if: (1) a person has taken adverse action against you because of information in your credit report, (2) you are the victim of identity theft and place a fraud alert in your file, (3) your file contains inaccurate information as a result of fraud, (4) you are on public assistance, or (5) you are unemployed but expect to apply for employment within 60 days. In addition, all consumers are entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies. See www.consumerfinance.gov/learnmore for additional information.

■   You have the right to ask for a credit score. Credit scores are numerical summaries of your credit worthiness based on information from credit bureaus. You may request a credit score from consumer reporting agencies that create scores or distribute scores used in residential real property loans, but you will have to pay for it. In some mortgage transactions, you will receive credit score information for free from the mortgage lender.

■   You have the right to dispute incomplete or inaccurate information. If you identify information in your file that is incomplete or inaccurate, and report it to the consumer reporting agency, the agency must investigate unless your dispute is frivolous. See www.consumerfinance.gov/learnmore for an explanation of dispute procedures.

■   Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information. Inaccurate, incomplete, or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer reporting agency may continue to report information it has verified as accurate.

■   Consumer reporting agencies may not report outdated negative information. In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.

■   Access to your file is limited. A consumer reporting agency may provide information about you only to people with a valid need—usually to consider an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for access

■   You must give your consent for reports to be provided to employers. A consumer reporting agency may not give out information about you to your employer, or a potential employer, without your written consent given to the employer. Written consent generally is not required in the trucking industry. For more information, go to www.consumerfinance.gov/learnmore.

■   You may limit “prescreened” offers of credit and insurance you get based on information in your credit report. Unsolicited “prescreened” offers for credit and insurance must include a toll-free phone number you can call if you choose to remove your name and address from the lists these offers are based on. You may opt out with the nationwide credit bureaus at 1-888-5-OPTOUT (1-888-567-8688).

■   You may seek damages from violators. If a CRA, or (in some cases) a user of consumer reports or furnisher of information to a CRA, violates the FCRA, you may sue them in state or federal court.

■   Identity theft victims and active duty military personnel have additional rights. For more information, visit www.consumerfinance.gov/learnmore.

States may enforce the FCRA, and many states have their own consumer reporting laws.

In some cases, you may have more rights under state law. For more information, contact your state or local consumer protection agency or your state attorney general. The FCRA gives several different federal agencies authority to enforce the FCRA:

TYPE OF BUSINESS:

CONTACT:

1.a. Banks, savings associations, and unions with total assets of over $10 billion and their affiliates

a. Bureau of Consumer Financial Protection
1700 G Street NW
Washington, DC 20552

b. Such affiliates that are not banks, associations, or credit unions also should list, in addition to the CFPB:

b. Federal Trade Commission: Consumer
Response Center – FCRA
Washington, DC 20580
877-382-4357

2. To the extent not included in item 1 above:
a. National banks, federal savings and federal branches and federal agencies of foreign banks

a. Office of the Comptroller of the Currency Customer Assistance Group
1301 McKinney St., Suite 3450
Houston, TX 77010-9050

b. State member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act

b. Federal Reserve Consumer Help
P.O. Box 1200
Minneapolis, MN 55480

c. Nonmember insured banks, insured state branches of foreign banks, and insured state savings associations

c. FDIC Consumer Response
100 Walnut St., Box 11
Kansas City, MO 64106

d. Federal credit unions

d. National Credit Union Administration Office of Consumer Protection
Division of Consumer Compliance and Outreach
1775 Duke St.
Alexandria, VA 22314

3. Air carriers

Asst. General Counsel for Aviation Enforcement & Proceedings
Aviation Consumer Protection Division Dept. of Transportation
1200 New Jersey Ave., SE
Washington, DC 20590

4. Creditors subject to surface transportation board

Office of Proceedings, Surface Transportation Board
Dept. of Transportation
395 E St., SW
Washington, DC 20423

5. Creditors subject to packers and stockyards act

Nearest Packers and Stockyards Administration area supervisor

6. Small business investment companies

Associate Deputy Administrator for Capital Access
U.S. Small Business Affiliates
409 Third St., SW, 8th Floor
Washington, DC 20416

7. Brokers and dealers

Securities and Exchange Commission
100 F. St. NE
Washington, DC 20549

8. Federal land banks, federal land bank associations, federal intermediate credit banks, and production credit associations

Farm Credit Administration
1501 Farm Credit Dr.
McLean, VA 22102-5090

9. Retailers, finance companies, and all other creditors not listed above

FTC regional office for region in which the creditor operates or Federal Trade Commission: Consumer Response Center – FCRA
Washington, DC 20580
877-382-4357

e. Letter to Applicant to Be Used After Taking Adverse Action

[DATE]
CONFIDENTIAL TO BE OPENED BY ADDRESSEE ONLY

[NAME OF APPLICANT]
[ADDRESS]
[CITY, STATE, ZIP]

Dear Applicant:

We write to inform you that we are unable to offer you a position with [COMPANY NAME] (hereinafter “COMPANY”). This decision was based, in part, upon the consumer report previously provided to you.

The report was prepared by [NAME OF CREDIT REPORTING AGENCY] pursuant to an authorization signed by you at the time you applied for employment with COMPANY. A copy of the authorization and a summary of your rights as a consumer are enclosed. Please note that [NAME OF CREDIT REPORTING AGENCY] did not make the decision to deny your application for employment and, therefore, is unable to provide you with specific reasons for this adverse action.

If you have any questions regarding this report or believe that it may contain incorrect information, you may contact [NAME OF CREDIT REPORTING AGENCY], which will respond to your inquiry. You have the right to dispute with [NAME OF CREDIT REPORTING AGENCY] the accuracy or completeness of any information in the report. The agency’s mailing address and phone number are listed below.

[NAME OF CREDIT REPORTING AGENCY]
[ADDRESS OF AGENCY]
[CITY, STATE, ZIP OF AGENCY]
[PHONE NUMBER OF AGENCY]

Pursuant to the Fair Credit Reporting Act, you have a right to obtain a free copy of the report directly from [NAME OF CREDIT REPORTING AGENCY], provided you request a copy of the report in writing within 60 days after your receipt of this letter. In addition, you have the right to dispute the accuracy and/or completeness of any information contained in the report by contacting [NAME OF CREDIT REPORTING AGENCY].

Sincerely,

[NAME]
[TITLE]
[COMPANY]

Enclosures

8

Arbitration Agreement

The following sample arbitration agreement is generic and may not comply with the laws of all states; it may not be appropriate for, or be sufficient to protect the interests of, all staffing firms. This policy should be used only as a guideline; you should consult with a qualified attorney for legal advice.

In consideration of my being employed by [COMPANY NAME] (hereinafter “COMPANY”) and in return for COMPANY’s agreement to arbitrate employment-related disputes as provided below, I hereby agree that should any dispute, controversy, or disagreement arise out of or in connection with my compensation, employment, or cessation of employment by COMPANY, I will try in good faith to resolve such dispute, controversy, or disagreement informally with COMPANY. If such dispute, controversy, or disagreement cannot be resolved amicably, I hereby irrevocably consent to final and binding arbitration of such dispute, controversy, or disagreement in a proceeding before the American Arbitration Association pursuant to AAA’s National Rules for the Resolution of Employment Disputes. This agreement to arbitrate includes any and all claims of wrongful discharge or other adverse employment action under federal, state, local, and common law; employment discrimination, harassment, or retaliation under federal, state, or local law; compensation disputes; breach of express or implied contracts; tortious conduct; and all other statutory and common law claims and disputes I may have with COMPANY, including wage and hour claims. The arbitration shall be an individual, bilateral arbitration, and I waive any option to file a class, collective, or multi-party claims in court or in an arbitration. Likewise, I agree that the arbitrator shall have no authority to combine claims or conduct any type of arbitration other than an individual, bilateral arbitration.

The arbitration shall be held in [CITY, STATE] as promptly and practicably as possible. I understand that the award or decision made in accordance with such rules shall be final, binding, and conclusive upon me and COMPANY.

In such an arbitration proceeding, the arbitrator shall have no authority to amend, modify, or in any other way change the terms of this agreement. Judgment upon such award or decision may be entered in any court having jurisdiction hereof to the same. COMPANY will be responsible for the AAA’s administrative costs and arbitrator’s fees incurred in connection with such arbitration.

In the event I fail to abide by the terms set forth above, COMPANY shall have the right to enforce this agreement in a court of competent jurisdiction.

Neither this agreement nor any other COMPANY document constitutes an employment agreement or a promise of employment for any specific term.

9

Application for Employment for Temporary Employee

10

Employment Agreement With Temporary Employee

This AGREEMENT is entered into between [COMPANY NAME], with offices at [ADDRESS, CITY, STATE, ZIP] (hereinafter “COMPANY”), and [EMPLOYEE NAME], residing at [ADDRESS, CITY, STATE, ZIP] (hereinafter “EMPLOYEE”).

In consideration of employment or continued employment with COMPANY, EMPLOYEE agrees as follows:

1. General

The parties acknowledge that EMPLOYEE is interested in receiving temporary assignments to provide services at client sites through COMPANY. Details of specific assignments will be described on a separate form. In consideration of EMPLOYEE’s employment and continued employment by COMPANY, and in consideration of the mutual promises and benefits set forth below, the parties hereby enter into this agreement.

2. Employment at Will

a)  The parties agree that this is not intended to create, add to, or imply any contractual or other right of employment by COMPANY. EMPLOYEE confirms that his or her employment with COMPANY is at will, and no other inference is to be drawn from this Agreement.

b)  EMPLOYEE understands and agrees that he or she is employed by COMPANY and is not an employee of any client of COMPANY. EMPLOYEE agrees to accept and comply with the rules and working conditions established by COMPANY, as well as any rules of the client applicable to the project or assignment.

3. Waiver of Any Claim to Client Benefits

In consideration for potential assignments to its clients by COMPANY, EMPLOYEE agrees that he or she is solely an employee of COMPANY for benefit plan purposes and that EMPLOYEE is eligible only for such employee benefits as COMPANY may offer to its employees. EMPLOYEE understands and agrees that COMPANY cannot and does not guarantee EMPLOYEE a specific number of assignments or a fixed duration of any particular assignment. EMPLOYEE further understands that EMPLOYEE is not eligible for, or entitled to participate in, any benefit plan offered by COMPANY’s clients or their parents, affiliates, subsidiaries, or successors to any of their direct employees, regardless of the length of EMPLOYEE’s assignment to COMPANY’s clients and regardless of whether EMPLOYEE is found to be a common law employee of COMPANY’s clients for any purpose. Therefore, with full knowledge and understanding, EMPLOYEE hereby expressly waives any claim or right that EMPLOYEE may have to such benefits and agrees not to make any claim for such benefits.

4. Waiver of Any Claim Against Client for Workplace Injuries

In consideration for potential assignments to its customers and clients by COMPANY, EMPLOYEE acknowledges and agrees that any work-related injuries that might be sustained by EMPLOYEE are covered by state workers’ compensation statutes, and to avoid the circumvention of such state statutes that may result from suits against COMPANY’S customers or clients, based on the same injury or injuries, and to the extent permitted by law, EMPLOYEE HEREBY WAIVES AND FOREVER RELEASES ANY RIGHTS EMPLOYEE MIGHT HAVE to make claims or bring suit against any client or customer of COMPANY, for damages based upon injuries which are covered under such workers’ compensation statutes.

5. Agreement Not to Disclose Confidential Information

a)  EMPLOYEE acknowledges and agrees that in the course of performing services for companies or persons to whom he or she is introduced or assigned by COMPANY (i.e., COMPANY’s clients) (hereinafter “CLIENT”), he or she shall be given or have access to information and materials that are the exclusive property of clients and that are confidential, proprietary, and trade secrets of such clients. This information and materials include, but are not limited to, the terms of EMPLOYEE’s assignment, including EMPLOYEE’s compensation and services rendered; the identity of other COMPANY employees assigned to clients and their services; and any inventions, designs, tools, equipment, published or unpublished written materials, plans, processes, costs, methods, systems, improvements, financial information, and project and computer-related technical matters, including, without limitation, design performance specifications, operating procedures, systems documentation, utility reference manuals, language reference manuals, and any other private or nonpublic information of or belonging to the clients which EMPLOYEE obtains or has access to while working on assignment to such clients (hereinafter “Confidential Information”).

b)  EMPLOYEE acknowledges and agrees that in the course of performing services for COMPANY he or she shall be given or have access to information and materials that are the exclusive property of COMPANY and that are confidential, proprietary, and trade secrets of COMPANY. This information and materials include, but are not limited to, the terms of EMPLOYEE’s assignments, including EMPLOYEE’s compensation and services rendered, the identity of COMPANY clients, and the identity of other COMPANY employees assigned to COMPANY clients.

c)  EMPLOYEE promises and agrees that, at no time during or after such assignment, will he or she use or disclose Confidential Information without the express prior written consent of client and COMPANY, except as necessary to perform his or her duties while on assignment or to authorized representatives of COMPANY or client.

6. Agreement to Return Documents and Work Product

Upon the termination of EMPLOYEE’s assignment with any client for any reason, EMPLOYEE promises and agrees to return immediately to such client any and all Confidential Information and all other materials or documents, including computer printouts and computer disks, belonging to such Client or that contain Confidential Information, unless the client consents in writing to EMPLOYEE’s retention thereof.

7. Assignment of Copyrights and Patents

In connection with EMPLOYEE’s assignment to provide services to [NAME OF CLIENT], EMPLOYEE agrees that any and all discoveries and/or inventions (which shall include improvements and modifications, but shall not be limited hereto) relating to work performed by EMPLOYEE, or relating to matters disclosed to EMPLOYEE in connection with work to be performed, or suggested by such matters, whether or not patentable, which discoveries and/or inventions are made or conceived by EMPLOYEE, solely or jointly with others, during the term of EMPLOYEE’s assignment (regardless of whether conceived or developed during working hours) or during a period of one year thereafter, shall be the property of [NAME OF CLIENT] as “work made for hire” to the extent provided by sections 101 and 201(b) of the Copyright Act, 17 U.S.C. 101 et seq., and such discoveries and/or inventions shall be promptly disclosed to [NAME OF CLIENT]. [NAME OF CLIENT] shall have the right to file and prosecute, at its own expense, all patent applications, whether U.S. or foreign, on said discoveries and/or inventions. EMPLOYEE shall, during EMPLOYEE’s assignment with [NAME OF CLIENT] or any time thereafter, provide to [NAME OF CLIENT] all documents, information, and assistance requested for the filing or prosecution of any such patent application, for the preparation, prosecution, or defense of any legal action or application pertaining to such discoveries and/ or invention, and for the assignment or conveyance to CLIENT of all right, title, and interest in and to such discoveries and/or inventions, patent applications, and letters patent issuing thereon.

8. Indemnification

a)  EMPLOYEE agrees to indemnify and hold COMPANY harmless of and from any losses, judgments, liabilities, or costs (including reasonable attorneys’ fees) that COMPANY incurs as a direct or indirect result of any act, statement, error, omission, conduct, or fault of EMPLOYEE.

b)  If EMPLOYEE does not complete any assignment (except for the client’s cancellation for reasons unrelated to EMPLOYEE’s performance), EMPLOYEE shall indemnify and hold COMPANY harmless for all losses, liabilities, and expenses COMPANY may incur, including lost fees, commission, or attorneys’ fees, or other compensation as a result of such noncompletion.

9. Consent to Injunctive Relief

EMPLOYEE acknowledges that COMPANY will suffer irreparable damage, including damage to its client relationships and reputation, in the event EMPLOYEE violates or threatens to violate any provision contained in Sections 4 through 7 hereof. EMPLOYEE therefore agrees that in the event of such violation or threatened violation, COMPANY shall be entitled, in addition to its other remedies, to equitable and injunctive relief to restrain such violation(s) by EMPLOYEE and others acting in concert with EMPLOYEE, without the obligation to post an injunction bond, pending the arbitration on the merits of the controversy in accordance with Section 10 below. EMPLOYEE hereby consents to personal jurisdiction of the courts of the state of [NAME OF STATE IN WHICH COMPANY DOES BUSINESS] should COMPANY exercise its rights under this Section 9.

10. Arbitration

a)  The parties agree that any controversy or dispute arising out of or in connection with EMPLOYEE’s employment, the terms and conditions of such employment, or the termination of such employment shall be resolved in binding arbitration before the American Arbitration Association in accordance with its National Rules for the Resolution of Employment Disputes in effect at the time a demand for arbitration is made. EMPLOYEE understands that COMPANY will bear the administrative cost of arbitration and the arbitrator’s fees. The arbitrator’s award will be final and binding upon the EMPLOYEE and COMPANY.

b)  This Agreement to arbitrate includes any and all claims of wrongful discharge or other adverse employment action under federal, state, local, and common law; employment discrimination, harassment, or retaliation under federal, state, or local law; compensation disputes; breach of express or implied contracts; tortious conduct; and all other statutory and common law claims and disputes EMPLOYEE may have with COMPANY, including wage and hour claims. The arbitration shall be an individual, bilateral arbitration, and EMPLOYEE waives any option to file a class, collective, or multi-party claims in court or in an arbitration. Likewise, EMPLOYEE agrees that the arbitrator shall have no authority to combine claims or conduct any type of arbitration other than an individual, bilateral arbitration.

c)  In such arbitration, the arbitrator shall have no authority to amend, modify, or in any other way change any of the terms of this agreement. In the event that EMPLOYEE fails to seek arbitration as provided above, COMPANY shall have the right to enforce this provision in a court of competent jurisdiction.

11. Client as Third Party Beneficiary

EMPLOYEE acknowledges that this Agreement, and the rights hereunder, shall inure to the benefit of each client to which he or she is assigned, and its successors and assignees, as third party beneficiaries of this Agreement.

12. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the state of [NAME OF STATE IN WHICH COMPANY DOES BUSINESS], without references to any conflicts-of-law principles thereof. The canon of construction that agreements are to be construed against the drafter shall not be applicable in any dispute arising hereunder.

13. Severability

Each provision of the Agreement shall be considered severable such that if any one provision or clause conflicts with existing or future applicable law, or may not be given full effect because of such law, this shall not affect any other provision of the Agreement that can be given effect without the conflicting provision or clause.

14. Entire Employment Agreement; No Modification

This Agreement contains the entire agreement between COMPANY and EMPLOYEE and supersedes any and all prior agreements or understandings (whether written or oral) between EMPLOYEE and COMPANY relating to the subject matter covered by the Agreement. Any oral representation or modification of this Agreement shall be of no force or effect. This Agreement may not be modified, altered, or terminated except upon the express written consent of EMPLOYEE and COMPANY.

15. Disclosure of Employment Agreement

EMPLOYEE agrees that he or she will advise any prospective employer of the covenants and restrictions in this Agreement. EMPLOYEE also authorizes COMPANY to advise any other company or person of the existence and terms of this Agreement.

16. Acknowledgments

a)  EMPLOYEE acknowledges that the covenants and conditions of this Agreement are reasonable and necessary for the protection of COMPANY’s business, and EMPLOYEE further acknowledges that in the event his or her employment with COMPANY ends for any reason, he or she will be able to earn a livelihood even if this Agreement is fully enforced against him or her.

b)  EMPLOYEE acknowledges and agrees that he or she is entering into this Agreement voluntarily and of his or her own free will in order to obtain the benefits of employment by COMPANY.

c)  EMPLOYEE acknowledges that he or she has received a copy of this Agreement and has read and understands its terms.

IN WITNESS WHEREOF, and intending to be legally bound thereby, the undersigned have set their hands as of the date stated below.

[COMPANY]

[SIGNATURE]

[PRINTED] NAME

[TITLE]

[DATE]

[EMPLOYEE]

[SIGNATURE]

[PRINTED] NAME

[TITLE]

[DATE]

11

Application for Employment for Regular Employee

12.

Employment Agreement With Regular Employee

The following policy is generic and may not comply with the laws of all states, may not be appropriate for, or be sufficient to protect the interests of all staffing firms. This policy should be used only as a guideline and you should consult with a qualified attorney for legal advice.

This AGREEMENT is entered into between [COMPANY NAME] (hereinafter “COMPANY”), with offices at [ADDRESS, CITY, STATE, ZIP], and [EMPLOYEE NAME] (hereinafter “EMPLOYEE”), residing at [ADDRESS, CITY, STATE, ZIP].

In consideration of EMPLOYEE’s employment and continued employment by COMPANY, the parties hereby agree as follows:

Employment

1. COMPANY agrees to employ EMPLOYEE as an employee at will, and EMPLOYEE hereby accepts such employment. EMPLOYEE acknowledges that just as EMPLOYEE is free to resign his or her employment at any time, COMPANY has the right to terminate his or her employment for any reason at any time. While employed by COMPANY, EMPLOYEE shall devote his or her full working time and best efforts to COMPANY’s affairs and shall faithfully and diligently serve COMPANY’s interest.

2. EMPLOYEE’s compensation and benefits are set forth in Rider A to this Agreement.

3. EMPLOYEE acknowledges and agrees that 10% of his or her overall compensation is in consideration for EMPLOYEE’s promise to comply with Paragraphs 6 through 14 of this Agreement.

Employee Warranties

4. EMPLOYEE warrants that he or she is free to enter into the terms of this Agreement and has no obligations inconsistent with unrestrained employment for COMPANY. EMPLOYEE further agrees that during this employment, EMPLOYEE shall not prepare for, undertake, or discuss with other employees of COMPANY any business or professional employment of any kind that is competitive with COMPANY.

Agreement Not to Disclose COMPANY’s Confidential Information

5. EMPLOYEE acknowledges that COMPANY has, through the expenditure of considerable time and expense over the course of many years, developed extensive confidential and secret information, whether on written lists, computer disks, computer printouts, or hard copy documents, regarding the following:

a)  Its customers’ names, addresses, preferences, seasonal and other business cycles, buying patterns, pricing and discounting, key contact personnel, special requirements, financial and/or contractual relations, job orders, requisitions, bids and bidding practices, and related information

b)  Its applicants or candidates, including their names, home telephone numbers, addresses, skills, abilities, test results, evaluations, work history, pay rates, and related policies

c)  Various documents containing information relating to COMPANY’s recruiting, training, operating, advertising, marketing, and financial policies and practices, financial information, and other nonpublicly disclosed financial information (hereinafter collectively referred to as “Confidential Information”).

6. EMPLOYEE acknowledges that COMPANY’s Confidential Information is proprietary, not available to the public or to its competitors, and provides COMPANY with a unique and valuable competitive advantage.

7. EMPLOYEE is, or will be, employed in a confidential relationship with COMPANY, and EMPLOYEE will perform certain duties in regard to COMPANY’s applicants, candidates, customers and potential customers, and will be entrusted with Confidential Information in connection with the performance of those duties.

8. Accordingly, during EMPLOYEE’s employment by COMPANY, and for a period of 12 months after such employment ends for any reason, EMPLOYEE promises and agrees, that (except as may be necessary for the performance of his or her duties on behalf of COMPANY) EMPLOYEE shall not copy, disclose, use, reproduce, sell, remove from the premises, or make available to any other person or entity, or use for his or her own benefit, any portion of the Confidential Information, whether prepared or obtained by EMPLOYEE or otherwise.

Agreement Not to Solicit Employees of COMPANY

9. During EMPLOYEE’s employment by COMPANY, and for a period of 12 months after such employment ends for any reason, EMPLOYEE promises and agrees not to solicit any applicant, candidate, or regular employee of COMPANY, or persuade, encourage or induce any such employee, to cease his or her employment with COMPANY, or to become employed by or affiliated in any capacity with any person or firm engaged in the same or similar business as COMPANY, or to contact or communicate with any such employee, applicant, or candidate for any purpose prohibited by this paragraph.

Agreement Not to Solicit Customers of COMPANY

10. During EMPLOYEE’s employment by COMPANY, and for a period of 12 months after such employment ends for any reason, EMPLOYEE promises and agrees not to initiate communications with, telephone, send announcements to, correspond with, contact, or solicit any person or firm that had been a Customer of COMPANY at any time during EMPLOYEE’s employment, or seek to have any such customer divert its patronage, in whole or in part, from COMPANY to any other person or firm, or otherwise seek in any way to interfere with the business relationship between COMPANY and any of its customers.

11. For the purposes of this Agreement, “customer of COMPANY” includes but is not limited to any person, corporation, partnership, firm, company, association, governmental agency, institution, or other entity that, during the period of 12 months prior to the cessation of his or her employment with COMPANY, placed one or more job orders for temporary or permanent personnel (whether or not such job orders were filled), or paid any fees, liquidated damages, commissions, or payments of any kind to COMPANY, or was the subject of a sales presentation on the customer’s premises by EMPLOYEE, or entered into a contract or contracts with COMPANY, or otherwise engaged in any business transaction with COMPANY.

Agreement to Return Documents and Work Product

12. Upon the termination of EMPLOYEE’s employment with COMPANY for any reason, EMPLOYEE promises and agrees to return immediately to COMPANY any and all Confidential Information and all other materials or documents, including mailing lists, indexes, computer printouts, and computer disks, belonging to COMPANY or that contain information pertaining to COMPANY’s business, methods, customers, potential customers, or employees, unless COMPANY consents in writing to the EMPLOYEE’s retention thereof.

13. If EMPLOYEE fails to obtain such written consent or fails to return immediately all such materials and documents, EMPLOYEE agrees to and hereby does waive and forfeit all claims (to the fullest extent permitted by law) to any unpaid commissions, severance pay, vacation pay, sick pay, bonuses, expense reimbursements, or other payments that might otherwise be due, without affecting COMPANY’s right to compel the return of said records and papers, and to enforce all provisions of this Agreement.

Consent to Injunctive Relief

14. EMPLOYEE acknowledges that COMPANY will suffer irreparable damage in the event EMPLOYEE violates any provision contained in Paragraphs 5 through 13, and agrees that in the event of such violation, COMPANY shall be entitled, in addition to its other remedies, to temporary and permanent injunctive relief to restrain such violation(s) by EMPLOYEE and others acting in concert or participation with EMPLOYEE.

Liquidated Damages

15. EMPLOYEE recognizes and acknowledges that it would be difficult to ascertain the damages arising from EMPLOYEE’s violation of his or her agreements contained in Paragraphs 5 through 13. Therefore, EMPLOYEE agrees that if he or she violates any such provision of this Agreement, EMPLOYEE shall pay COMPANY, as liquidated damages and not as a penalty, an amount equal to the gross profit or 50% of the gross sales, whichever is greater, resulting from any revenues directly or indirectly generated by EMPLOYEE for his or her own benefit or as shareholder, director, officer, agent, partner, COMPANY employee, consultant, or in any other capacity with any other person or entity engaged in the same or similar business as COMPANY during the period of 12 months after the EMPLOYEE’s employment with COMPANY ends.

Tolling of Time

16. The time periods agreed to in this Agreement shall be tolled and shall cease to run during any violation of the agreements set forth in Paragraphs 5 through 13.

Attorneys’ Fees

17. In the event EMPLOYEE breaches any provision of Paragraphs 5 through 13 of this Agreement, EMPLOYEE promises and agrees to reimburse COMPANY for its attorneys’ fees and expenses incurred in enforcing this Agreement.

Governing Law; Service of Process; Waiver of Jury Trial

18. This Agreement shall be interpreted and construed according to the laws of the state of [NAME OF STATE IN WHICH COMPANY CONDUCTS BUSINESS]. The parties agree to accept service of all legal process by regular and certified mail, return receipt requested, directed to their respective addresses set forth above. The parties expressly waive their right to a trial by jury with respect to any dispute or controversy arising under or pursuant to this Agreement, and consent to a trial by judge instead.

Arbitration [OPTIONAL CLAUSE, Paragraphs 19 through 21]

19. The parties agree that any controversy or dispute arising out of or in connection with EMPLOYEE’s employment, the terms and conditions of such employment, or the termination of such employment shall be resolved in binding arbitration before the American Arbitration Association in accordance with its National Rules for the Resolution of Employment Disputes in effect at the time a demand for arbitration is made. EMPLOYEE understands that COMPANY will bear the administrative cost of the arbitration and the arbitrator’s fees. The arbitrator’s award will be final and binding upon EMPLOYEE and COMPANY.

20. This agreement to arbitrate includes any and all claims of wrongful discharge or other adverse employment action under federal, state, local, and common law; employment discrimination, harassment, or retaliation under federal, state, or local law; compensation disputes; breach of express or implied contracts; tortious conduct; and all other statutory and common law claims and disputes EMPLOYEE may have with COMPANY.

21. In such arbitration, the arbitrator shall have no authority to amend, modify, or in any other way change any of the terms of this Agreement. In the event that EMPLOYEE fails to seek arbitration as provided above, COMPANY shall have the right to enforce this provision in a court of competent jurisdiction.

Severability

22. If any provision or clause hereof is adjudged by any court of law to be void or unenforceable in whole or in part, such adjudication shall not be deemed to affect the validity of the remainder of the Agreement. Each provision, paragraph, and subparagraph is declared to be separable from every other provision, paragraph, and subparagraph, and constitutes a separate or distinct agreement that may be separately enforced.

Waiver of Breach

23. The waiver by COMPANY of a breach of any provision of this Agreement by EMPLOYEE shall not operate or be construed as a waiver of any continuing or subsequent breach by EMPLOYEE or as a waiver by COMPANY of any past, present, or future right granted under this Agreement.

Binding Effect

24. EMPLOYEE acknowledges that this Agreement, and the rights hereunder, shall inure to the benefit of COMPANY, and to its successors or assigns.

Rule of Construction

25. The rule of construction that provides that agreements shall be construed against the drafter shall not be applied or considered in any action or proceeding to enforce any provision of this Agreement.

Understanding of Parties

26. This Agreement represents the entire agreement between the parties and supersedes any and all prior agreements or understandings, oral or written, between EMPLOYEE and COMPANY pertaining to the subject matter covered by the Agreement. EMPLOYEE acknowledges that the covenants and conditions of this Agreement are reasonable and necessary for the protection of COMPANY’s business, and EMPLOYEE further acknowledges that in the event his or her employment with COMPANY ends for any reason, he or she will be able to earn a livelihood even if this Agreement is fully enforced against him or her.

Notice of Covenants to Prospective Employer

27. EMPLOYEE agrees that he or she will advise any prospective employer of the covenants and restrictions of this Agreement. EMPLOYEE also authorizes COMPANY to advise any other company or person of the existence and terms of this Agreement.

Acknowledgment of Receipt; No Coercion or Duress

28. By signing below, EMPLOYEE acknowledges receiving a copy of this Agreement.

29. EMPLOYEE acknowledges and agrees that he or she is entering into this Agreement voluntarily and of his or her own free will in order to obtain the benefits of employment and continued employment by COMPANY. EMPLOYEE acknowledges and agrees that he or she has not been coerced or suffered any duress in order to induce him or her to enter into this Agreement.

IN WITNESS WHEREOF, and intending to be legally bound thereby, the undersigned have set their hands as of the date stated below.

[COMPANY]

[SIGNATURE]

[PRINTED NAME]

[TITLE]

[DATE]

Rider A: Initial Compensation and Benefits

DATE:
EMPLOYEE NAME:
SALARY:
BENEFITS:

Nothing in this rider shall be construed as creating any contractual rights; or precluding COMPANY from modifying COMPANY’s compensation or benefits in the future on a prospective basis only; or limiting COMPANY’s right to modify, alter, or delete any aspect of its benefits package; or guaranteeing to EMPLOYEE employment for any specific time period; or changing or modifying in any way the provisions of the Agreement to which this rider is attached.

[EMPLOYEE]

[SIGNATURE]

[PRINTED NAME]

[TITLE]

[DATE]

13

Family and Medical Leave Act Policy

[COMPANY NAME] (hereinafter “COMPANY”) fully complies with the Family and Medical Leave Act of 1993 (FMLA). As such, COMPANY will grant an unpaid leave of absence for a period of up to 12 weeks to eligible employees for one of the following reasons:

1. Incapacity due to pregnancy, prenatal medical care, or child birth;

2. To care for the employee’s child after birth, or placement for adoption or foster care;

3. To care for the employee’s family member (spouse— including same-sex spouses where recognized under state law, child, or parent) with a serious health condition;

4. Because of the employee’s own serious health condition that renders the employee unable to perform his or her job functions; or

5. Because of any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on covered activity duty.

COMPANY will grant an unpaid leave of absence for a period of up to 26 weeks to an eligible employee to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember’s spouse, son, daughter, parent, or next of kin.

COMPANY will follow applicable federal and state laws in reviewing and approving such leave requests.

Employee Eligibility

To be eligible for FMLA benefits, an employee must meet the following requirements:

1. Worked for COMPANY for at least 12 months; and

2. Worked at least 1,250 hours during the 12 months immediately preceding commencement of the leave.

Because the laws of certain states provide greater or different protection to employees, employees should always contact a human resource representative to determine eligibility and leave entitlements under their specific circumstances.

Leave Year

The leave year will be a “rolling” 12-month period measured backward from the date an employee uses FMLA leave. Each time an employee takes FMLA leave, the remaining leave entitlement is the balance of 12 weeks not used in the preceding 12 months.

Leave for birth or placement for adoption or foster care must commence within 12 months of the birth or placement. Married couples in which both spouses are employed by COMPANY are only entitled to a total of 12 workweeks of family leave to care for a newborn or a child placed for adoption or foster care. However, individuals who are married and work for the same employer are both entitled to the full 12-week leave under the FMLA for their own serious health condition or to care for a family member with a serious health condition.

Intermittent Leave

Employees may take FMLA leave intermittently or on a reduced schedule. Intermittent leave—which means taking leave in blocks of time or reducing the normal weekly or daily work schedule—is available when medically necessary to care for a family member with a serious health condition, or because the employee has a serious health condition and is unable to work.

Use of Accrued Paid Leave

Employees taking FMLA leave for the birth or placement of a child or to care for a family member with a serious health condition will be required to use accrued paid vacation or personal leave for all or part of the period of FMLA leave. Employees taking FMLA leave because of the employee’s own serious health condition will be required to use accrued paid vacation, personal leave, or sick leave for all or part of the period of leave. The period of paid leave will count against the employee’s 12-week entitlement. Otherwise, the 12-week FMLA leave period will be without pay.

Maintenance of Health Benefits

COMPANY will maintain group health insurance coverage for employees on FMLA leave whenever such insurance was provided before the leave was taken, and coverage will be on the same terms as if the employee had continued to work. Where applicable, employees should make arrangements to pay for their share of health insurance premiums while on leave. If paid leave is used for any portion of the family or medical leave, the employee’s portion of the premiums will be deducted from the employee’s paycheck under the same terms and conditions that existed before the leave began. At the time an employee begins unpaid family or medical leave, he or she will receive written instructions detailing the time and manner in which the employee’s portion of the premiums are to be paid by the employee.

COMPANY may recover from an employee who fails to return to work at the end of the leave health insurance premiums it has paid during a period of unpaid FMLA leave unless the failure to return to work was due to the following:

1. The continuation, recurrence, or onset of a serious health condition that would have entitled the employee to FMLA leave; or

2. Other circumstances beyond the employee’s control.

An employee who returns to work for at least 30 days is deemed to have returned to work.

Job Restoration

Upon return from FMLA leave, COMPANY will restore the employee to his or her original job, or to an equivalent job with equivalent pay, benefits, and other employment terms and conditions. However, the FMLA does not entitle a restored employee to any more rights, benefits, or employment beyond that to which the employee would have been entitled had the employee not taken FMLA leave.

An employee’s use of FMLA leave will not result in the loss of any employment benefit that the employee earned or was entitled to before using FMLA leave.

COMPANY may decline to reinstate certain highly paid “key” employees after using FMLA leave in circumstances where keeping the position vacant would cause substantial and grievous economic injury to the company’s operations. Under these circumstances, the employee will be notified at the start of the leave that he or she is considered a “key” employee and that he or she may not be entitled to job restoration at the end of the leave.

Notice and Certification

Employees seeking to use FMLA leave will be required to provide:

1. Thirty days’ advance notice of the need to take FMLA leave when the leave is foreseeable or, if the need for leave is unforeseeable, notice as soon as practicable;

2. Medical certification supporting the need for FMLA leave due to a serious health condition affecting the employee or an immediate family member;

3. Periodic reports during FMLA leave regarding the employee’s status and intent to return to work; and

4. If leave was taken because of the employee’s own serious health condition, medical certification that the employee is able to return to work.

When FMLA leave is needed to care for an immediate family member with a serious health condition or the employee’s own serious health condition, and is for planned medical treatment, the employee must try to schedule the treatment so as not to unduly disrupt the company’s operations.

COMPANY will furnish an employee with information regarding the employee’s rights and responsibilities under the FMLA when the employee gives notice of his or her intent to take FMLA leave.

14

FMLA ‘Poster’ (U.S. Department of Labor Publication)

15

OSHA Fact Sheet: HIPAA and OSHA Whistleblower Complaints

Appendix F

Summary of Selected State Employment Discrimination Statutes Relevant to Private Employers

Many states have additional employment discrimination laws, including but not limited to laws prohibiting harassment on the basis of sex (as well as other protected classifications) and prohibiting retaliation for engaging in protected activity. Therefore, staffing firms should check with legal counsel to ensure compliance with all such laws. This summary was prepared by Seyfarth Shaw LLP.

State Employment Discrimination Law

Prohibited Basis of Discrimination

Scope of Coverage

Statute of Limitations

ALABAMA

Alabama Age Discrimination in Employment Act
(AL ST § 25–1-20 to § 25–1-29)

Age (40 years and older)

Businesses with 20 or more employees

A charge or civil action under the act must be filed within 180 days of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit.

ALASKA

Alaska Human Rights Law
(AK ST § 18.80.200 et seq.)

Race, religion, color, national origin, ancestry, age, sex, physical or mental disability, marital status, changes in marital status, pregnancy, or parenthood

Businesses with one or more employees within the state

A charge must be filed with the state commission within 180 days of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action must be filed within two years.

ARIZONA

Arizona Civil Rights Act
(AZ ST § 41-1461 et seq.)

Race, color, religion, sex (including pregnancy), age (40 years and older), disability, genetic test result, or national origin

Businesses with 15 or more employees; however, in the case of sexual harassment, the law covers businesses with one or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

ARKANSAS

Arkansas Civil Rights Act of 1993
(AR ST § 16–123–101 et seq.)

Race, religion, national origin (includes ancestry), gender (includes pregnancy, childbirth or related medical conditions), or the presence of any sensory, mental, or physical disability

Businesses with nine or more employees within the state

A charge must be filed with the EEOC within 180 days of the alleged discriminatory act. A claim must be filed within one year of the alleged discriminatory act, or within 90 days of right to sue or notice of determination from the EEOC, whichever is later. A claimant is not required to exhaust administrative remedies prior to filing suit.

CALIFORNIA

California Fair Employment and Housing Act
(CA Gov § 12900 et seq.)

Race, color, religious creed (including dress and grooming), sex (including pregnancy, childbirth, breastfeeding, or related medical conditions; as well as gender, gender identity, and gender expression), sexual orientation, transgender transitioning status, physical or mental disability (including HIV/AIDS), medical condition (including cancer, a record or history of cancer, or genetic characteristics), military or veteran status, marital status (includes registered domestic partners), age (40 years and older), national origin (including language use restrictions), or ancestry. Employer also may not refuse leave based on pregnancy, childbirth, or related medical conditions, or take adverse employment action for use of family care and medical leave.

Businesses with five or more employees

A charge must be filed within 365 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

COLORADO

Colorado Anti-Discrimination Act of 1957
(CO ST § 24–34–401 et seq.)

Disability, race, creed, color, sex, age (40–70 years), national origin, sexual orientation (including transgender status and the perception of such), religion, or ancestry

Businesses with one or more employees

A charge must be filed within six months of the alleged discriminatory act. A claimant must exhaust administrative remedies.

CONNECTICUT

Connecticut Fair Employment Practices Act
(CT ST § 46a-60 et seq.)

Race, color, religious creed, age, sex (including pregnancy, childbearing capacity, sterilization, fertility, or related medical conditions), gender identity or expression, sexual orientation (actual or perceived) or civil union status, marital status, national origin, ancestry, genetic information, past or present history of mental disability, mental retardation, or learning or physical disability (including but not limited to blindness)

Businesses with three or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies. Civil actions must be filed within two years of filing with the commission.

DELAWARE

Delaware Discrimination in Employment Act and Handicapped Persons Employment Protections Act
(DE ST 19 § 710, 720 et seq.)

Race, color, marital status, handicap, genetic information, religion, sex (including pregnancy), gender identity, sexual orientation, national origin, age (40 years and older), volunteer emergency responder status, status as a victim of domestic violence, sexual offenses, or stalking, reproductive health decisions, or family responsibilities

Businesses with four or more employees within the state; however, with respect to disability discrimination, the law covers businesses with 15 or more employees in the state

A charge must be filed within 300 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

DISTRICT OF COLUMBIA

District of Columbia Human Rights Act of 1977
(DC ST § 2–1401.01 to 2–1411.06)

Actual or perceived: Race, color, religion, national origin, sex (including pregnancy, childbirth, and related medical conditions, and breastfeeding), age (18 years or older), marital status (includes domestic partners), personal appearance, sexual orientation, gender identity or expression, familial status, family responsibilities, genetic information, disability, matriculation, source of income, status as a victim of an intra-family offense, place of business or residence, or political affiliation

Businesses with one or more employees

A charge or civil action must be filed within one year of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit.

FLORIDA

Florida Civil Rights Act of 1992
(FL ST § 760.01 et seq.)

Race, color, religion, sex, national origin, age, handicap, or marital status

Businesses with 15 or more employees

A charge must be filed within 365 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

GEORGIA

Georgia has no comprehensive antidiscrimination law. However, it has separate statutes prohibiting age discrimination
(O.C.G.A. § 34–1-2); unequal pay based on gender for equal work (O.C.G.A. § 34–5-1 et seq.); and disability discrimination (Georgia Equal Employment for Persons With Disabilities Code, O.C.G.A. § 34-6A-1 et seq.)

Age (40–70 years), disability, or sex-based pay discrimination

As to age discrimination, the statute covers any person, firm, association, or corporation carrying on or conducting business in Georgia. With respect to sex-based pay discrimination, the law covers any employer of 10 or more employees. As to disability-based discrimination, the law covers any employer with 15 or more employees.

A claimant is not required to exhaust administrative remedies. A charge with the EEOC under the Persons With Disability Code must be filed within 180 days of the alleged discriminatory act. The statute of limitations to file a claim of sex-based pay discrimination is one year after the cause of action accrues. There is no private right of action under the age discrimination law.

Hawaii

Hawaii Employment Discrimination Law
(HI ST § 378-1 et seq.)

Race, sex, (including pregnancy, childbirth, or related medical conditions, and gender identity or expression), age, religion, color, ancestry, sexual orientation, disability (including genetic information), known relationship with a disabled person, marital status, breastfeeding, absence due to National Guard membership, credit history or report (not including managerial or supervisory employees), assignment of income for satisfaction of child support obligations, known domestic violence or sexual assault victim status, or arrest and court record

Businesses with one or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

IDAHO

Idaho Human Rights Act
(ID ST § 67-5901 et seq.)

Race, color, national origin, religion, sex, disability (and association with a person with a disability), or age (40 and over)

Businesses with five or more employees in the state

A charge must be filed within one year of the alleged discriminatory act. A claimant must exhaust administrative remedies.

ILLINOIS

Illinois Human Rights Act (IL ST 775 5/1-101 to 5/10-104)

Race, color, religion, sex, sexual orientation (including gender identity, actual or perceived), national origin, ancestry, age (40 years and older), pregnancy (including childbirth or related conditions), marital status, physical or mental disability, military status, unfavorable military discharge, persons having obtained an order of protection due to domestic violence, citizenship status, or arrest or expunged or sealed conviction record

Businesses with 15 or more employees within the state; however, in the case of a sexual harassment, retaliation, or disability discrimination (including pregnancy) charge, the law covers businesses with one or more employees within the state)

A charge must be filed within 180 days of the alleged discriminatory act. There is no private right of action under the IHRA. If the department finds substantial evidence or misses time limits, a complainant may pursue a claim in Illinois Human Rights Commission.

INDIANA

Indiana Civil Rights Law
(IN ST § 22–9-1–1, 22–9-2, 22–9-5 et seq.)

Race, religion, color, sex, disability, national origin, age (40–75 years), or ancestry

Businesses with six or more employees within the state; however, with respect to age discrimination, the law covers any person in the state employing one or more individuals, and as to disability discrimination, the law covers any person employing 15 or more individuals

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies. No compensatory or punitive damages are allowed.

IOWA

Iowa Civil Rights Act of 1965 (IA ST § 216.1 et seq.)

Age (18 years and older), race, color, religion or creed, sex, national origin, pregnancy, gender identity, sexual orientation, childbirth, nonjob-related physical or mental disability, and HIV, AIDS, or AIDS-related complexes

Any person employing four or more employees

A charge must be filed within 300 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

KANSAS

Kansas Act Against Discrimination
(KS ST § 44-1001 et seq.), Age Discrimination in Employment Act (KS ST § 44-1111 et. seq.)

Race, color, religion, sex, disability, national origin or ancestry, age (18 years and older), or genetic information

Businesses within the state with four or more employees

A charge must be filed within six months of the alleged discriminatory act. A claimant must exhaust administrative remedies.

KENTUCKY

Kentucky Civil Rights Act
(KY ST § 344.010 et seq.)

Disability, race, color, religion, national origin, sex (including pregnancy, childbirth, and related medical conditions), age (40 years and older), or status as a smoker or nonsmoker

Businesses with eight or more employees within the state. For disability claims, businesses with 15 or more employees.

A charge must be filed within 180 days of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action must be filed within five years.

LOUISIANA

Louisiana Employment Discrimination Law
(LA ST § 23:301 et seq.)

Age (40 years and older), disability, race, color, religion, sex, national origin, pregnancy, childbirth, and related medical conditions, genetic information, or sickle cell trait

Business within the state: as to pregnancy, childbirth, and related medical conditions—more than 25 employees; other protected categories—20 or more employees

A charge or civil action must be filed within one year of the alleged discriminatory act (claimant who cross-files may have one-and-a-half years to file a charge). A claimant is not required to exhaust administrative remedies prior to filing suit.

MAINE

Maine Human Rights Act
(ME ST 5 § 4551 et seq.)

Race, color, sex (including pregnancy and related medical conditions), actual or perceived sexual orientation (including gender identity), physical or mental disability, religion, age, ancestry, national origin, previous assertion of a claim or right under the workers’ compensation law, or previous actions under the Maine Whistleblowers’ Protection Act

All businesses located within the state, or those outside the state that have employees with a usual place of employment in the state

A charge must be filed within 300 days of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit (damages may be limited if bypass administrative process). A civil action must be filed within two years from the alleged discriminatory act.

MARYLAND

MD Code, State Government
§ 20-601 et seq.

Race, color, religion, sex, sexual orientation, gender identity, genetic information, age, national origin, marital status, disability, or pregnancy

Businesses with 15 or more employees or agents of such businesses

A charge must be filed within six months of the alleged discriminatory act. A claimant must exhaust administrative remedies.

MASSACHUSETTS

Massachusetts Fair Employment Practices Act
(MGLA Ch. 151B, § 1 et seq.)

Race, color, religious creed, sex, status of pregnancy or related conditions (including lactation or the need to express breast milk), gender identity, sexual orientation, national origin, ancestry, age (40 years and older), handicap, military service, and genetic information. The statute also prohibits employers from requesting certain arrest and conviction information or from discriminating against any person for failure to furnish such information, or from refusing to hire or discharging any person for failing to furnish information regarding admission to mental illness facility if now mentally competent.

Businesses with six or more employees

A charge must be filed within 300 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

MICHIGAN

Elliott Larsen Civil Rights Act (“ELCRA”) (MI ST § 37.2101 et seq., 37.2205a); Persons With Disabilities Civil Rights Act
(MI ST § 37.1101 et seq).

Religion, race, color, national origin, age, sex (including sexual harassment), height, weight, familial status, marital status, physical or mental disability, genetic information, or misdemeanor arrest record. While sexual orientation and gender identity are not expressly covered by the ELCRA, the Michigan Civil Rights Commission has interpreted the ELCRA to extend to those traits as part of its prohibition on discrimination based on sex. Michigan employees may file complaints of sexual orientation or gender identity discrimination with the Michigan Department of Civil Rights, but Michigan courts may not uphold that interpretation of the ELCRA.

Businesses with one or more employees, under either law

A charge must be filed within 180 days of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action must be filed within three years.

MINNESOTA

Minnesota Human Rights Act
(MN ST § 363A.01 et seq.)

Race, color, creed, religion, national origin, sex (including pregnancy and childbirth), sexual orientation (including gender identity), marital status, status with regard to public assistance, membership or activity in a local commission, disability, or age

Businesses with one or more employees

A civil action under the act or an administrative charge must be filed within one year of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit.

MISSISSIPPI

Mississippi has no comprehensive antidiscrimination statute

Not applicable

Not applicable

Not applicable

MISSOURI

Missouri Human Rights Act (MO ST § 213.010 et seq.)

Race, color, religion, sex (including pregnancy and stereotyping), national origin, disability, age (40–69 years), ancestry, or association with a protected person

Businesses with six or more employees within the state

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

MONTANA

Montana Human Rights Act (MT ST §§ 49–2-303 et seq.)

Race, religion, creed, color, national origin, age, physical or mental disability, pregnancy, marital status, or sex

Businesses with one or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

NEBRASKA

Nebraska Fair Employment Practice Act
(NE ST § 48-1101 et seq.); Age Discrimination in Employment Act (NE ST § 48-1001 et seq.)

Race, color, religion, sex (including pregnancy, childbirth, or related conditions), disability, marital status, national origin, or age

Fair Employment Practices Act: businesses with 15 or more employees; Age Discrimination in Employment Act: businesses with 20 or more employees

A charge under FEPA and Age Discrimination in Employment Act must be filed within 300 days of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action must be filed within four years.

NEVADA

Nevada Fair Employment Practices Act
(NV ST § 613.310 et seq.)

Race, color, religion, sex, gender identity or expression, age, national origin, disability, or sexual orientation

Businesses with 15 or more employees employed in the state

A charge must be filed within 300 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

NEW HAMPSHIRE

New Hampshire Law Against Discrimination
(NH ST § 354-A:1 et seq.)

Age, sex (including pregnancy and related medical conditions), sexual orientation, gender identity, race, religious creed, color, marital status (including civil unions), physical or mental disability, or national origin

Businesses with six or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

NEW JERSEY

New Jersey Law Against Discrimination
(NJ ST § 10:5-1 et seq.)

Race (including race of individuals affiliated with employee), color, creed, sex, pregnancy, national origin, ancestry, age (18 years and older), marital status, civil union status, domestic partnership status, gender identity or expression, affectional or sexual orientation, genetic information, refusal to disclose the results of, or submit to, a genetic test, nationality, past or present service in the state militia or U.S. Armed Forces, atypical hereditary cellular or blood trait, certain religious requirements, and disability

Businesses with one or more employees

A charge must be filed within 180 days. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action under the act must be filed within two years of the alleged discriminatory act.

NEW MEXICO

New Mexico Human Rights Act
(NM ST § 28-1-1 et seq.)

Race, color, religion, sex, sexual orientation, gender identity, spousal affiliation, age, national origin, ancestry, physical or mental handicap, or serious medical condition

Businesses with four or more employees; however, with respect to discrimination based on spousal affiliation, the law covers businesses with 50 or more employees, and with respect to sexual orientation or gender identity discrimination, the law covers businesses with 15 or more employees

A charge must be filed within 300 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

NEW YORK

New York Human Rights Law (NY ST EXEC § 290 et seq.)

Race, color, creed, sex, sexual orientation, disability, marital status, familial status, national origin, age (18 and over), genetic predisposition, domestic victim status, military record or status, or arrest/conviction record.

Businesses with four or more employees. For sexual harassment, the law covers all employees.

A charge must be filed within one year. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action under the act must be filed within three years of the alleged discriminatory act.

NORTH CAROLINA

North Carolina Equal Employment Practices Act (NC ST § 143-422.2); this provision is only a public policy statement; there is no administrative or civil cause of action arising under it. North Carolina Persons With Disabilities Protection Act
(NC ST § 168A-1 et seq.)

Race, religion, color, national origin, age, sex, or disability

Businesses with 15 or more employees within the state

A civil action regarding employment discrimination brought pursuant to the Persons With Disabilities Protection Act must be commenced within 180 days after becoming aware of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit.

NORTH DAKOTA

North Dakota Human Rights Act
(ND ST § 14-02.4-01 et seq.)

Race, color, religion, sex (including pregnancy, childbirth, and related disabilities), national origin or ancestry, age, physical or mental disability, marital status, public assistance status, or participation in lawful activity off the employer’s premises during nonworking hours

Businesses with one or more employees

A charge must be filed within 300 days of the alleged discriminatory act in either the human rights division or district court. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action must be filed within three years.

OHIO

Ohio Fair Employment Practices Law
(OH ST § 4112.01 et seq.)

Race, color, religion, sex (including pregnancy, childbirth, and related conditions), age, national origin or ancestry, military status, or disability

Businesses with four or more employees within the state

A charge must be filed within six months of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action must be filed within six years. Exceptions for age claims apply.

OKLAHOMA

Oklahoma Anti-Discrimination Act (OK ST 25 § 1301 et seq.)

Race, color, religion, national origin, sex (includes pregnancy, childbirth, and related medical conditions), age, genetic information, or disability.

Businesses with one or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

OREGON

Oregon Fair Employment Practices Act
(OR ST § 659A.001 et seq.)

Race, color, religion, national origin, ancestry, sex (including pregnancy, childbirth, and related medical conditions), actual or perceived sexual orientation (including gender identity), marital status (including domestic partners), credit history, genetic information, injured workers, certain juvenile records, association with protected class, uniformed service, whistleblowers, victims of domestic violence, sexual assault, or stalking, or age (18 years and older)

Businesses with one or more employees; however, with regard to disability discrimination and discrimination against injured workers and victims of domestic violence, harassment, sexual assault, or stalking, the law only covers businesses with six or more employees.

A charge or civil action must be filed within one year of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit.

PENNSYLVANIA

Pennsylvania Human Relations Act
(PA ST 43 § 955)

Race, color, religious creed, national origin or ancestry, non-job-related handicap or disability, age, sex (including sex assigned at birth, sexual orientation, gender identity or expression, gender transition, or transgender identity), GED (not high school diploma), or use of guide/support animal

Businesses with four or more employees within the state

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

PUERTO RICO

Fair Employment Practices Law (PR ST 29 § 146 et seq.)

Age, race, color, sex (including pregnancy, childbirth, and related medical conditions), sexual orientation, gender identity, military or veteran status, being perceived as victim of domestic violence or sexual assault or stalking, social or national origin, social condition, or political or religious ideology or affiliation. The statute also prohibits discrimination because an employee’s spouse has these characteristics.

Businesses with one or more employees

A charge or civil action must be filed within one year of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit.

RHODE ISLAND

Rhode Island State Fair Employment Practices Act
(RI ST § 28-5-1 et seq.)

Race, color, religion, sex (including pregnancy, childbirth, and related medical conditions), country of ancestral origin, gender identity or expression, age, disability, or sexual orientation

Businesses with four or more employees

A charge must be filed within one year of the discriminatory act. A claimant must exhaust administrative remedies.

SOUTH CAROLINA

South Carolina Human Affairs Law
(SC ST § 1-13-10 et seq.)

Race, color, religion, sex (including pregnancy, childbirth, and related medical conditions), age, national origin, or disability

Businesses with 15 or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

SOUTH DAKOTA

South Dakota Human Relations Act of 1972
(SD ST § 20-13-10 et seq.)

Race, color, creed, religion, sex, national origin, ancestry, disability, or blindness, or partial blindness

Businesses with any employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

TENNESSEE

Tennessee Human Rights Act (TN ST § 4-21-301 et seq.);
Tennessee Disability Act (TN ST § 8-50-103)

Race, color, creed, religion, sex, age, disability, national origin, or volunteer rescue squad workers (if the worker is absent or late to work because the worker is responding to an emergency before the employee’s reporting time).

Businesses with eight or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit. Civil action must be filed within one year of the alleged discriminatory act.

TEXAS

Texas Commission on Human Rights Act
(TX Labor § 21.001 et seq.)

Race, color, disability, religion, sex (including pregnancy, childbirth, and related medical conditions), national origin, or age (40 years and older)

Businesses with 15 or more employees

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

UTAH

Utah Antidiscrimination Act
(UT ST § 34A-5-101 et seq.)

Race, color, sex (including pregnancy, childbirth, and related medical conditions), age (40 years and older), religion, national origin, sexual orientation, gender identity, or disability

Businesses with 15 or more employees within the state

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies.

VERMONT

Vermont Fair Employment Practices Act
(VT ST 21 § 495 - 496a)

Race, color, religion, ancestry, disability, national origin, sex, sexual orientation, gender identity, place of birth, crime victim status, or age (18 years and older). These prohibitions also preclude discrimination based on an HIV-related blood test, unequal pay, and retaliation for disclosure of wages.

Businesses with one or more employees within the state

A charge must be filed within 300 days. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action must be filed within three years (six years in some cases, per available damages).

VIRGINIA

Virginia Human Rights Act (“VHRA”)
(VA ST § 2.2-3900 et seq.)

Race, color, religion, national origin, sex (including pregnancy, childbirth, and related medical conditions), age, marital status, and disability

All Virginia employers are covered by the VHRA. However, employees can only bring suit to enforce the VHRA against employers with more than five but fewer than 15 employees. For a claim of age discrimination, employees can only bring suit against employers with more than five but fewer than 20 employees.

A charge must be filed within 180 days of the alleged discriminatory act. A claimant must exhaust administrative remedies. With regard to discriminatory discharge, employees do not need to exhaust administrative remedies and can file actions in any state general district or circuit court with jurisdiction over the employer who allegedly wrongfully discharged the employee within 300 days from the date of discharge.

WASHINGTON

Washington State Law Against Discrimination
(WA ST § 49.60.010 et seq.)

Age, sex (including pregnancy, childbirth, and related medical conditions), gender identity, sexual orientation, marital status, families with children, race, creed, color, ancestry, national origin, or the presence of any sensory, mental, or physical disability (including claims of discrimination based on HIV or hepatitis C), honorably discharged veteran or military status, or the use of a trained guide dog or service dog by a disabled person

Businesses with eight or more employees; however, with regard to age discrimination, all employers are covered

A charge must be filed within six months of the alleged discriminatory act, except that complaints of whistleblower retaliation must be filed within two years. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action must be filed within three years.

WEST VIRGINIA

West Virginia Human Rights Act
(WV ST § 5-11-1 et seq.)

Race, religion, color, national origin, ancestry, sex, blindness, age (40 years and older), familial status, or disability

Businesses with 12 or more employees with the state; however, the West Virginia Supreme Court of Appeals has held that employees can sue employers of any size for retaliatory discharge based on sex discrimination or harassment under the common law

A charge must be filed within 365 days of the alleged discriminatory act. A claimant is not required to exhaust administrative remedies prior to filing suit. A civil action under the act must be filed within two years.

WISCONSIN

Wisconsin Fair Employment Act
(WI ST § 111.31 et seq.)

Age (40 years and older), race, creed, color, disability, sex (including sexual harassment, pregnancy, childbirth, maternity leave, and related medical conditions), marital status, national origin or ancestry, sexual orientation, arrest or conviction record, military service, off-duty, off-premises use of lawful products, the results of or refusal or failure to submit to honesty tests, employees who fail to attend religious or political meetings, or genetic testing

Businesses with one or more employees

A charge must be filed within 300 days of the alleged discriminatory act. A claimant must exhaust administrative remedies. Complainants who receive findings of discrimination by an administrative law judge may file action in circuit court to obtain additional damages (compensatory, punitive, attorneys’ fees, costs, etc.).

WYOMING

Wyoming Fair Employment Practices Act of 1965
(WY ST § 27-9-101 et seq.)

Race, color, creed, sex, national origin, ancestry, pregnancy, age (40 years and older), disability, or off-duty use or nonuse of tobacco products

Businesses with two or more employees within the state

A charge must be filed within six months of the alleged discriminatory act. A claimant must exhaust administrative remedies.

Index

A

ACA (Affordable Care Act)   ... 295

Accent, discrimination based on   ... 189

Acknowledgment of receipt of handbook   ... 173–174

ADA. See Americans With Disabilities Act

Addiction. See Substance abuse

ADEA. See Age Discrimination in Employment Act

Adjustment of Status portability   ... 178

Administrative employees   ... 115–119

Advertising

Discriminatory (ASA Tip 84)   ... 242

Employment authorization documents, request for applicants to bring (ASA Tip 57)   ... 185

Recruitment   ... 242–243

Affirmative action   ... 25

Affirmative action clause   ... 29

Affirmative action program

Executive Order 11246   ... 26–27

Reasonable accommodation needs   ... 246–247

Rehabilitation Act of 1973   ... 29

Vietnam Era Veterans’ Readjustment Assistance Act of 1972   ... 30

ASA Tip 26   ... 26

Affordable Care Act (ACA)   ... 295

Age-based bona fide occupational qualifications (BFOQs)   ... 13

ASA Tip 13   ... 13

Age certificate for minor employees   ... 128

Age discrimination   ... 12–14

See also Age Discrimination in Employment Act

Interviewing cautions   ... 245, 263

Pre-employment inquiries   ... 243

Age Discrimination in Employment Act (ADEA)   ... 12–14

ASA Tip 12   ... 12

Bona fide employee benefit plan   ... 13

Bona fide occupational qualifications (BFOQs)   ... 13

ASA Tip 13   ... 13

Bona fide seniority system   ... 13

Coverage   ... 22

Defenses   ... 12

Early retirement plans   ... 13–14

ASA Tip 14   ... 13

EEOC Guidelines on Application of EEO Laws to Contingent Workers (Appendix C)   ... 353–368

EEOC suits   ... 23

Enforcement   ... 22–23

See also Equal Employment Opportunity Commission

Filing of charge   ... 23–24

Individual suits   ... 23

Investigation and conciliation   ... 23

Notice posting requirements   ... 25

ASA Tip 25   ... 25

Older Workers’ Benefit Protection Act   ... 23, 24

Reasonable factors other than age (RFOA)   ... 13

Record-keeping requirements   ... 351

Reductions in force   ... 13–14

Relief   ... 22, 23

Reports and records   ... 24

Retaliation   ... 2

Waivers and releases   ... 23–24

ASA Tip 24   ... 24

Reductions in force   ... 266

Termination of employment   ... 266

Agreements. See also Employment agreements

Samples of (Appendix E)   ... 381–416

Agricultural child labor   ... 128

Alabama

Drug testing   ... 197–199

Fair employment practices   ... 33, 418

Jury duty pay   ... 132

Restrictive covenants   ... 148

Wrong discharge   ... 73–74

Alaska

Drug testing   ... 199–200

Employment references provided in good faith   ... 252

Fair employment practices   ... 33, 418

Privacy rights   ... 193

Restrictive covenants   ... 148

Wrong discharge   ... 74

Alcohol abuse. See Substance abuse

Alternative dispute resolution   ... 267–268

Handbook provisions on   ... 172–174

American Arbitration Association’s Rules for the Resolution of Employment Disputes   ... 175

Americans With Disabilities Act (ADA)   ... 14–18

Client discriminatory acts (ASA Tip 16)   ... 14

Coverage   ... 24

Minimum number of employees   ... 6

Definition of disability   ... 14

ASA Tip 18   ... 15

Drug addiction   ... 193–195

EEOC Enforcement Guidance on Application of ADA to Contingent Workers   ... 6–7, 353–368

EEOC suits   ... 23–24

Enforcement   ... 24

See also Equal Employment Opportunity Commission

Essential job functions   ... 15

ASA Tip 18   ... 15

Job descriptions to include (ASA Tip 19)   ... 15

Pre-employment inquiries (ASA Tip 89)   ... 246

Family and Medical Leave Act (FMLA) and   ... 18

Filing of charge   ... 24

Handing discrimination by client (ASA Tip 16)   ... 14

Health care staffing and   ... 315–316

Individual suits   ... 24

Investigation and conciliation   ... 24

Job descriptions (ASA Tip 19)   ... 15

Litigation   ... 241

Major life activities   ... 14–15

Medical examinations and inquiries   ... 17

Notice posting requirements   ... 25

ASA Tip 25   ... 25

Pre-employment inquiries   ... 17

See also Pre-employment process

EEOC enforcement guidance (Appendix D)   ... 369–380

Pre-employment inquiries, what is permissible   ... 243–244

Pregnant workers, treatment of   ... 10, 17

Preventive measures   ... 315–317

Psychiatric disabilities   ... 14

Qualified individual with disability   ... 15

Reasonable accommodation   ... 15–16

ASA Tip 19   ... 15

Pregnant workers   ... 10

Record-keeping requirements   ... 350

Relief   ... 24

Retaliation   ... 2

Social Security disability insurance (SSDI)   ... 18

Substantial limitation of major life activity   ... 14

ASA Tip 18   ... 15

Testing   ... 17

ASA Tip 21   ... 17

Threat to health or safety   ... 16–17

ASA Tip 20   ... 17

Health care employee as direct threat   ... 316–317

Undue hardship   ... 16

Workers’ compensation laws and   ... 17

Americans With Disabilities Act Amendments Act of 2008   ... 14, 17

Amphetamines. See Drug testing; Substance abuse

Ancestry, harassment based on   ... 3–4

Anti-Kickback Statute   ... 317–318

Appendices

Appendix A: Directory of Federal and State Agencies   ... 339–348

Appendix B: Record-Keeping Requirements of Selected Federal Laws   ... 349–352

Appendix C: EEOC Guidelines on Application of EEO Laws to Contingent Workers   ... 353–368

Appendix D: EEOC Enforcement Guidance on Pre-Employment Disability-Related Inquiries   ... 369–380

Appendix E: Sample Policies, Forms, Contracts, and Language   ... 381–416

Appendix F: Summary of Selected State Employment Discrimination Statutes Relevant to Private Employers   ... 417–430

Applicants. See Drug testing; Pre-employment inquiries; Pre-employment process Application forms. See Pre-employment inquiries

Apprentices   ... 125

Aptitude tests   ... 190

Arbitration agreements   ... 143, 174–176

Advantages of arbitration   ... 175–176

ASA Tip 48   ... 176

Cost of arbitration   ... 174

Disadvantages of arbitration   ... 176

Employment agreement provision   ... 143

Oxford Health Plans LLC v. Sutter (2013)   ... 175

Sample   ... 395

Stolt-Nielsen v. AnimalFeeds International Corp. (2010)   ... 175

Arizona

Drug testing   ... 200

Employment references provided in good faith   ... 252

Fair employment practices   ... 33–34, 418

Privacy rights   ... 193

Restrictive covenants   ... 148–149

Wrong discharge   ... 74–76

Arkansas

Drug testing   ... 200–202

Employment references provided in good faith   ... 252

Fair employment practices   ... 34, 418

Restrictive covenants   ... 149–150

Wrong discharge   ... 76

Arrest records

Employment-related decisions based on   ... 253

Interview questions on   ... 244

Pre-employment inquiries   ... 248

ASA Tips

Affirmative action (Tip 26)   ... 26

Age Discrimination in Employment Act (Tip 12)   ... 12

BFOQs (Tip 13)   ... 13

Early retirement plans (Tip 14)   ... 13

Notice posting requirements (Tip 25)   ... 25

Waivers and releases (Tip 24)   ... 24

Americans With Disabilities Act

Client discriminatory acts (Tip 16)   ... 14

Definition of disability (Tip 18)   ... 15

Essential job functions (Tip 18)   ... 15

Handing discrimination by client (Tip 16)   ... 14

Job descriptions (Tip 19)   ... 15

Notice posting requirements (Tip 25)   ... 25

Pre-employment inquiries (Tip 89)   ... 246

Reasonable accommodation (Tip 19)   ... 15

Substantial limitation of major life activity (Tip 18)   ... 15

Testing (Tip 21)   ... 17

Threat to health or safety (Tip 20)   ... 17

Arbitration agreements (Tip 48)   ... 176

Discipline (Tip 17)   ... 14

Documentation (Tip 3)   ... 3

Discrimination. See also specific Acts (this heading)

Advertising (Tip 84)   ... 242

In assignments (Tip 9)   ... 8

Client engaging in (Tip 8)   ... 7

EEOC evaluation of claims (Tip 95)   ... 260

Notice posting requirements (Tip 25)   ... 25

Religion (Tip 10)   ... 11

Disparate impact (Tip 2)   ... 2

Disparate treatment (Tip 1)   ... 2

Drug testing

Antidiscrimination laws (Tip 81)   ... 233

Applicants (Tip 65)   ... 195

City ordinances (Tip 72)   ... 223

Defamation claims (Tip 67)   ... 196

Disclosure of policy (Tips 68 & 75)   ... 197, 226

Disclosure of results (Tip 76)   ... 226

To clients (Tip 80)   ... 231

Handbook stating policy (Tip 68)   ... 197

Laboratory, choice of (Tip 66)   ... 196

Methods (Tip 82)   ... 239

Notice to employees (Tip 75)   ... 226

On-site administration of test (Tip 79)   ... 228

Refusal of employee to take test (Tip 78)   ... 227

Responding to client requests for

Liability for improper or wrongful drug testing (Tip 74)   ... 225

When employee refuses to take test (Tip 78)   ... 227

Search and seizure prohibitions (Tip 63)   ... 193

Sources of information (Tip 83)   ... 239

State and local laws (Tip 72)   ... 223

Temporary staffing firm’s policy (Tip 77)   ... 227

Drug use policy (Tip 77)   ... 227

EEOC notice (Tip 25)   ... 25

Employment agreements

Commission provisions (Tip 44)   ... 140

Noncompetes (Tip 45)   ... 145

Prior employer covenants (Tip 47)   ... 147

Restrictive covenants, enforceability (Tip 46)   ... 147

English-only rule (Tip 11)   ... 12

Exempt employees

Executives and administrative employees (Tip 29)   ... 115

Family leave (Tip 32)   ... 125

Handbook statements about (Tip 33)   ... 125

Job descriptions (Tip 34)   ... 126

Payment documentation (Tip 30)   ... 122

Written policy requirement (Tip 31)   ... 123

Fair Labor Standards Act (FLSA)

Child labor (Tip 35)   ... 128

Discrimination protections (Tip 41)   ... 135

FMLA and (Tip 32)   ... 125

Investigations (Tip 42)   ... 136

Notice of (Tip 43)   ... 136

Job descriptions (Tip 34)   ... 126

Meal breaks (Tip 38)   ... 130

Minimum wage (Tip 36)   ... 129

Overtime (Tip 37)   ... 129

Payment documentation (Tip 30)   ... 122

Time sheets (Tip 40)   ... 134

Travel and waiting time (Tip 39)   ... 132

Family and Medical Leave Act (FMLA)

Benefits continuation (Tip 110)   ... 286

Calculating leave (Tip 109)   ... 285

Employee benefits (Tip 112)   ... 286

Employers covered (Tip 105)   ... 283

50-employees test (Tip 107)   ... 284

Intermittent leave and FLSA exemption (Tip 32)   ... 125

Joint employment (Tip 106)   ... 283

Loss of protection (Tip 117)   ... 292

Medical certification (Tip 119)   ... 292

Notice

Certification (Tip 116)   ... 291

By employee (Tip 115)   ... 290

By employer (Tip 118)   ... 292

Primary and secondary employers (Tip 114)   ... 289

Prior employment (Tip 108)   ... 284

Serious health condition (Tip 113)   ... 287

Termination of employment (Tip 120)   ... 294

Unpaid leave (Tip 111)   ... 286

Form EEO-1 (Tip 23)   ... 21

Form I-9 compliance (Tip 49)   ... 177

Acceptable documents (Tip 53)   ... 182

Copies of documentation (Tip 54)   ... 182

Examination of documents (Tip 52)   ... 181

Exceptions from definition of “hire” and duty to prepare (Tip 55)   ... 185

Limited work authorization (Tip 58)   ... 186

Reverification (Tip 59)   ... 187

Significant break in temporary assignments (Tip 56)   ... 185

Time to complete (Tip 57)   ... 185

H-1B temporary professional workers

Back-wage obligations (Tip 129)   ... 311

Families of foreign employees (Tip 131)   ... 312

Part-time status (Tip 128)   ... 310

Period of approval (Tip 130)   ... 312

Required wage (Tip 129)   ... 311

USCIS premium processing service (Tip 132)   ... 312

Handbooks

Contract disclaimer (Tip 28)   ... 71

FLSA exemption, statements about (Tip 33)   ... 125

Substance abuse policy (Tip 68)   ... 197

Immigration Reform and Control Act (IRCA)

Amendments (Tip 49)   ... 177

Applicants (Tip 57)   ... 185

Audits/investigations (Tip 60)   ... 187

Copies of documentation (Tip 54)   ... 182

Exceptions from definition of “hire” and duty to prepare (Tip 55)   ... 185

Form I-9. See Form I-9 compliance (this heading)

Green Cards (Form I-551) (Tip 51)   ... 180

“Handbook for Employers” (USCIS) (Tip 50)   ... 177

Limited work authorization (Tip 58)   ... 186

Local laws (Tip 62)   ... 190

Reverification (Tip 59)   ... 187

Significant break in temporary assignments (Tip 56)   ... 185

Title VII coverage (Tip 61)   ... 189

Independent contractor status

Common law standard (Tip 123)   ... 301

Economic realities test (Tip 123)   ... 301

IRS Voluntary Classification Settlement Program (Tip 132)   ... 300

Worker status (Tip 121)   ... 299

Job listing requirements (Tip 27)   ... 31

Joint employers (Tip 22)   ... 19

Occupational Safety and Health Act

Informal conference with OSHA area director (Tip 104)   ... 280

Inspections (Tip 103)   ... 279

Preventive measures to reduce risk of violations (Tip 102)   ... 276

Per diem regulations

Department of Labor vs. IRS regulations (Tip 127)   ... 307

Excess amounts (Tip 126)   ... 306

Regular place of abode (Tip 124)   ... 304

Travel less than a full day (Tip 125)   ... 306

Performance evaluations (Tip 96)   ... 263

Personnel files, employees’ right to inspect (Tip 97)   ... 264

Photographs of employees (Tip 9)   ... 8

Pre-employment process

Application forms (Tip 85)   ... 243

Background reports (Tip 93)   ... 254

Essential job functions (Tip 89)   ... 246

Interview questions (Tip 88)   ... 244

Attendance-related (Tip 87)   ... 244

Job advertising (Tip 84)   ... 242

Permissible inquiries (Tip 86)   ... 243

Post-offer (Tip 90)   ... 247

Reference checks (Tip 91)   ... 252

Sharing results with clients (Tip 92)   ... 253

Protection against potential liability (Tip 94)   ... 259

Rehires (Tip 101)   ... 273

Release, defined (Tip 98)   ... 266

Religious discrimination (Tip 10)   ... 11

Replacing employees (Tip 99)   ... 268

Retaliation claims, how to avoid (Tip 3)   ... 3

Salaried temporary employees (Tip 100)   ... 270

Sexual harassment

Complaints (Tip 4)   ... 5

Guidelines to avoid complaints (Tip 7)   ... 7

Investigations (Tip 6)   ... 6–7

Policy (Tip 5)   ... 5

State laws

Drug testing (Tip 72)   ... 223

Florida Drug-Free Workplace Act (Tip 69)   ... 206

Iowa drug testing (Tip 70)   ... 209

Louisiana drug testing (Tip 71)   ... 210

Substance abuse

Discipline and discrimination (Tip 64)   ... 195

Drug-Free Workplace Act of 1988 (Tip 73)   ... 225

Handbook policy (Tip 68)   ... 197

Policy elements (Tip 77)   ... 227

Ticket to Work and Work Incentives Improvement Act of 1999 (Tip 15)   ... 14

Workplace conduct standards (Tip 17)   ... 14

Wrongful discharge (Tip 28)   ... 71

Attendance

Essential job function (ASA Tip 19)   ... 15

Requirements, pre-offer questions on   ... 244

ASA Tip 87   ... 244

Attorneys’ fees

Employment agreement provision   ... 143

IRCA violations   ... 190

B

Background reports

Notification of background check (sample)   ... 389

Pre-employment process   ... 354–356

State laws (ASA Tip 93)   ... 254

Barbiturates. See Drug testing; Substance abuse Benefits. See Employee benefit plans

Bereavement leave policy   ... 172

Bona fide employee benefit plans   ... 13

Bona fide occupational qualifications (BFOQs)   ... 7–8

Age-based   ... 13

ASA Tip 13   ... 13

Bona fide seniority system   ... 13

Bonuses   ... 122

See also Regular rate of pay

Preventive measures   ... 271

Bulletin boards policy   ... 172

Business considerations

Reductions in force   ... 13

Restrictive covenants   ... 144–147

Undue hardship under Americans With Disabilities Act (ADA)   ... 16

C

California

Criminal history pre-employment inquiries   ... 248, 253

Drug testing, termination for refusal   ... 202–203

Employment references provided in good faith   ... 252

Fair employment practices   ... 34–36, 419

Meal and rest period requirements   ... 130, 137

ASA Tip 38   ... 130

Pregnancy-related disabilities leave   ... 9

Privacy rights   ... 193

Restrictive covenants   ... 150

Sexual harassment training of managers   ... 260

Wrong discharge   ... 76–77

Certification

Age certificate for minor employees   ... 128

Interview questions on   ... 244

Medical certification for FMLA purposes. See Family and Medical Leave Act

Child care

Leave for   ... 9

See also Family and Medical Leave Act

Pre-employment inquiries on arrangements   ... 248

Child labor   ... 128

ASA Tip 35   ... 128

Documentation for employment authorization   ... 180

Preventive measures   ... 271

Child support enforcement orders   ... 273

Citizenship discrimination   ... 1, 178, 188, 272

City ordinances

Drug testing (ASA Tip 72)   ... 223

New York City fair employment ordinances   ... 57

Civil Rights Act of 1866   ... 11, 21–23

Coverage   ... 22

Enforcement   ... 22

Relief   ... 22

Reports and records   ... 22

Statute of limitations   ... 22

Civil Rights Act of 1964. See Title VII

Civil Rights Act of 1991   ... 5, 20, 188

Classes protected. See Protected classes

Class-wide arbitration   ... 174

COBRA, handbook provisions on   ... 270

Cocaine. See Drug testing; Substance abuse

Co-employees

Hostile environment created by   ... 5

Solicitation. See No-raiding agreements

Whistle-blowing on   ... 70

Coercion or duress   ... 144

IRCA protections   ... 190

Colorado

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 203

Employment references provided in good faith   ... 252

Fair employment practices   ... 36–37, 419

Jury duty pay   ... 132

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 150–151

Wrong discharge   ... 77–78

Color discrimination. See Title VII

Commission   ... 122–123

See also Regular rate of pay

Employment agreements (ASA Tip 44)   ... 140

Preventive measures   ... 271

Common law standard for independent contractor status   ... 297

ASA Tip 123   ... 301

Comparable worth claims   ... 10–11

Compensable hours   ... 130–131

Compensation. See also Equal Pay Act; Fair Labor Standards Act; Severance; Wage and hour laws

Comparable worth claims   ... 10–11

Employment agreement provision   ... 142

Offers   ... 263

Preventive measures   ... 271

Compensatory time (“comp time”)   ... 130

Complaint procedures

EEO problems   ... 260

Executive Order 11246   ... 28

Handbook provisions on   ... 172

OSHA Fact Sheet on HIPAA complaints (reprinted)   ... 414–416

Sexual harassment complaints (ASA Tip 4)   ... 5

Computer professionals   ... 121–122

Confidentiality. See also Privacy rights

Drug testing policy   ... 227

Employment agreements   ... 143

Handbook stating policy   ... 172

Restrictive covenants   ... 144–147

Conflict of interest

Employment agreements   ... 142

Handbook stating policy   ... 172

Connecticut

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 203–204

Fair employment practices   ... 37–38, 419

Restrictive covenants   ... 151

Sexual harassment training of managers   ... 260

Wrong discharge   ... 78–79

Consent

Drug testing consent form with release (sample)   ... 387

Employment references, applicant authorization and consent form (sample)   ... 388

Informed consent, health care   ... 324–325

Consideration for restrictive covenants   ... 142, 145

Construction workers   ... 122

Consumer Credit Reporting Reform Act   ... 254

Consumer reports   ... 254–256

See also Fair Credit Reporting Act

Contingent workers

ADA and   ... 6

EEOC Guidelines on Application of EEO Laws to Contingent Workers (Appendix C)   ... 353–368

Conviction records

Employment-related decisions based on   ... 253

Pre-employment inquiries   ... 248

Copeland Act   ... 135

Covenant of good faith and fair dealing   ... 71

Creative professionals   ... 120–121

Credit check. See Fair Credit Reporting Act Criminal conviction records. See Conviction records

D

Damages

Employment agreement specifying liquidated damages   ... 143

FLSA   ... 134, 135

Title VII   ... 21, 268

Davis-Bacon Act   ... 135

Defamation   ... 72

Drug testing   ... 196, 228

ASA Tip 67   ... 196

Employment references   ... 252

Delaware

Drug testing   ... 204

Employment references provided in good faith   ... 252

Fair employment practices   ... 38, 420

Restrictive covenants   ... 151

Wrong discharge   ... 79–80

Department of Labor, U.S.

Directory (Appendix A)   ... 339–348

FMLA action   ... 294

FMLA poster (sample)   ... 413

Per diem regulations vs. IRS regulations (ASA Tip 127)   ... 307

Directory of Federal and State Agencies (Appendix A)   ... 339–348

Disability

Discrimination laws   ... 1, 14–18, 193

See also Americans with Disabilities Act (ADA)

Documentation for employment authorization   ... 184, 185

Drug addiction   ... 193–195

Handicapped workers, minimum wage   ... 125

Interviewing cautions   ... 245, 263

Nondiscrimination pledges signed by employees   ... 260

Post-offer questions on   ... 247

Discipline

Discrimination under Title VII and   ... 8–9

Documentation (ASA Tip 3)   ... 3

Handbook provisions on   ... 172

Progressive discipline   ... 264–265

Retaliation claims as result of (ASA Tip 3)   ... 3

For sexual harassment (ASA Tip 5)   ... 5

Workplace conduct standards (ASA Tip 17)   ... 14

Disclaimers in handbooks   ... 172

ASA Tip 28   ... 71

Discrimination

Advertising (ASA Tip 84)   ... 242

Affirmative action   ... 25–32

See also Affirmative action

Age   ... 1, 12–14

See also Age Discrimination in Employment Act

Assignments (ASA Tip 9)   ... 8

Bona fide occupational qualifications (BFOQs)   ... 7–8, 13

Citizenship   ... 1, 177, 187, 272

Client engaging in (ASA Tip 8)   ... 7–8

Disabled workers (ASA Tip 16)   ... 14

Preventive measures   ... 271

Disability. See Americans With Disabilities Act; Disability

Discipline and termination   ... 8–9

Disparate impact   ... 2

Disparate treatment   ... 1–2

Employment qualifications   ... 7–8

Enforcement. See Equal Employment Opportunity Commission

Equal Pay Act   ... 22

See also Equal Pay Act

FLSA protections (ASA Tip 41)   ... 135

Genetic information   ... 1

Handbooks, useful in defense   ... 171

Harassment   ... 3–4

Hiring   ... 8

IRCA provisions   ... 187–190

Job referrals   ... 8

Mixed motive cases   ... 5–6

National origin   ... 1, 11–12, 188

Pregnancy discrimination   ... 9–10

See also Pregnancy Discrimination Act

Preventive methods for harassment   ... 5

Protected classes   ... 9–18

Race   ... 1, 9

See also Title VII

Recruitment   ... 8

See also Pre-employment process

Religion   ... 1, 11

ASA Tip 10   ... 11

Retaliation   ... 2–3

Sex   ... 1, 9

See also Title VII

Glass ceiling   ... 11

State protective laws   ... 10, 32–68

See also specific states

Temporary services companies, common issues for   ... 6–8

Terms and conditions of employment   ... 8

Title VII coverage   ... 17–21

See also Title VII

Veteran status   ... 1

Disparate impact   ... 2

ASA Tip 2   ... 2

Drug testing   ... 195

Disparate treatment   ... 1–2

ASA Tip 1   ... 2

Drug testing   ... 195

District of Columbia

Drug testing   ... 204

Fair employment practices   ... 38–39, 420

Restrictive covenants   ... 152

Wrong discharge   ... 80

Documentation. See also Record-keeping requirements

Discipline (ASA Tip 3)   ... 3

For employment authorization   ... 184, 185

Form I-9 compliance, copies of documentation (ASA Tip 54)   ... 182

Performance problems   ... 264

Wage payments (ASA Tip 30)   ... 122

Dress codes   ... 172

Drug-Free Workplace Act of 1988   ... 223–226

Coverage   ... 224

Enforcement   ... 225

Government contracts (ASA Tip 73)   ... 225

Penalties   ... 225

Requirements   ... 223–224

Drug testing   ... 191–193

See also Substance abuse

Antidiscrimination laws   ... 193, 195

ASA Tip 81   ... 233

Applicants   ... 230, 246–247

ASA Tip 65   ... 195

Authorization and release from liability forms   ... 227, 230

City ordinances (ASA Tip 72)   ... 223

Confidentiality   ... 227

Confirmation   ... 238

Gas chromatography and mass spectrometry (GC/MS)   ... 238

High-performance liquid chromatography (HPLC)   ... 238

Consent form with release (sample)   ... 387

Constitutional privacy rights   ... 193

Defamation claims   ... 198

ASA Tip 67   ... 196

Detection time theory   ... 232

Disability discrimination laws   ... 193–194

Disclosure of policy

ASA Tip 68   ... 197

ASA Tip 75   ... 226

Disclosure of results   ... 231

ASA Tip 76   ... 226

To clients   ... 231

ASA Tip 80   ... 231

Scope of disclosure   ... 228

Disparate impact   ... 195

Disparate treatment   ... 195

Drug-Free Workplace Act of 1988   ... 223–226

Drugs of abuse, list of   ... 234–237

See also Substance abuse

Due process and equal protection challenges   ... 192–193

Existing employees   ... 224

For-cause testing   ... 230

Handbook stating policy   ... 172

ASA Tip 68   ... 197

Intentional infliction of emotional distress claims   ... 196–197

Invasion of privacy   ... 195–196

Laboratory, choice of   ... 228

Accuracy checks   ... 228

ASA Tip 66   ... 196

Certification   ... 228

Chain of custody of samples   ... 229

Collection methods for samples   ... 228

Collection sites   ... 228

Contact with testees   ... 229

Laboratory staff   ... 228

Litigation support available   ... 228

Quality control procedures   ... 229

Recommendations   ... 228

Results transmission   ... 229

Legal implications of   ... 191–197

Legalization under state law   ... 224

Limitations of   ... 231

Accuracy   ... 231

Cross-reactivity   ... 239

Human error   ... 239

Inability to measure current impairment   ... 239

Interfering substances   ... 238

Specificity   ... 238–239

Methods   ... 237–239

ASA Tip 82   ... 239

Color or spot tests   ... 238

Enzyme multiplied immunoassay technique (EMIT)   ... 237

EZ-Screen   ... 238

Fluorescence polarization immunoassay (FPIA)   ... 237

Radio-immunoassay (RIA)   ... 237

Thin-layer chromatography (TLC)   ... 237–238

Negligence claims   ... 196

Notice to employees (ASA Tip 75)   ... 226

On-site administration of test (ASA Tip 79)   ... 228

Passive inhalation theory   ... 231–232

Policy statements. See Substance abuse

Positive test results, dealing with   ... 231–234

Common responses   ... 231

Deciding how to treat employee   ... 233

Limitations on drug testing   ... 231

Options   ... 232

Risk for employers   ... 224–225

Unemployment compensation after termination for   ... 233–234

Pre-employment   ... 229–231, 241–242

ASA Tip 65   ... 195

Procedures with testing laboratories   ... 228

Public policy violation   ... 197

Random testing   ... 192, 230

Reasonable suspicion   ... 192

Recording results   ... 229

Refusal of employee to take test (ASA Tip 78)   ... 227

Release and consent form (sample)   ... 387

Responding to client requests for   ... 225–229

Control of testing   ... 225–226

Knowledge of clients   ... 225

Liability for improper or wrongful drug testing (ASA Tip 74)   ... 225

Planning in advance   ... 226

When employee refuses to take test (ASA Tip 78)   ... 227

Retesting   ... 232

Scheduled testing   ... 230

Search and seizure prohibitions   ... 192

ASA Tip 63   ... 193

Sources of information (ASA Tip 83)   ... 239

State and local laws   ... 197–223

ASA Tip 72   ... 223

State common law challenges   ... 195–197

State constitutional provisions applicable   ... 197

Temporary staffing firm’s policy   ... 226

ASA Tip 77   ... 227

Volunteers   ... 230–231

Workers’ compensation reductions due to   ... 234

Due process challenges to drug testing   ... 192–193

Duty of loyalty   ... 142

Handbook stating policy   ... 170

E

E-3 visas   ... 178

Early retirement plans   ... 13–14

ASA Tip 14   ... 13

Education-related pre-employment inquiries   ... 251

Applicant authorization and consent form (sample)   ... 388

EEO-1 reports   ... 21

ASA Tip 23   ... 21

EEOC. See Equal Employment Opportunity Commission

EEOC notice   ... 25

“80%” (or “four-fifths”) rule   ... 2

Eight Hour Law   ... 136

Electronic monitoring policy   ... 172

EMIT (Enzyme multiplied immunoassay technique)   ... 237

Emotional distress, intentional infliction of   ... 71–72

Drug testing   ... 196

Employee benefit plans

Bona fide   ... 13

Continuation while on FMLA leave   ... 284–285

ASA Tip 110   ... 286

ASA Tip 112   ... 286

Employment agreement provision   ... 142

Flexibility to add, amend, or delete employee benefits   ... 140

Handbook provisions on   ... 172

Employee handbooks. See Handbooks

Employee performance appraisals. See Performance evaluations

Employee Polygraph Protection Act   ... 252

Employment agreements   ... 139, 140–144

Advantages of   ... 140–141

Arbitration provision   ... 143

Attorneys’ fees provision   ... 143

Attraction of qualified executives   ... 141

Certainty   ... 140

Commission provisions (ASA Tip 44)   ... 140

Compensation and benefits provision   ... 142

Confidentiality   ... 143

Conflict of interest   ... 142

Consideration for restrictive covenants   ... 142

Defense of wrongful discharge claims   ... 140

Difficulty in enforcing against employee   ... 141

Disadvantages of   ... 141

Duty of loyalty   ... 142

EEO laws compliance   ... 143

Employee warranty   ... 142

Employment-at-will provision   ... 142

Employment-at-will status preserved by   ... 140

Entire agreement in writing   ... 140, 144

Express agreements   ... 140–144

Flexibility to add, amend, or delete employee benefits   ... 140

Illustrative provisions   ... 141–142

Implied   ... 170–172

Injunctive relief   ... 143

Intellectual property provision   ... 143

Liquidated damages   ... 143

No coercion or duress   ... 144

Noncompete covenants   ... 142

Nonsolicitation of clients   ... 142–143

Nonsolicitation of employees   ... 143

No-raiding provision   ... 133

No release of future claims   ... 141

Notice of covenants   ... 143

Prior employer covenants (ASA Tip 47)   ... 147

Restrictive covenants   ... 139

See also Restrictive covenants

Right to discharge limited by   ... 141

Samples (Appendix E)

Regular employee   ... 407–140

Temporary employee   ... 400–406

Scope and nature of duties provision   ... 142

Severance provision   ... 141

State law compliance   ... 142

Termination procedures   ... 141

Tolling of time   ... 143

Unilateral change of terms   ... 141

Waiver of breach   ... 143–144

Wrongful discharge claims   ... 140

Employment applications. See Pre-employment inquiries

Employment at will. See also Wrongful discharge

Policy   ... 261

Employment practices liability insurance (EPLI)   ... 269–270

Employment qualifications. See Background reports; Pre-employment inquiries

Employment references

Applicant authorization and consent form (sample)   ... 388

Job-related and permissible questions (ASA Tip 91)   ... 252

Pre-employment inquiries   ... 252

Retaliation claims as result of (ASA Tip 3)   ... 3

Sharing results of reference checks with clients (ASA Tip 92)   ... 253

Waiver to former employer   ... 252–253

English-only rule   ... 12, 189

ASA Tip 11   ... 12

Enzyme multiplied immunoassay technique (EMIT)   ... 237

Equal Employment Opportunity Commission (EEOC). See also Discrimination

ADA enforcement   ... 23

ADEA enforcement   ... 23

Arbitration agreements and   ... 174–175

Directory (Appendix A)   ... 339

EEOC notice   ... 25

Enforcement Guidance on Application of ADA to Contingent Workers   ... 6–7

Enforcement Guidance on Pregnancy Discrimination   ... 9–10

Guidelines on Application of EEO Laws to Contingent Workers

(Appendix C)   ... 339–348

Health care industry factsheet   ... 316

IRCA policy statements   ... 190

Notice posting requirements   ... 25

ASA Tip 25   ... 25

“Policy Guidance on Contingent Workers”   ... 6

Equal employment opportunity policy (sample)   ... 382

Employee acknowledgment and pledge to comply with company’s policy (sample)   ... 383

Equal opportunity clause   ... 26

Equal opportunity laws   ... 1–32

See also Discrimination; State fair employment practices

Affirmative action   ... 25–32

Age Discrimination in Employment Act   ... 23–24

Bona fide occupational qualifications (BFOQs)   ... 7–8

Civil Rights Act of 1866   ... 21–22

Disparate impact   ... 2

Disparate treatment   ... 1–2

Equal Pay Act   ... 22–23

Harassment   ... 3–4

See also Harassment

Liability for harassment   ... 4–5

Mixed motive cases   ... 5–6

National origin harassment   ... 3–4

Preventive methods for harassment   ... 5

Protected classes   ... 9–18

Racial harassment   ... 3

Recruitment   ... 8

See also Pre-employment process

Retaliation   ... 2–3

Sexual harassment   ... 4

State-by-state analysis   ... 32–68

See also specific states

Temporary services companies, common issues for   ... 6–8

Title VII coverage   ... 18–25

Equal Pay Act   ... 22

EEOC Guidelines on Application of EEO Laws to Contingent Workers (Appendix C)   ... 353–368

Notice posting requirements   ... 25

ASA Tip 25   ... 25

Retaliation   ... 2

Equal pay claims   ... 10–11

Equal protection challenges to drug testing   ... 192–193

Ergonomics   ... 279–280

Ethics   ... 172

E-Verify   ... 179, 182–184

Executive assistants   ... 119

Executive employees   ... 115–116

ASA Tip 29   ... 115

Executive Order 11246   ... 26–29

Affirmative action program   ... 26–29

Complaints   ... 29–30

Compliance reviews   ... 27–28

EEO-1 reports   ... 21

ASA Tip 23   ... 21

Enforcement   ... 27–28

Equal opportunity clause   ... 26

Goals and timetables   ... 27

Implementation procedures   ... 27

Record-keeping requirements   ... 350

Reports and records   ... 28–29

Sanctions   ... 28

Utilization analysis   ... 27

Exempt employees   ... 114–128

Apprentices and learners   ... 125

Computer professionals   ... 121–122

Creative professionals   ... 120–121

Executives and administrative employees   ... 115–125

Administrative duties test   ... 116

ASA Tip 29   ... 115

Discretion and independent judgment   ... 117–119

Executive duties test   ... 115–116

Handbook statements about (ASA Tip 33)   ... 125

Handicapped workers   ... 125

Highly compensated employees   ... 122

Home health aides and personal care attendants   ... 127

Hospitals and nursing homes   ... 126

Industry-based exemptions   ... 128

Job descriptions (ASA Tip 34)   ... 126

Learned professionals   ... 120

Loss of exempt status   ... 125

Messengers   ... 125

Motor carriers   ... 126–127

Outside salespersons   ... 122

Payment documentation (ASA Tip 30)   ... 122

Placement counselors and recruiters   ... 127

Preventive measures   ... 270–271

Professionals   ... 119–120

Public employees   ... 130

Safe harbor regulation   ... 125

Salary basis test   ... 123–124

Family leave (ASA Tip 32)   ... 125

Written policy requirement (ASA Tip 31)   ... 123

Student workers   ... 125

EZ-Screen drug testing   ... 238

F

Failure-to-hire suits   ... 242

Fair and Accurate Credit Transactions Act   ... 255

Fair Credit Reporting Act (FCRA)   ... 254–255

Applicant authorization and release of information (sample)   ... 389

Disclosing credit check results to clients   ... 256

Letter to applicant after taking adverse action (sample)   ... 394

Letter to applicant before taking adverse action (sample)   ... 390

Notification of background check (sample)   ... 389

Summary of consumer rights (sample)   ... 391

Fair Labor Standards Act (FLSA)   ... 113–135

Child labor   ... 128

ASA Tip 35   ... 128

Compensable hours   ... 130–131

Compensatory time   ... 130

Coverage   ... 114–115

Enterprise coverage   ... 114

Individual employee coverage   ... 114

Joint employment relationship   ... 114

Damages   ... 134, 136

Discrimination protections (ASA Tip 41)   ... 135

Enforcement   ... 135

Exemptions   ... 114–128

FLSA and Overtime   ... 129, 132–134

See also Overtime

ASA Tip 37   ... 129

FMLA and (ASA Tip 32)   ... 125

Government contracts   ... 135–136

Holiday pay   ... 132

Hours worked, defined   ... 135

Investigations   ... 136

ASA Tip 42   ... 136

Notice of (ASA Tip 43)   ... 136

IRCA, effects of   ... 128

Jury duty   ... 132

Litigation   ... 134, 135, 259

Make-up payments   ... 122

Meal breaks   ... 130, 137

ASA Tip 38   ... 130

Minimum wage   ... 125, 129

ASA Tip 36   ... 129

Payment documentation (ASA Tip 30)   ... 122

Payment intervals (pay dates)   ... 130

Preventive measures to reduce risk of violations   ... 270–271

Record-keeping requirements   ... 133–134, 350

Time sheets (ASA Tip 40)   ... 134

Regular rate of pay   ... 129, 132–133

Retaliation   ... 2

Safe harbor regulation   ... 124–125

Salary basis test   ... 123–124

Statute of limitations   ... 135

Subminimum wage (age 16–19)   ... 113, 126

Travel and waiting time   ... 132

ASA Tip 39   ... 132

Undocumented aliens   ... 128

Vacation pay   ... 131

Willful violations   ... 134

Workweek, defined   ... 130

Family and Medical Leave Act (FMLA)   ... 283–294

Accommodation of intermittent leave   ... 287

ADA and   ... 17–18, 284

Arbitration of claims   ... 294

Benefit continuation   ... 284–285

ASA Tip 110   ... 286

Birth, adoption, or foster care of a child   ... 285

Calculating leave (ASA Tip 109)   ... 285

Child care leave   ... 9

Civil suits by employees   ... 293–294

Covered employers   ... 283

ASA Tip 105   ... 283

Department of Labor action   ... 294

Department of Labor poster   ... 413

Documentation in writing   ... 292

Employee benefits (ASA Tip 112)   ... 286

50-employees test (ASA Tip 107)   ... 284

Handbook stating policy   ... 170

Husband and wife at same employer   ... 287–288

Intermittent leave   ... 287

Birth, adoption, or foster care of a child   ... 285

Health-related reasons   ... 285

Transfer to alternate position to accommodate   ... 287

Intermittent leave and FLSA exemption (ASA Tip 32)   ... 125

Job restoration   ... 289–290

Joint employment (ASA Tip 106)   ... 283

Key employee exemption   ... 288

Leave entitlement   ... 283–290

Leave year, determination of   ... 284

Loss of protection (ASA Tip 117)   ... 292

Medical certification

ASA Tip 119   ... 292

Fitness for duty   ... 291

Military families   ... 288–289

Military exigency leave   ... 291

Notice   ... 292

Certification   ... 291

ASA Tip 116   ... 291

Consequences of failure to give   ... 290

By employee   ... 290–291

ASA Tip 115   ... 290

By employer   ... 291–293

ASA Tip 118   ... 292

Paid vs. unpaid leave   ... 288

Policy (sample)   ... 411–412

Posting of notice   ... 293

Primary and secondary employers   ... 289

ASA Tip 114   ... 289

Prior employment (ASA Tip 108)   ... 284

Qualified employees   ... 283–284

Record-keeping requirements   ... 292–293, 351

Reduced schedule leaves   ... 291

Birth, adoption, or foster care of a child   ... 290

Health-related reasons   ... 285–286

Transfer to alternate position to accommodate   ... 287

Remedies   ... 293

Retaliation   ... 2

Return to work   ... 288

“Head-of-the-line” rule   ... 290

Serious health condition   ... 285–287

Chronic serious health condition   ... 286

Examples   ... 287

Four-day absence involving treatment   ... 286

Inpatient care   ... 286

Long-term or permanent incapacity   ... 286

Minor conditions resulting in incapacity (ASA Tip 113)   ... 287

Multiple treatments for restorative surgery   ... 286

Multiple treatments to avoid incapacity   ... 286

Pregnancy or prenatal care   ... 286

Sick family member   ... 285, 290

Stacking leaves   ... 284

Staffing industry compliance   ... 289–290

Statute of limitations   ... 294

Termination of employment (ASA Tip 120)   ... 294

Time worked   ... 283–284

Unpaid leave

ASA Tip 111   ... 286

Paid leave vs.   ... 284

Violations   ... 293–294

Family planning, interviewing cautions   ... 263

FCRA. See Fair Credit Reporting Act

Federal Arbitration Act   ... 175

Federal contractors. See Government contracts

Federal Railroad Administration   ... 192

Financial service industry, employees in   ... 116

Florida

Drug-Free Workplace Act (ASA Tip 69)   ... 206

Drug testing   ... 204–206

Employment references provided in good faith   ... 252

Fair employment practices   ... 40–41, 420

Privacy rights   ... 193

Restrictive covenants   ... 152

Wrong discharge   ... 80–81

FLSA. See Fair Labor Standards Act

Fluorescence polarization immunoassay (FPIA) drug testing   ... 237

Form EEO-1   ... 21

ASA Tip 23   ... 21

Form ETA Form 9035 (labor condition application)   ... 311

Form I-9 compliance   ... 177

Acceptable documents   ... 180–183

ASA Tip 53   ... 182

Applicants (ASA Tip 57)   ... 185

ASA Tip 49   ... 177

Copies of documentation (ASA Tip 54)   ... 182

Employee completing Section 1   ... 179–180

Employer completing Section 2   ... 182

Employer retaining form   ... 182, 272

Employer retaining supporting documents   ... 182, 271–272

E-Verify   ... 179, 182–184

Examination of documents (ASA Tip 52)   ... 181

Exceptions from definition of “hire” and duty to prepare (ASA Tip 55)   ... 185

Limited work authorization   ... 185–186

ASA Tip 58   ... 186

Paper vs. electronic   ... 178–179

Preventive measures to reduce risk of violations   ... 271–272

Receipts   ... 181–182

Rehires   ... 186

Reverification   ... 185–186

ASA Tip 59   ... 187

Significant break in temporary assignments (ASA Tip 56)   ... 185

Time to complete   ... 179

ASA Tip 57   ... 185

Form I-129H (Petition to Classify Nonimmigrant as Temporary Worker or Trainee)   ... 312

Form I-551 (Green Card) (ASA Tip 51)   ... 187

“Four-fifths” rule   ... 2

Fourteenth Amendment protections   ... 192–193

Fourth Amendment challenges to search and seizure   ... 192

ASA Tip 63   ... 193

Fraud or misrepresentation   ... 71

Anti-Kickback Statute   ... 317–318

Freelance status. See Independent contractor status

G

Gas chromatography and mass spectrometry (GC/MS)   ... 238

Genetic Information Nondiscrimination Act (GINA)   ... 335–337

Geographical limitations in restrictive covenants   ... 146

Georgia

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 206–207

Employment references provided in good faith   ... 252

Fair employment practices   ... 41, 420

Restrictive covenants   ... 152–153

Wrong discharge   ... 81–82

Glass ceiling   ... 11

Good faith and fair dealing   ... 71

Government contracts   ... 135–136

Copeland Act   ... 135

Davis-Bacon Act   ... 135

Drug-Free Workplace Act of 1988   ... 223–226

ASA Tip 73   ... 225

Eight Hour Law   ... 136

Executive Order 11246   ... 26–29

See also Executive Order 11246

Service Contract Act   ... 135

Walsh-Healey Public Contracts Act   ... 135

Work Hours and Safety Act of 1962   ... 135

Green Cards (ASA Tip 51)   ... 187

H

H-1B temporary professional workers   ... 178, 309–314

Back-wage obligations (ASA Tip 129)   ... 311

Defined   ... 309

Eligibility for classification as   ... 309–310

Families of foreign employees (ASA Tip 131)   ... 312

Form ETA Form 9035 (labor condition application)   ... 311

Form I-129H (Petition to Classify Nonimmigrant as Temporary Worker or Trainee)   ... 312

Labor condition application   ... 311–312

Part-time status (ASA Tip 128)   ... 310

Period of approval (ASA Tip 130)   ... 312

Prevailing wage determination   ... 310–311

Required wage (ASA Tip 129)   ... 311

Special circumstances requiring attorney to be consulted   ... 312

Specialty occupation, defined   ... 309

USCIS premium processing service (ASA Tip 132)   ... 312

Handbooks   ... 170–174

Acknowledgment of receipt of   ... 172

Advantages of   ... 171

Common topics   ... 172

Contract disclaimer   ... 173

ASA Tip 28   ... 71

Disadvantages of   ... 171–172

Discipline and discharge provisions   ... 172–173

EEO policy   ... 172, 260

FLSA exemption, statements about (ASA Tip 33)   ... 125

Preventive measures   ... 260

Purposes   ... 171, 172

Reduction in force policy   ... 266

Sexual harassment policy   ... 171, 172, 174, 260

Substance abuse policy (ASA Tip 68)   ... 197

Useful in legal defense   ... 171

Harassment   ... 3–4

Hostile working environment   ... 4–5, 174

How to proceed after investigation into   ... 5

Liability for clients   ... 5

Liability for co-employees   ... 5

Liability for harassment   ... 4–5

Liability for managers and supervisors   ... 4–5

National origin harassment   ... 3–4, 188

Policy

In handbook   ... 174, 260

Sample   ... 384

Posting notice of policies   ... 260

Preventive methods   ... 5

Quid pro quo harassment   ... 4

Racial harassment   ... 3

Remedies for sexual harassment   ... 5

Sexual harassment   ... 4

See also Sexual harassment

Hawaii

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 207–208

Employment references provided in good faith   ... 252

Fair employment practices   ... 41–42, 421

Privacy rights   ... 193

Restrictive covenants   ... 153–154

Wrong discharge   ... 82–83

Hazard Communication Standard (HCS)   ... 277–278

Health Care Quality Improvement Act (HCQIA)   ... 321–322

Health care staffing   ... 315–338

ADA and   ... 315–317

Anti-Kickback Statute and   ... 317

ASA Tips 133 & 134   ... 317

Classification of medical professionals (ASA Tip 140)   ... 324

Continuing education time compensable   ... 335–337

ASA Tip 148   ... 336

Employer provided/paid programs   ... 337

Exception to noncompensable categories   ... 337

Independent training not compensable   ... 337

Not directly related to employee’s job   ... 336

Outside of regular working hours/no productive work performed   ... 336

Statute-mandated compensability   ... 337

Time spent evaluated by four-part test   ... 336–337

Voluntary attendance   ... 2336

Credentialing requirements   ... 320–323

Best practices   ... 322–323

Credential-verification organizations (CVOs)   ... 322–323

Documented checklists (ASA Tip 138)   ... 322

Examples (ASA Tip 135)   ... 320

Importance of (ASA Tip 136)   ... 320

Legal risks   ... 320–321

Vetting documentation (ASA Tip 137)   ... 321

Direct threat to health or safety posed by individual employee   ... 316–317

EEOC factsheet   ... 316

Health care client and health care staffing professional, defined   ... 315–316

HIPAA provisions. See Medical information privacy

Independent contractors, physicians in locum tenens status   ... 323

Informed consent   ... 324–325

Lawsuits

Against health care staffing firm   ... 326

Against medical professionals in individual capacity (ASA Tip 141)   ... 324

Locum tenens doctors contract with staffing firms   ... 323

Employees vs. independent contractors (ASA Tip 139)   ... 323

Malpractice issues   ... 324–326

Malpractice insurance (ASA Tip 142)   ... 326

State legislation   ... 326

ASA Tip 143   ... 326

Mandatory vaccination policies   ... 326–329

ADA or Title VII (ASA Tip 144)   ... 327

EEOC guidance on employee requests for exemption   ... 328

Evidence to support exemption request   ... 329

ASA Tip 145   ... 329

Exemption provisions   ... 327

General rule to accommodate legitimate exemption requests absent undue hardship   ... 328–329

Legal issues   ... 327

Medical issues   ... 327

Religious issues   ... 327

Summary of employer’s duty   ... 329

Medical information privacy   ... 329–335

See also Medical information privacy

Medical professional, defined   ... 315

Negligence   ... 324

Peer review protections   ... 321–322

Professional review action   ... 321

Safe harbors   ... 321–322

Physician self-referral law (Stark Law)   ... 318–320

Res ipsa doctrine   ... 325

Respondeat superior doctrine   ... 325–326

Vicarious liability   ... 325

Health insurance

Affordable Care Act (ACA)   ... 295

COBRA, handbook provisions on   ... 270

Plan sponsors and medical information privacy   ... 334–335

Privacy provisions. See Medical information privacy

Health Insurance Portability and Accountability Act (HIPAA)   ... 329

See also Medical information privacy

Heroin. See Drug testing; Substance abuse

Highly compensated employees   ... 122

High-performance liquid chromatography (HPLC)   ... 238

Hiring criteria. See Pre-employment inquiries; Pre-employment process

Holidays

Handbook stating   ... 172

Pay   ... 132

Home health aides   ... 127

See also Health care staffing

Hospital workers   ... 126

See also Health care staffing

Hostile working environment   ... 4–5, 174

Defense to   ... 259

Hours compensable   ... 130–131

See also Overtime

Handbook stating   ... 172

Holidays   ... 132

Illness   ... 131

Jury duty   ... 132

Meal breaks   ... 130

ASA Tip 38   ... 130

Regular rate of pay   ... 129, 132–133

Travel and waiting time   ... 132

ASA Tip 39   ... 132

Vacation   ... 131

Workweek, defined   ... 130

Human resource managers   ... 117

I

I-140 portability   ... 178

ICE (U.S. Immigration & Customs Enforcement)   ... 183, 186

Idaho

Drug testing   ... 208

Employment references provided in good faith   ... 252

Fair employment practices   ... 42, 421

Restrictive covenants   ... 143

Wrong discharge   ... 83

Illinois

Criminal history pre-employment inquiries   ... 248, 253

Employment references provided in good faith   ... 252

Fair employment practices   ... 42–44, 421

Privacy rights   ... 193

Restrictive covenants   ... 154–155

Wrong discharge   ... 83–84

Illness. See Family and Medical Leave Act (FMLA); Sick leave

Immigration Reform and Control Act (IRCA)   ... 177–190

Accent   ... 189

Agents   ... 184

Antidiscrimination provisions   ... 187–190

Aptitude or other employment tests   ... 190

Citizenship discrimination   ... 188–189

Contract labor   ... 184

Covered employees   ... 188

EEOC policy statements   ... 189

EEO laws enforcement   ... 190

Effective date   ... 178

Enforcement   ... 186, 272

English fluency requirements   ... 190

English-only rules   ... 189

E-Verify   ... 179, 182–184

FLSA enforcement and   ... 134–135

Form I-9

Acceptable documents   ... 180–182

ASA Tip 53   ... 182

Applicants (ASA Tip 57)   ... 185

ASA Tip 49   ... 177

Copies of documentation (ASA Tip 54)   ... 182

Employee completing Section 1   ... 179–180

Employer completing Section 2   ... 182

Employer retaining form   ... 182

Employer retaining supporting documents   ... 182, 272

Exceptions from definition of “hire” and duty to prepare (ASA Tip 55)   ... 185

Paper vs. electronic   ... 178–179

Preventive measures to reduce risk of violations   ... 272

Receipts   ... 181–182

Significant break in temporary assignments (ASA Tip 56)   ... 185

Time to complete   ... 179, 185

ASA Tip 57   ... 185

Form I-551 (ASA Tip 51)   ... 187

Green Cards (ASA Tip 51)   ... 187

“Handbook for Employers” (USCIS) (ASA Tip 50)   ... 177

Harassment   ... 189

Height or weight requirements   ... 190

Investigations (ASA Tip 60)   ... 187

Limited work authorization   ... 185–186

ASA Tip 58   ... 186

Local laws   ... 190

ASA Tip 62   ... 190

National origin discrimination   ... 11

Penalties   ... 186–187

Discrimination   ... 190

Effective date   ... 187

Employment verification system   ... 187

Enforcement proceedings   ... 187

Knowingly hiring, employing, recruiting, or referring unauthorized aliens   ... 186–187

Pre-employment screening   ... 178

Preference for nationals and citizens   ... 188–189

Preventive measures to reduce risk of violations   ... 272–273

Record-keeping requirements   ... 351

Recruiters and referrers for a fee   ... 184

Refusal to hire   ... 189

Rehires   ... 186

Retaliation or intimidation prohibited   ... 189

Unauthorized aliens, defined   ... 177–178

USCIS premium processing service (ASA Tip 132)   ... 312

Verification procedures   ... 178–187

Reverification   ... 185

ASA Tip 59   ... 187

Impairment. See Americans With Disabilities Act; Disability

Implied employment agreements   ... 139

Indemnification provisions   ... 270

Independent contractor status   ... 297–302

ABC test   ... 301

Benefits of classification

To business   ... 299

To employee   ... 299

Categories of employees   ... 298

Common law standard   ... 297

ASA Tip 123   ... 301

Consistency test   ... 298

Economic realities test   ... 300

ASA Tip 123   ... 301

FLSA and   ... 300–301

Internal Revenue Code Section 3509   ... 299–300

IRS Voluntary Classification Settlement Program (ASA Tip 132)   ... 300

Misclassification, consequences of (ASA Tip 132)   ... 300

Reasonable basis test   ... 298

Revenue Act of 1978, Section 530   ... 298

State unemployment and workers’ compensation laws   ... 301

Tax Reform Act of 1986, Section 1706   ... 298–299

20-factor test   ... 297

Worker status

ASA Tip 121   ... 299

Under other laws   ... 300

Independent judgment   ... 117–119

Indiana

Criminal history pre-employment inquiries   ... 248, 253

Employment references provided in good faith   ... 252

Fair employment practices   ... 44, 422

Restrictive covenants   ... 155

Wrong discharge   ... 84–85

Informed consent for health care   ... 324–325

Injunctive relief   ... 143

Inspection by employee of personnel files (ASA Tip 97)   ... 264

Inspectors   ... 117

Insurance   ... 269–270

See also Health insurance

Insurance claims adjusters   ... 119

Intellectual property provision in employment agreements   ... 143

Intentional infliction of emotional distress

Drug testing   ... 196

Wrongful discharge   ... 71–72

Interference with contractual relations   ... 72–73

Interference with prospective economic advantage   ... 73

Internal Revenue Code

Independent contractor status (Section 3509)   ... 297–298

Record-keeping requirements   ... 350

Interview questions. See Pre-employment inquiries

Invasion of privacy   ... 72

Drug testing   ... 225

Iowa

Drug testing   ... 209

ASA Tip 70   ... 209

Employment references provided in good faith   ... 252

Fair employment practices   ... 44–45, 422

Restrictive covenants   ... 155–156

Wrong discharge   ... 85

J

Job advertisements. See Advertising Job descriptions

Essential job functions (ASA Tip 19)   ... 15

FLSA and (ASA Tip 34)   ... 126

Preventive measures   ... 260–261

Job offers. See Pre-employment process

Job referrals   ... 8

Job security, promise of   ... 70–71

Joint Commission on Accreditation of Hospitals   ... 320, 322

Joint employer liability   ... 6, 18–19

FLSA   ... 114

Jury duty   ... 132, 172

K

Kansas

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 209

Employment references provided in good faith   ... 252

Fair employment practices   ... 45, 422

Restrictive covenants   ... 156

Wrong discharge   ... 85–86

Kentucky

Fair employment practices   ... 45–46, 422

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 156

Wrong discharge   ... 86–87

Kickbacks   ... 135

See also Stark Law

L

Language requirements. See English-only rule

Layoffs. See Reductions in force

Learned professionals   ... 120

Learners   ... 125

Leave policy. See also Family and Medical Leave Act

Handbook stating   ... 172

Light-duty assignments   ... 15

Pregnant workers   ... 10

Locum tenens doctors contract with staffing firms   ... 323

Employees vs. independent contractors (ASA Tip 139)   ... 323

Louisiana

Drug testing   ... 210

ASA Tip 71   ... 210

Employment references provided in good faith   ... 252

Fair employment practices   ... 46, 422

Jury duty pay   ... 132

Privacy rights   ... 193

Restrictive covenants   ... 156–157

Wrong discharge   ... 87

M

Maine

Drug testing   ... 210–211

Employment references provided in good faith   ... 252

Fair employment practices   ... 46–47, 423

Restrictive covenants   ... 157

Wrong discharge   ... 87–88

Major life activities   ... 14–15

Malpractice issues of health care professionals   ... 324–326

Managers

Quid pro quo harassment committed by   ... 4–5

Training

On conducting performance reviews   ... 264

On EEO issues and company policies   ... 259–260

On interviewing   ... 264

“Manager’s privilege”   ... 73

Mandatory vaccination policies   ... 326–329

Manual workers   ... 122

Marijuana. See Drug testing; Substance abuse Marital status

Pre-employment inquiries   ... 245

Protected against discrimination   ... 1, 32

Maryland

Drug testing   ... 211–212

Employment references provided in good faith   ... 252

Fair employment practices   ... 47–48, 423

Restrictive covenants   ... 158–159

Wrong discharge   ... 88–89

Massachusetts

Consumer reports   ... 255

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 212

Fair employment practices   ... 48–50, 423

Hazard communication standards   ... 278

Jury duty pay   ... 132

Privacy rights   ... 193

Restrictive covenants   ... 158

Wrong discharge   ... 89–90

Maternity leave. See Family and Medical Leave Act; Pregnancy Discrimination Act Meal breaks   ... 137

ASA Tip 38   ... 130

State laws   ... 136–137

Medical examinations and inquiries   ... 17

See also Drug testing

Physical fitness test   ... 246

Pre-employment   ... 246–247

Psychological examinations   ... 246

Medical information privacy   ... 329–335

ADA provisions   ... 260–261

Breach notification rule   ... 334

Business associates   ... 330–331

Covered entities   ... 330

Genetic Information Nondiscrimination Act (GINA)   ... 335

Health insurance issuers   ... 334

Health Insurance Portability and Accountability Act (HIPAA)   ... 330

Exceptions   ... 332–333

Excluded records (ASA Tip 147)   ... 332

HIPAA training (ASA Tip 146)   ... 332

OSHA Fact Sheet: HIPAA and OSHA Whistleblower

Complaints (reprinted)   ... 414–416

Regulations (Privacy Rule)   ... 332

Protected health information (PHI)   ... 332

Medical malpractice   ... 324–326

Informed consent   ... 324–326

Negligence   ... 324

Res ipsa doctrine   ... 325

Respondeat superior doctrine   ... 325

Vicarious liability   ... 325

Messengers   ... 125

Methamphetamines. See Drug testing; Substance abuse

Methaqualone. See Drug testing; Substance abuse

Michigan

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 213

Employment references provided in good faith   ... 252

Fair employment practices   ... 50, 423

Restrictive covenants   ... 158–159

Wrong discharge   ... 90–92

Military service

Discharge, pre-employment inquiries on   ... 248

FMLA provisions   ... 288–289

Military exigency leave   ... 291

Handbook stating leave policy   ... 172

Minimum wage   ... 114, 129

ASA Tip 36   ... 129

Learners, apprentices, handicapped workers, messengers, and students   ... 125

Minnesota

Criminal history pre-employment inquiries   ... 213–214

Drug testing   ... 213–215

Employment references provided in good faith   ... 252

Fair employment practices   ... 50–51, 424

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 159

Wrong discharge   ... 92–93

Misrepresentation. See Fraud or misrepresentation

Mississippi

Drug testing   ... 214–215

Fair employment practices   ... 52, 424

Restrictive covenants   ... 159

Wrong discharge   ... 93

Missouri

Fair employment practices   ... 52, 424

Restrictive covenants   ... 159–160

Wrong discharge   ... 93–94

Mixed motive cases   ... 5–6

Montana

Drug testing   ... 215–216

Employment references provided in good faith   ... 252

Fair employment practices   ... 52–53, 424

Privacy rights   ... 193

Restrictive covenants   ... 160

Wrong discharge   ... 94–95

Motor carrier exemption   ... 126–127

Multistate employers, reporting new hires   ... 273

N

Narcotics. See Drug testing; Substance abuse

National Committee for Quality Assurance   ... 322

National Institute for Occupational Safety and Health   ... 275, 280

National Labor Relations Act   ... 323

National origin discrimination   ... 11–12, 188

See also Immigration Reform and Control Act

English-only rule (ASA Tip 11)   ... 12

Hiring criteria   ... 12

Interviewing cautions   ... 263

Title VII coverage (ASA Tip 61)   ... 189

See also Title VII

National origin harassment   ... 3–4, 188

Nebraska

Drug testing   ... 216

Drug testing, termination for refusal   ... 216

Fair employment practices   ... 53, 424

Jury duty pay   ... 132

Restrictive covenants   ... 160–161

Wrong discharge   ... 95–96

Negligence

Drug testing   ... 196

Health care professionals   ... 324

Negligent hiring or assignment claims   ... 253, 268–269

Wrongful discharge   ... 72

Nepotism   ... 172

Nevada

Drug testing   ... 216

Employment references provided in good faith   ... 252

Fair employment practices   ... 53–54, 424

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 161

Wrong discharge   ... 96–97

New Hampshire

Fair employment practices   ... 54, 425

Restrictive covenants   ... 161–162

Wrong discharge   ... 97

New hires

Avoiding hiring after reduction in force   ... 266

Form I-9 completion. See Form I-9 compliance Handbooks given to. See Handbooks

Prior employer covenants (ASA Tip 47)   ... 147

Probationary period   ... 261

Reporting laws   ... 273

Restrictive covenants, signing of   ... 147

New Jersey

Consumer reports   ... 255

Drug testing, termination for refusal   ... 216–217

Fair employment practices   ... 54–55, 425

Hazard communication standards   ... 278

Restrictive covenants   ... 162–163

Wrong discharge   ... 97–98

New Mexico

Drug testing   ... 217

Employment references provided in good faith   ... 252

Fair employment practices   ... 55–56, 425

Restrictive covenants   ... 163

Wrong discharge   ... 98–99

Newspaper delivery and child labor   ... 128

New York

Drug testing   ... 217

Consumer reports   ... 255

Criminal history pre-employment inquiries   ... 248, 253

Fair employment practices   ... 56–57, 425

Hazard communication standards   ... 278

Jury duty pay   ... 132

Restrictive covenants   ... 163–164

Wrong discharge   ... 99–100

New York City fair employment ordinances   ... 57

Noncompete agreements

Employment agreements   ... 142

Restrictive covenants   ... 144

ASA Tip 45   ... 145

Nondisclosure agreements   ... 144

Nonsolicitation agreements   ... 145

Nonsolicitation of clients   ... 142–143

Nonsolicitation of employees. See No-raiding provisions No-raiding agreements

Employment agreements   ... 143

Restrictive covenants   ... 144

North Carolina

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 217

Drug testing, termination for refusal   ... 217

Employment references provided in good faith   ... 252

Fair employment practices   ... 57–58, 426

Restrictive covenants   ... 164

Wrong discharge   ... 100

North Dakota

Employment references provided in good faith   ... 252

Fair employment practices   ... 58, 426

Restrictive covenants   ... 164

Wrong discharge   ... 100–101

Notice posting requirements   ... 25

ASA Tip 25   ... 25

Nurses. See Health care staffing

Nursing home workers   ... 126

O

O-1 visas   ... 178

Occupational Safety and Health Act   ... 275–282

Application to staffing firms   ... 275–277

ASA Tip 102   ... 276

Coverage   ... 275

Enforcement   ... 279–280

Ergonomics   ... 279–280

Fact Sheet (reprinted)   ... 414–416

General duty clause   ... 277

Hazard Communication Standard (HCS)   ... 277–278

Informal conference with OSHA area director (ASA Tip 104)   ... 280

Inspections (ASA Tip 103)   ... 279

Penalties   ... 280

Preventive measures (ASA Tip 102)   ... 276

Record-keeping requirements   ... 278–273

Safety Data Sheets   ... 277

Safe workplace   ... 277

State approved plans   ... 281–282

Temporary Worker Initiative   ... 278

Whistleblower complaints, reprinted fact sheet on   ... 414–416

Occupational Safety and Health Administration (OSHA)   ... 275

Office of Child Support Enforcement   ... 273

Office of Federal Contract Compliance Programs   ... 26

Directory (Appendix A)   ... 347

Office of Special Counsel for Immigration-Related Unfair Employment Practices   ... 348

Ohio

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 217–218

Employment references provided in good faith   ... 252

Fair employment practices   ... 58–59, 426

Restrictive covenants   ... 164–165

Wrong discharge   ... 101–102

Oklahoma

Drug testing   ... 218–219

Employment references provided in good faith   ... 252

Fair employment practices   ... 59, 426

Restrictive covenants   ... 165

Wrong discharge   ... 102–103

Older Workers’ Benefit Protection Act   ... 23, 24, 266

Ombudsman   ... 260

Open-door policy   ... 172

Ordinances. See City ordinances

Oregon

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 219

Employment references provided in good faith   ... 252

Fair employment practices   ... 59–61, 427

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 165–166

Wrong discharge   ... 103

Outside salespersons   ... 122

Overseas employees   ... 133

Overtime   ... 113, 128–129

ASA Tip 37   ... 129

Home health aides   ... 127

Hospital workers   ... 126

Litigation over   ... 260

Messengers   ... 125

Motor carrier exemption   ... 126–127

Nursing home workers   ... 126

Placement counselors and recruiters   ... 127

Preventive measures   ... 270–272

Weekly salaried temporary employees (ASA Tip 100)   ... 270

Regular rate of pay   ... 129, 132–133

Travel and waiting time   ... 132

ASA Tip 39   ... 132

Workweek, defined   ... 130

OWBPA notice   ... 24

Oxford Health Plans LLC v. Sutter (2013)   ... 175

P

Parental leave. See Family and Medical Leave Act

Payment intervals (pay dates)   ... 130

Payroll administration   ... 172

Payroll records, retention of   ... 133–134

PCP. See Drug testing; Substance abuse

PDA. See Pregnancy Discrimination Act

Pennsylvania

Criminal history pre-employment inquiries   ... 248, 253

Drug testing, termination for refusal   ... 219–220

Fair employment practices   ... 61, 427

Hazard communication standards   ... 278

Restrictive covenants   ... 166

Wrong discharge   ... 103–104

Per diem regulations   ... 303–308

Business connection   ... 303–305

Business transportation rules for temporary employees   ... 307

CONUS tables   ... 305–306

Department of Labor vs. IRS regulations (ASA Tip 127)   ... 307

Excess amounts

ASA Tip 126   ... 306

Return of   ... 306

Safe harbors   ... 306–307

Indefinite assignment   ... 304

Reasonable time period   ... 306

Fixed Date Method   ... 306

Periodic Statement Method   ... 307

Regular place of abode (ASA Tip 124)   ... 304

Substantiation requirements   ... 305–306

Travel less than a full day (ASA Tip 125)   ... 306

Performance evaluations

Employee to sign   ... 264

Frequency and setting goals (ASA Tip 96)   ... 263

Handbook provisions on   ... 172

Preventive measures   ... 263–264

Self-evaluations   ... 264

Substantiation   ... 305–306

Upward reviews   ... 264

Performance problems, documentation of   ... 264

Personal care attendants   ... 127

Personal Responsibility and Work Opportunity Act   ... 273

Personnel files, employees’ right to inspect (ASA Tip 97)   ... 264

Personnel policies. See Handbooks; Policies

Photographs of employees (ASA Tip 9)   ... 8

Physicians. See Health care staffing

Physician self-referral law (Stark Law)   ... 318–320

Piece rates   ... 133

Placement counselors and recruiters   ... 127

Plant closing laws, state   ... 266

Policies

Equal employment opportunity policy (sample)   ... 382

Employee acknowledgment and pledge to comply with company’s policy (sample)   ... 383

On exempt employees (ASA Tip 33)   ... 125

FMLA (sample)   ... 411

Harassment prohibited policy (sample)   ... 384

Sample policies (Appendix E)   ... 381–416

On sexual harassment (ASA Tip 5)   ... 5

Substance abuse and drug testing   ... 226–228

See also Substance abuse

Alcohol- and drug-free workplace policy (sample)   ... 385

Polygraph testing   ... 252

Portal-to-Portal Act of 1947   ... 132

Posters

Antidiscrimination laws   ... 25, 259–260

FLSA requirements   ... 134

FMLA (sample)   ... 413

No-harassment policies   ... 260

Pre-employment inquiries   ... 17, 243–251

Affirmative action programs   ... 246

Age questions   ... 248

Application forms   ... 243

ASA Tip 85   ... 243

Preventive measures   ... 260–261

Regular employee (sample)   ... 403

Temporary employee (sample)   ... 396

Arrest records   ... 244, 248, 253

Child care   ... 248

Conviction records   ... 248, 253

Drug-testing   ... 247

See also Drug testing

EEOC enforcement guidance (Appendix D)   ... 369–380

Employment references   ... 252

Applicant authorization and consent form (sample)   ... 388

General considerations   ... 243

Interview questions

Americans With Disabilities Act restrictions   ... 245

ASA Tip 88   ... 244

Attendance-related (ASA Tip 87)   ... 244

Checklist, use of   ... 273

Disability-related   ... 244, 245

Preventive measures   ... 272–273

Marital status   ... 248

Medical examinations   ... 246–247

Military discharge   ... 248

Obvious disability or volunteered information about disability   ... 246

Permissible   ... 244, 249–251

ASA Tip 86   ... 243

Education-related   ... 249–250, 388

General information   ... 249–250

Prior employment   ... 250

Skills and relevant nonvocational activities   ... 250–251

Polygraph testing   ... 252

Post-offer   ... 247

ASA Tip 90   ... 247

Vs. pre-offer   ... 244–245

Pre-offer   ... 244–245

Vs. post-offer   ... 247–248

Reasonable accommodation needs   ... 246–247

State and local laws   ... 249

Substance abuse history   ... 245

Title VII restrictions   ... 244, 248

Pre-employment process   ... 241–258

Aptitude tests   ... 190

Arrest records   ... 253

Conviction records   ... 253

Credit and background reports   ... 254–256

English-only rule   ... 189

ASA Tip 11   ... 12

Height or weight requirements   ... 190

Inquiries. See Pre-employment inquiries

Job advertising (ASA Tip 84)   ... 242

Job offers   ... 263

Post-offer inquiries   ... 247–248

ASA Tip 90   ... 247

Promissory estoppel based on   ... 73

Physical fitness test   ... 246

Polygraph testing   ... 252

Protecting against negligent hiring or assignment claims   ... 253

Recruitment   ... 242–243

Advertising   ... 242–243

See also Advertising

Walk-in hiring   ... 243

Word-of-mouth   ... 242

Verification of alien employment authorization   ... 178

Pregnancy Discrimination Act (PDA)   ... 9–10, 17

Preventive measures   ... 259–274

ADA compliance   ... 260–261

Alternative dispute resolution   ... 267–268

Applications   ... 261–262

Compensation   ... 263

Discriminatory client requests   ... 268

EEOC evaluation of claims (ASA Tip 95)   ... 260

Employee handbooks   ... 262

Employment-at-will policy   ... 261

Harassment   ... 5

Indemnification   ... 270

Insurance   ... 269–270

Interviewing and evaluations   ... 263

IRCA violations   ... 272–273

Job descriptions   ... 262–263

Negligent hiring   ... 268–269

New hire reporting laws   ... 273

OSHA violations (ASA Tip 102)   ... 276

Performance appraisals   ... 262–263

Performance problems, documentation of   ... 264

Policies and training   ... 259–260

Probationary period   ... 261

Progressive discipline   ... 264–265

Protection against potential liability (ASA Tip 94)   ... 259

Reductions in force   ... 266–267

Release   ... 266

Replacing employees (ASA Tip 99)   ... 268

Severance   ... 271

Temporary employees   ... 271

Termination of employment   ... 265–266

Wage and hour law violations   ... 270–272

Weekly salaried temporary employees (ASA Tip 100)   ... 270

Prior employer covenants (ASA Tip 47)   ... 147

Privacy rights

Credit reports   ... 254

Drug testing   ... 193

Medical information privacy   ... 329–335

See also Medical information privacy

Probationary period   ... 261

Professional employees   ... 119–120

Computer professionals   ... 121–122

Learned professionals   ... 120

Progressive discipline   ... 264–265

Promise of job security   ... 70

Promissory estoppel   ... 73

Prospective economic advantage, interference with   ... 73

Prospective employers, restrictive covenants and   ... 147

Protected classes   ... 9–18

Age   ... 12–14

See also Age Discrimination in Employment Act

Disability   ... 14–18

See also Americans With Disabilities Act

Pregnant employees   ... 9–10

See also Pregnancy Discrimination Act

Race   ... 9

See also Title VII

Sex   ... 9

See also Title VII

Psychiatric disabilities   ... 14

Psychological examinations   ... 246–247

Public employers   ... 124

Public policy violations, wrongful discharge   ... 69–70

Puerto Rico

Fair employment practices   ... 427

Privacy rights   ... 193

Purchasing agents   ... 119

Q

Quid pro quo harassment   ... 4

R

Race discrimination   ... 1, 9

See also Title VII

Racial harassment   ... 3

Radio-immunoassay (RIA) drug testing   ... 237

Reasonable accommodation

ADA   ... 15–16

ASA Tip 19   ... 15

Pre-offer questions   ... 243

Preventive measures   ... 260–261

Pregnant workers   ... 9–10

Religious needs of employees   ... 11

ASA Tip 10   ... 11

Substance abuse treatment   ... 194

Reasonable factors other than age (RFOA)   ... 13

Record-keeping requirements

ADA   ... 350

ADEA   ... 24, 351

Civil Rights Act of 1866   ... 22

Executive Order 11246   ... 28, 350

FLSA   ... 133–134, 350

FMLA   ... 292–293, 351

Health records. See Medical information privacy

IRCA   ... 351

OSHA   ... 278–279

Payroll records   ... 133–134

Rehabilitation Act of 1973   ... 29–30

Selected Federal Laws (Appendix B)   ... 349–352

Title VII   ... 21, 350

Vietnam Era Veterans’ Readjustment Assistance Act of 1972   ... 32, 351

Vocational Rehabilitation Act of 1973   ... 351

Recruiters   ... 127

Recruitment   ... 242

See also Pre-employment process

Advertising   ... 242–243

See also Advertising

Walk-in hiring   ... 243

Word-of-mouth   ... 242

Reductions in force   ... 13–14, 266–267

References. See Employment references

Regular rate of pay   ... 129, 132–133

Rehabilitation Act of 1973   ... 25, 29–30

Accommodation   ... 28

Affirmative action clause   ... 29

Affirmative action program   ... 29–30

Drug addiction as disability   ... 193–194

Enforcement   ... 30

Persons protected   ... 29

Reports and records   ... 30

Sanctions   ... 30

Rehires

Form I-9 compliance   ... 186

Reporting (ASA Tip 101)   ... 273

Reimbursement. See Regular rate of pay

Relatives, hiring of   ... 172

Releases. See Waivers and releases

Religious discrimination   ... 11

See also Title VII

ASA Tip 10   ... 11

Interviewing cautions   ... 263

Remedies. See also Damages

Discriminatory actions by clients (ASA Tip 8)   ... 7–8

FMLA   ... 293–294

Restrictive covenants   ... 146

Sexual harassment   ... 5

Replacing employees (ASA Tip 99)   ... 268

Res ipsa doctrine   ... 325

Restrictive covenants   ... 144–147

Business considerations   ... 147

Confidential information   ... 145–146

Consideration for   ... 142, 145

Defined   ... 144

Employment agreements and   ... 140

Enforceability (ASA Tip 46)   ... 147

Geographical limitations   ... 146

Legal concerns   ... 145–147

Legitimate business interests   ... 145–146

Noncompete agreements   ... 145

ASA Tip 45   ... 145

Nondisclosure agreements   ... 144

Nonsolicitation agreements   ... 145

No-raiding agreements   ... 145

Prior employer covenants (ASA Tip 47)   ... 147

Prospective employers   ... 147

Reasonableness   ... 146

Remedies   ... 146–147

State-by-state analysis   ... 147–176

Time limitations   ... 146

Trade secrets   ... 145

Types of   ... 144–145

Unique or extraordinary services   ... 146

Retaliation   ... 2–3

FLSA protections (ASA Tip 41)   ... 135

Immigration Reform and Control Act protections   ... 190

Protection against claims of   ... 259

ASA Tip 3   ... 3

Revenue Act of 1978   ... 298

Rhode Island

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 220

Employment references provided in good faith   ... 252

Fair employment practices   ... 61–62, 427

Privacy rights   ... 193

Restrictive covenants   ... 166

Wrong discharge   ... 104

Right to sue notice   ... 20

S

Safety. See also Occupational Safety and Health Act

Handbook stating policy   ... 172

Safety Data Sheets   ... 277–278

Salespersons   ... 277

San Francisco VDT regulations   ... 280

Searches, workplace   ... 172

Security industry, polygraph testing of job applicants   ... 252

Seniority system   ... 13, 267

Service Contract Act   ... 135

Severance

Employment agreement provision   ... 141

Handbook provision on   ... 172

Preventive measures   ... 271–272

Reduction in force   ... 267

Sex discrimination   ... 10

See also Title VII

Comparable worth claims   ... 10–11

Damages   ... 248

Equal pay claims   ... 10–11

Glass ceiling   ... 11

Sex, as protected class   ... 9

State protective laws   ... 10

Sexual harassment   ... 4

Complaints (ASA Tip 4)   ... 5

Defense to   ... 259

Hostile working environment   ... 4–5, 174

Defense to   ... 259

Investigations (ASA Tip 6)   ... 6

Policy

ASA Tip 5   ... 5

In handbooks   ... 170, 172, 174, 262

Sample   ... 384

Remedies for   ... 5

Sex, as protected class   ... 9

Sexual orientation

Interviewing cautions   ... 263

Protected against discrimination   ... 1, 32

Shift differentials   ... 129, 270

Sick leave. See also Family and Medical Leave Act

ADA provisions   ... 10

OSHA record-keeping   ... 278–279

Preventive measures   ... 269–270

Smoking policy   ... 172

Social Security disability insurance (SSDI)   ... 18

Solicitation at worksite policy   ... 172

South Carolina

Employment references provided in good faith   ... 252

Fair employment practices   ... 62–63, 427

Privacy rights   ... 193

Restrictive covenants   ... 166–167

Wrong discharge   ... 104–105

South Dakota

Employment references provided in good faith   ... 252

Fair employment practices   ... 63, 428

Restrictive covenants   ... 167

Wrong discharge   ... 105–106

Stark Law   ... 318–320

State departments of labor, directory of (Appendix A)   ... 345–347

State fair employment practices   ... 33–68

Agencies (Appendix A)   ... 342–344

State laws

Alabama

Drug testing   ... 197–199

Fair employment practices   ... 33, 418

Jury duty pay   ... 132

Restrictive covenants   ... 148

Wrong discharge   ... 73–74

Alaska

Drug testing   ... 199–200

Employment references provided in good faith   ... 252

Fair employment practices   ... 33, 418

Privacy rights   ... 193

Restrictive covenants   ... 148

Wrong discharge   ... 74

Arizona

Drug testing   ... 200

Employment references provided in good faith   ... 252

Fair employment practices   ... 33–34, 418

Privacy rights   ... 193

Restrictive covenants   ... 148–149

Wrong discharge   ... 74–76

Arkansas

Drug testing   ... 200–202

Employment references provided in good faith   ... 252

Fair employment practices   ... 34, 418

Restrictive covenants   ... 149–150

Wrong discharge   ... 76

California

Criminal history pre-employment inquiries   ... 248, 253

Drug testing, termination for refusal   ... 202–203

Employment references provided in good faith   ... 252

Fair employment practices   ... 34–36, 419

Meal and rest period requirements   ... 130, 137

Pregnancy-related disabilities leave   ... 9

Privacy rights   ... 193

Restrictive covenants   ... 150

Sexual harassment training of managers   ... 260

Wrong discharge   ... 76–77

Colorado

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 203

Employment references provided in good faith   ... 252

Fair employment practices   ... 36–37, 419

Jury duty pay   ... 132

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 150–151

Wrong discharge   ... 77–78

Connecticut

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 203–204

Fair employment practices   ... 37–38, 419

Restrictive covenants   ... 151

Sexual harassment training of managers   ... 260

Wrong discharge   ... 78–79

Delaware

Drug testing   ... 204

Employment references provided in good faith   ... 252

Fair employment practices   ... 38, 420

Restrictive covenants   ... 151

Wrong discharge   ... 79–80

District of Columbia

Drug testing   ... 204

Fair employment practices   ... 38–39, 420

Restrictive covenants   ... 152

Wrong discharge   ... 80

Florida

Drug-Free Workplace Act (ASA Tip 69)   ... 206

Drug testing   ... 204–206

Employment references provided in good faith   ... 252

Fair employment practices   ... 40–41, 420

Privacy rights   ... 193

Restrictive covenants   ... 152

Wrong discharge   ... 80–81

Georgia

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 206–207

Employment references provided in good faith   ... 252

Fair employment practices   ... 41, 420

Restrictive covenants   ... 152–153

Wrong discharge   ... 81–82

Hawaii

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 207–208

Employment references provided in good faith   ... 252

Fair employment practices   ... 41–42, 421

Privacy rights   ... 193

Restrictive covenants   ... 153–154

Wrong discharge   ... 82–83

Idaho

Drug testing   ... 208

Employment references provided in good faith   ... 252

Fair employment practices   ... 42, 421

Restrictive covenants   ... 143

Wrong discharge   ... 83

Illinois

Criminal history pre-employment inquiries   ... 248, 253

Employment references provided in good faith   ... 252

Fair employment practices   ... 42–44, 421

Privacy rights   ... 193

Restrictive covenants   ... 154–155

Wrong discharge   ... 83–84

Indiana

Criminal history pre-employment inquiries   ... 248, 253

Employment references provided in good faith   ... 252

Fair employment practices   ... 44, 422

Restrictive covenants   ... 155

Wrong discharge   ... 84–85

Iowa

Drug testing   ... 209

ASA Tip 70   ... 209

Employment references provided in good faith   ... 252

Fair employment practices   ... 44–45, 422

Restrictive covenants   ... 155–156

Wrong discharge   ... 85

Kansas

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 209

Employment references provided in good faith   ... 252

Fair employment practices   ... 45, 422

Restrictive covenants   ... 156

Wrong discharge   ... 85–86

Kentucky

Fair employment practices   ... 45–46, 422

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 156

Wrong discharge   ... 86–87

Louisiana

Drug testing   ... 210

ASA Tip 71   ... 210

Employment references provided in good faith   ... 252

Fair employment practices   ... 46, 422

Jury duty pay   ... 132

Privacy rights   ... 193

Restrictive covenants   ... 156–157

Wrong discharge   ... 87

Maine

Drug testing   ... 210–211

Employment references provided in good faith   ... 252

Fair employment practices   ... 46–47, 423

Restrictive covenants   ... 157

Wrong discharge   ... 87–88

Maryland

Drug testing   ... 211–212

Employment references provided in good faith   ... 252

Fair employment practices   ... 47–48, 423

Restrictive covenants   ... 158–159

Wrong discharge   ... 88–89

Massachusetts

Consumer reports   ... 255

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 212

Fair employment practices   ... 48–50, 423

Hazard communication standards   ... 278

Jury duty pay   ... 132

Privacy rights   ... 193

Restrictive covenants   ... 158

Wrong discharge   ... 89–90

Michigan

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 213

Employment references provided in good faith   ... 252

Fair employment practices   ... 50, 423

Restrictive covenants   ... 158–159

Wrong discharge   ... 90–92

Minnesota

Criminal history pre-employment inquiries   ... 213–214

Drug testing   ... 213–215

Employment references provided in good faith   ... 252

Fair employment practices   ... 50–51, 424

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 159

Wrong discharge   ... 92–93

Mississippi

Drug testing   ... 214–215

Fair employment practices   ... 52, 424

Restrictive covenants   ... 159

Wrong discharge   ... 93

Missouri

Fair employment practices   ... 52, 424

Restrictive covenants   ... 159–160

Wrong discharge   ... 93–94

Montana

Drug testing   ... 215–216

Employment references provided in good faith   ... 252

Fair employment practices   ... 52–53, 424

Privacy rights   ... 193

Restrictive covenants   ... 160

Wrong discharge   ... 94–95

Nebraska

Drug testing   ... 216

Drug testing, termination for refusal   ... 216

Fair employment practices   ... 53, 424

Jury duty pay   ... 132

Restrictive covenants   ... 160–161

Wrong discharge   ... 95–96

Nevada

Drug testing   ... 216

Employment references provided in good faith   ... 252

Fair employment practices   ... 53–54, 424

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 161

Wrong discharge   ... 96–97

New Hampshire

Fair employment practices   ... 54, 425

Restrictive covenants   ... 161–162

Wrong discharge   ... 97

New Jersey

Consumer reports   ... 255

Drug testing, termination for refusal   ... 216–217

Fair employment practices   ... 54–55, 425

Hazard communication standards   ... 278

Restrictive covenants   ... 162–163

Wrong discharge   ... 97–98

New Mexico

Drug testing   ... 217

Employment references provided in good faith   ... 252

Fair employment practices   ... 55–56, 425

Restrictive covenants   ... 163

Wrong discharge   ... 98–99

New York

Drug testing   ... 217

Consumer reports   ... 255

Criminal history pre-employment inquiries   ... 248, 253

Fair employment practices   ... 56–57, 425

Hazard communication standards   ... 278

Jury duty pay   ... 132

Restrictive covenants   ... 163–164

Wrong discharge   ... 99–100

New York City

Fair employment ordinances   ... 57

North Carolina

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 217

Drug testing, termination for refusal   ... 217

Employment references provided in good faith   ... 252

Fair employment practices   ... 57–58, 426

Restrictive covenants   ... 164

Wrong discharge   ... 100

North Dakota

Employment references provided in good faith   ... 252

Fair employment practices   ... 58, 426

Restrictive covenants   ... 164

Wrong discharge   ... 100–101

Ohio

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 217–218

Employment references provided in good faith   ... 252

Fair employment practices   ... 58–59, 426

Restrictive covenants   ... 164–165

Wrong discharge   ... 101–102

Oklahoma

Drug testing   ... 218–219

Employment references provided in good faith   ... 252

Fair employment practices   ... 59, 426

Restrictive covenants   ... 165

Wrong discharge   ... 102–103

Oregon

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 219

Employment references provided in good faith   ... 252

Fair employment practices   ... 59–61, 427

Meal and rest period requirements   ... 130, 137

Restrictive covenants   ... 165–166

Wrong discharge   ... 103

Pennsylvania

Criminal history pre-employment inquiries   ... 248, 253

Drug testing, termination for refusal   ... 219–220

Fair employment practices   ... 61, 427

Hazard communication standards   ... 278

Restrictive covenants   ... 166

Wrong discharge   ... 103–104

Puerto Rico

Fair employment practices   ... 427

Privacy rights   ... 193

Rhode Island

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 220

Employment references provided in good faith   ... 252

Fair employment practices   ... 61–62, 427

Privacy rights   ... 193

Restrictive covenants   ... 166

Wrong discharge   ... 104

South Carolina

Employment references provided in good faith   ... 252

Fair employment practices   ... 62–63, 427

Privacy rights   ... 193

Restrictive covenants   ... 166–167

Wrong discharge   ... 104–105

South Dakota

Employment references provided in good faith   ... 252

Fair employment practices   ... 63, 428

Restrictive covenants   ... 167

Wrong discharge   ... 105–106

Tennessee

Drug testing   ... 220–221

Employment references provided in good faith   ... 252

Fair employment practices   ... 63, 428

Jury duty pay   ... 132

Restrictive covenants   ... 167

Wrong discharge   ... 106–107

Texas

Drug testing   ... 221

Employment references provided in good faith   ... 252

Fair employment practices   ... 63–64, 428

Restrictive covenants   ... 167–168

Wrong discharge   ... 107

Utah

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 221–222

Employment references provided in good faith   ... 252

Fair employment practices   ... 64, 428

Restrictive covenants   ... 168

Wrong discharge   ... 107–108

Vermont

Drug testing   ... 222

Fair employment practices   ... 64–65, 428

Restrictive covenants   ... 168–169

Wrong discharge   ... 108

Virginia

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 222–223

Fair employment practices   ... 65, 429

Restrictive covenants   ... 169

Wrong discharge   ... 109

Washington

Consumer reports   ... 255

Drug testing   ... 223

Fair employment practices   ... 66–67, 429

Meal and rest period requirements   ... 130, 137

Privacy rights   ... 193

Restrictive covenants   ... 169

Wrong discharge   ... 109–110

Welfare recipients   ... 6

West Virginia

Drug testing, termination for refusal   ... 223

Fair employment practices   ... 67, 429

Restrictive covenants   ... 169–170

Wrong discharge   ... 110

Wisconsin

Criminal history pre-employment inquiries   ... 248, 253

Employment references provided in good faith   ... 252

Fair employment practices   ... 67–68, 430

Privacy rights   ... 193

Restrictive covenants   ... 170

Wrong discharge   ... 110–111

Wyoming

Employment references provided in good faith   ... 252

Fair employment practices   ... 68, 430

Restrictive covenants   ... 170

Wrong discharge   ... 111–112

Statutory right, exercise of   ... 70

Statutory right, termination for exercise of   ... 70

Statutory violation, termination for   ... 70

Stolt-Nielsen v. AnimalFeeds International Corp. (2010)   ... 175

Student workers   ... 125

Subminimum wage (age 16-19)   ... 113, 126

Substance abuse. See also Drug testing

Current drugs of abuse   ... 235–237

Alcohol   ... 234–235

Amphetamines   ... 235

Barbiturates   ... 235

Cocaine and crack cocaine   ... 236

Heroin   ... 236

Ice (methamphetamine or “speed”)   ... 235

Marijuana and hashish   ... 235

Prescription opiates (pain-killers or narcotics)   ... 236–237

Definition of drug   ... 234

As disability   ... 193–194

Discipline and discrimination (ASA Tip 64)   ... 195

Drugs of abuse, list of   ... 235–237

Handbook stating policy   ... 172

Interview questions on   ... 244–245

Nature of problem   ... 191

Policy statements

Authorization and release from liability forms   ... 227

Confidentiality   ... 227–228

Contents of (ASA Tip 77)   ... 227

Defined intent   ... 227

Detection training   ... 227

Disclosure to clients   ... 228

Drug-testing goal   ... 227

Intent and purpose of   ... 226

Need for temporary staffing firms to have   ... 226

Procedures with testing laboratories   ... 229

Recording results   ... 229

Rehabilitation   ... 227

Sample of alcohol- and drug-free workplace policy   ... 385–386

Scope of disclosure   ... 228

Selection of testing laboratory   ... 228–229

Substance abuse education   ... 227

Written policy   ... 226–227

Reasonable accommodation of treatment   ... 194–195

Supervisors. See Managers

T

Tax Reform Act of 1986   ... 298–299

Team leaders   ... 119

Telephone use policy   ... 172

Temporary services companies

Common discrimination issues for   ... 6–8

See also Discrimination

Discipline and termination   ... 8–9

Discrimination in assignments (ASA Tip 9)   ... 8

Drug testing policy   ... 226–228

See also Drug testing

ASA Tip 77   ... 227

EEOC’s “Policy Guidance on Contingent Workers”   ... 6

Employment qualifications or tests   ... 7–8

FLSA applicability   ... 114

Joint employment relationship   ... 114

Form I-9 compliance   ... 185

Guidelines to avoid discrimination complaints (ASA Tip 7)   ... 7

Hiring   ... 8

Job referrals   ... 8

National origin discrimination (ASA Tip 61)   ... 189

OSHA compliance   ... 275–277

Sexual harassment and discrimination policy (ASA Tip 5)   ... 5

Terms and conditions of employment   ... 8

Travel and waiting time   ... 132

Wage agreements (ASA Tip 36)   ... 129

Tennessee

Drug testing   ... 220–221

Employment references provided in good faith   ... 252

Fair employment practices   ... 63, 428

Jury duty pay   ... 132

Restrictive covenants   ... 167

Wrong discharge   ... 106–107

Termination of employment

Discrimination   ... 8–9

Drug testing, refusal as grounds for   ... 197

Employment agreement on grounds for   ... 141

Handbook provisions on   ... 172, 173

Preventive measures   ... 265–266

Procedures   ... 265–266

Releases   ... 266

Testing. See also Drug testing

Aptitude tests   ... 190

Polygraph testing   ... 252

Pre-employment or post-employment testing   ... 17, 245

Texas

Drug testing   ... 221

Employment references provided in good faith   ... 252

Fair employment practices   ... 63–64, 428

Restrictive covenants   ... 167–168

Wrong discharge   ... 107

Thin-layer chromatography (TLC)   ... 237–238

Ticket to Work and Work Incentives Improvement Act of 1999 (ASA Tip 15)   ... 14

Time sheets (ASA Tip 40)   ... 134

Title VII. See also National origin discrimination; Race discrimination; Religious discrimination; Sex discrimination

Conciliation   ... 20

Coverage   ... 18–21

Minimum number of employees   ... 6

Damages   ... 21, 257

Deferral and time for filing   ... 19

Discrimination charge   ... 19

EEO-1 reports   ... 21

EEOC Guidelines on Application of EEO Laws to Contingent

Workers (Appendix C)   ... 353–368

Enforcement   ... 19–21

Investigation   ... 19

Joint employers (ASA Tip 22)   ... 19

Notice of right to sue   ... 20

Notice posting requirements   ... 24–25

ASA Tip 25   ... 25

Pre-employment inquiries, restrictions on   ... 244, 248, 249

Reasonable cause determination   ... 19–20

Record-keeping requirements   ... 350

Relief   ... 20–21

Reports and records   ... 21

Retaliation   ... 2

TN status   ... 178

Trade secrets   ... 135

Training. See Managers

Transportation Department, regulation of motor carrier employees   ... 126–127

Travel and waiting time   ... 132

ASA Tip 39   ... 132

U

Unauthorized aliens. See also Immigration Reform and Control Act

Defined   ... 177

Effective date   ... 177

FLSA enforcement and   ... 128

Undue hardship

ADA   ... 16

Mandatory vaccination policies, general rule to accommodate legitimate exemption requests absent undue hardship   ... 328–329

Unilateral change of terms of employment agreement   ... 141

United Nations Globally Harmonized System of Classification and Labeling of Chemicals   ... 278

Unlawful acts, refusal of employee to perform   ... 69–79

U.S. Citizenship and Immigration Services (USCIS)   ... 178–179, 309–310

Directory (Appendix A)   ... 348

“Handbook for Employers” (ASA Tip 50)   ... 177

Premium processing service (ASA Tip 132)   ... 312

U.S. Customs Service drug testing   ... 192

U.S. Immigration & Customs Enforcement (ICE)   ... 182, 186

Utah

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 221–222

Employment references provided in good faith   ... 252

Fair employment practices   ... 64, 428

Restrictive covenants   ... 168

Wrong discharge   ... 107–108

V

Vacation

Handbook stating policy   ... 172

Pay   ... 131

Preventive measures   ... 271

Vaccination policies   ... 326–329

Verification for employment authorization. See Form I-9; Immigration Reform and Control Act

Vermont

Drug testing   ... 222

Fair employment practices   ... 64–65, 428

Restrictive covenants   ... 168–169

Wrong discharge   ... 108

Video display terminals (VDTs)   ... 280

Vietnam Era Veterans’ Readjustment Assistance Act of 1972   ... 25, 30–32

Affirmative action clause   ... 30

Affirmative action program   ... 31

Enforcement   ... 31–32

Form VETS-100   ... 32

Job listing requirements (ASA Tip 27)   ... 31

Record-keeping requirements   ... 351

Reports and records   ... 32

Sanctions   ... 32

Virginia

Criminal history pre-employment inquiries   ... 248, 253

Drug testing   ... 222–223

Fair employment practices   ... 65, 429

Restrictive covenants   ... 169

Wrong discharge   ... 109

Vocational Rehabilitation Act of 1973   ... 351

Voting leave policy   ... 172

W

Wage and hour laws   ... 113–138

See also Fair Labor Standards Act

Preventive measures to reduce risk of violations   ... 270–272

State laws   ... 136–137

Wages. See also Regular rate of pay

Exempt employees. See Exempt employees

Minimum wage. See Minimum wage

Offers of compensation   ... 263

Payment documentation (ASA Tip 30)   ... 122

Salary basis test   ... 123–124

Shift differentials   ... 129, 270

Straight-time rate   ... 133

Waiting time   ... 132

ASA Tip 39   ... 132

Waivers and releases

Age Discrimination in Employment Act (ADEA)   ... 23–24

Drug testing consent form (sample)   ... 387

Employment agreement provisions   ... 143–144

No release of future claims   ... 141

FCRA (sample)   ... 389

FLSA and state wage and hour laws   ... 271

Release, defined (ASA Tip 98)   ... 266

Termination of employment, signing of release   ... 266–267

Walk-in hiring   ... 243

Walsh-Healey Public Contracts Act   ... 135

Washington

Consumer reports   ... 255

Drug testing   ... 223

Fair employment practices   ... 66–67, 429

Meal and rest period requirements   ... 130, 137

Privacy rights   ... 193

Restrictive covenants   ... 169

Wrong discharge   ... 109–110

Welfare recipients   ... 6

West Virginia

Drug testing, termination for refusal   ... 223

Fair employment practices   ... 67, 429

Restrictive covenants   ... 169–170

Wrong discharge   ... 110

Whistle-blowing   ... 70

OSHA Fact Sheet   ... 414–416

Wisconsin

Criminal history pre-employment inquiries   ... 248, 253

Employment references provided in good faith   ... 252

Fair employment practices   ... 67–68, 430

Privacy rights   ... 193

Restrictive covenants   ... 170

Wrong discharge   ... 110–111

Withholding   ... 271

Women. See Pregnancy Discrimination Act (PDA); Sex discrimination; Sexual harassment

Worker Adjustment Retaining and Notification Act   ... 267

Workers’ compensation

ADA and   ... 17

Independent contractor status   ... 300–301

Reductions due to drug testing   ... 234

Workplace conduct standards (ASA Tip 17)   ... 14

Workplace searches   ... 172

Workweek, defined   ... 130

Wrongful discharge   ... 69–112

Defamation   ... 72

Disclaimers in handbooks (ASA Tip 28)   ... 71

Emotional distress, intentional infliction of   ... 71–72

Employment agreement as defense   ... 140

Exceptions to at-will doctrine   ... 69–73

Covenant of good faith and fair dealing   ... 71

Promise of job security   ... 70–71

Public policy   ... 69–70

Fraud or misrepresentation   ... 71

Handbooks, useful in defense   ... 171

Interference with contractual relations   ... 73

Interference with prospective economic advantage   ... 73

Invasion of privacy   ... 72

“Manager’s privilege”   ... 73

Negligence   ... 72

Promissory estoppel   ... 73

Public policy violations   ... 69–70

State-by-state analysis   ... 73–112

Statutory right, exercise of   ... 70

Statutory violation   ... 70

Unlawful acts, refusal of employee to perform   ... 69–79

Whistle-blowing   ... 70

Wyoming

Employment references provided in good faith   ... 252

Fair employment practices   ... 68, 430

Restrictive covenants   ... 170

Wrong discharge   ... 111–112