Is a Separation Agreement required?
No. The typical scenario for a Separation Agreement involves an for cause termination where the company is willing to pay some form of severance compensation to the employee. In these cases, a Separation Agreement is recommended but not required.

Is severance pay required?
U.S. law only requires pay through the last day of work. However, further commitments by the company to provide severance pay may be found in a company severance policy or in an individual employee’s employment contract. In these limited cases, the severance pay must be paid. In other cases, severance payments are optional.

What are the standard provisions of a Separation Agreement?
There will be some standard legal verbiage and some key provisions in almost every Separation Agreement. It is important for the Agreement to review the identity of the involved parties, the fact of the termination, the terms of any severance, the release of claims, the right of the employee to consult an attorney, confidentiality requirements regarding the terms, and some boilerplate language about the applicable law and enforceability of the agreement. The two key provisions are the severance pay, if any, and the release of claims.

The terms of severance would include the amount (if any), the timing for the payment, and a statement that applicable tax withholding will be deducted. If certain benefits are being given in addition to or in lieu of a cash severance payment, the terms and conditions of these benefits need to be specified in the Separation Agreement.

The release of claims is the most lengthy and legalistic-sounding part of a Separation Agreement. For example, in the State of California, the provision must include a reference to Section 1542 of the California Civil Code and a reference to a specific waiver of the protections of Section 1542. The purpose is to plug as many ambiguities as possible that might otherwise undermine the enforceability of the release.

There is a close connection between the severance and release provisions of a standard Separation Agreement. In fact, in order for a release of claims to be binding on the employee, the employee must receive some severance payment or other benefit in addition to the employee’s accrued vacation, COBRA coverage and any other legal rights. In exchange for any severance given above and beyond these rights, the company has a right to expect that it won’t be sued later.

Does the age of the employee make a difference?
Yes, special requirements apply to terminated employees who are age 40 or older. In order for a release to be valid, employees age 40 and over must be allowed 21 days to decide before an offer can expire, and must be allowed an additional 7 days after signing to revoke the Separation Agreement. An employee in this age category may voluntarily sign earlier than the full 21 days, in which case the 7-day revocation period will begin on that earlier date of signing.

Are there additional provisions to consider?
Yes, Separation Agreements can be customized based on the circumstances of each situation. Here are some of the questions to consider:

• Is the termination part of a workforce reduction?
• Is there a concern about the employee making disparaging remarks about the company?
• Will the employee want the company to give a standardized response when a reference check comes in?
• Is there company information or equipment the employee needs to return?
• Do invention and intellectual property rights of the company need to be established or reiterated to the employee?
• Are there some stock option vesting questions to be addressed?

If the answer is "yes" to any of these questions, corresponding provisions should be added to the Separation Agreement.

Clarifying the Next Steps
The "written handshake" helps to ease the pain of both the terminated employee and the employer. Clarifying crucial next steps as the company and the employee go separate ways is important – get it in writing to prevent misunderstandings.

This service is provided free of charge for clients of Workforce Solutions, Inc. If you are terminating and employee for cause, remember you must contact the Workforce HR Legal Department for advisement in handling the termination of any employee for cause. If the employee is terminating by choice, you may consult with our HR Legal Department as needed.

Question:

We just made the switch to a new timekeeping system for our nonexempt staff, and we’ll be rounding off hours worked, for pay purposes. Is there a rule about how to go about doing that?

Answer:

There is a rule, and it’s a bit complicated, says Workforce Solutions’ Employment Law attorney Jonathan Driggs.

Under the Fair Labor Standards Act (FLSA), you’re allowed to round off workers hours as long as the rounding doesn’t always favor the employer. In other words, over the course of time, the rounding should average out.

Specifically, the FLSA permits rounding employees’ hours “starting and stopping times to the nearest five minutes, or to the nearest one-tenth or quarter of an hour.”

A suggested approach: Round up and down based on a set increment. So, for instance, if a worker reports in at 7:38, start pay at 7:45. But if a worker comes on at 7:37, start pay at 7:30.

If you have further questions about how Workforce Solutions can help with your HR Questions, please contact us 866.637.3900

Companies face a lot of staffing decisions in a rough economy — which are often complicated by tough legal questions. For clarification, the Department of Labor (DOL) recently released a fact sheet on legally trimming exempt employees’ salaries and schedules.

Reducing salaries and hours for exempt employees can easily lead to FLSA violations. Here are the DOL’s answers to some of trickiest questions about legal staffing strategies during a slowdown:

1. Can we require exempt employees to take unpaid days off?

Only if it’s for a full week, the DOL says. Exempt employees must be paid for any week in which they perform any work — other than when a full day of pay is deducted because the employee took off for personal reasons.

But when the day off is the employer’s decision, pay can’t be deducted.

2. Can exempt employees volunteer to take time off without pay?

Employers can’t force exempt employees to take unpaid days off — but when it’s 100% voluntary, the DOL counts that as a “day off for personal reasons” and pay can be deducted in full-day increments.

3. Can we require exempt employees to use vacation time?

Yes, companies can deduct from an exempt employee’s leave bank for absences, even when it’s for less than a full day and the absence was mandated by the employer.

The tricky part: Exempt employees need to be paid a full salary in weeks in which they perform any work (except when a full day of pay is deducted when the employee is absent for personal reasons) — which means if someone’s leave bank is empty, pay cannot be deducted.

4. Can we just reduce exempt employees’ regular salary?

Yes — as long as salaries aren’t regularly changed to get around the salary basis requirement. What’s the difference? According to the DOL:

Allowable pay deductions involve “a prospective reduction in the predetermined pay to reflect long-term business needs,” rather than a “short-term, day-to-day or week-to-week deduction” based on how many hours employees work.

If you are thinking about trimming your Exempt Employee’s Salaries, then please contact Workforce Solutions, Inc to speak with our in-house legal counsel. This is a free service provided for clients of Workforce Solutions, Inc.

If passed, the Healthy Families Act (HFA) would require any company with 15 or more employees to offer full-time workers seven paid sick days a year. Part-time employees would get a prorated amount based on how much they work.

Like the FMLA, the HFA would let employees take time to care for themselves or a family member. The leave would be legally protected — meaning employees could sue if they feel they’ve been retaliated against for using it.

The HFA is less strict than the FMLA, however. “Family member” includes any blood relative and anyone whose relationship with the employee is “the equivalent of a family relationship.” Any physical or mental illness, injury, or medical condition could result in a protected absence.

What about current paid leave policies?

The bill says employers won’t need to change anything if they already give employees sick leave that’s at least equivalent to what’s required by HFA. But employers would be prohibited from eliminating leave they already offer in an attempt to offset the mandatory sick days.

That means companies won’t be able to reduce vacation time to offset the costs of additional sick time. And some experts interpet the provision to mean companies offering a general PTO bank would need to add seven sick days in addition to what’s already available.

What to expect

Attorney Mike Aitken, speaking at a recent Society for Human Resources Management conference in Washington, D.C., said he expects Congress to take a vote on the bill this spring.

The HFA was introduced in the Senate a few years ago and failed to move. But that was before President Obama — a vocal supporter of the bill — and an increased Congressional Democrat majority arrived in Washington.

So far, no states have made sick leave mandatory — measures have failed in California, Ohio, New Jersey and Washington. Three cities — San Francisco, Milwaukee and Washington, D.C. — have passed mandatory sick leave laws.

Workforce Solutions, Inc. keeps all of our clients up to date on the latest HR Law changes and ensures that our clients are in compliance. Stay tuned for more information on this subject

Our Employee Handbooks are broken down into three basic sections. The first section of an employee handbook should discuss general considerations, the second section discusses the unique issues to the Workforce Solutions, Inc. and Client relationship, and the final section addresses specific policies and provisions common to most handbooks.

Here are some  points to remember when creating your Employee Handbook:

• Make it Readable and Understandable
• Keep it Current
• Contract Disclaimer Language
• At-Will Statement
• Open Door Policy
• EEO Policy
• Disability Accommodation Policy
• Harassment Policy
• FMLA and Other Leave Policies
• Introductory Period
• Vacation Pay
• Drug Testing
• Smoking
• Attendance
• Pay Schedule, Deductions, and Errors in Pay
• Electronic Device Policies
• Intellectual Property
• Computer Access and Monitoring Policies
• Non-Fraternization Policy
• Conflicts of Interest
• Workplace Violence Policy
• Standards of Conduct
• Discipline and Discharge

Proof that an employee received the handbook often is critical when legal disputes arise. A handbook acknowledgment form should include language that the employee received the handbook, read it or will read it, and agrees to comply with the policies set fort in it. The acknowledgment should also include that at-will statement and reminder that the handbook is not an employment contract. A new handbook acknowledgment form should be signed any time the handbook is reissued in whole or in part.

As a client of Workforce Solutions, Inc. we are happy to review and or make changes to your employee handbook at anytime. Please contact your Client Services Representative for help with review of your Employee Handbook.

To further prove that immigration reform is still on the front burner, Immigration and Customs Enforcement announced its plan to implement a nationwide audit of employer I-9s.

ICE announced that it’s drawing up  Notices of Inspection to review the I-9 records of 652 employers — names not released yet. In some instances, the notices will include subpoenas for records such as

1. quarterly wage reports
2. EINs
3. business licenses
4. correspondence from Social Security Administration regarding no-match letters, and
5. payroll data.

Employers whose I-9-related records don’t pass muster with ICE will then receive Notices of Intent to Fine.  Also in the announcement, ICE officials said the audit is just a “first step,” so employers probably can expect more audits and inspections.

What happens if you’re contacted for an audit? Make sure you know:

• The name and contact information of company legal counsel. If the company’s legal counsel is not in-house, there should be written instructions for personnel to contact outside counsel immediately.
• Who, in HR or otherwise, will be the the company’s representative for the ICE investigation or audit. You’ll want all communication with ICE channeled through that person to avoid redundancy or contradictions in information. If you are a client of Workforce Solutions, Inc. we provide this service for you.
• The names of company managers who should be informed of an ICE investigation or audit.

And keep in mind:

• An investigator may contact you and ask for an interview, but you have the right to refer the investigator to an attorney.
• An investigator has no right to files and records without a search warrant or subpoena.
• Once you’re informed of an intent to investigate, take special care to secure all related records. Destruction or loss of records after notification could be seen as an attempt to destroy evidence or sabotage the investigation.

Clients of Workforce Solutions, Inc. should notify our corporate office immediately if their client company is contacted for an audit. This is a free service that Workforce Solutions, Inc provides for all our clients. 

In recent years, several state supreme courts have  ruled that employers can be held liable for up to four years of back pay and/or overtime for violations of  mandatory breaks. Ever since, there’s been a wave of employee lawyers around the country looking to cash in.

Two key steps for avoiding trouble:

1. verify your state laws on mandatory lunch and/or rest breaks, call Workforce Solutions Inc for a review of your employees
2. remind supervisors to insist non-exempt employees take their breaks, even if the employee says he or she wants to skip them.

Signed by President Obama on January 29, the Ledbetter Act gave employees more time to sue when they believe they’re victims of pay discrimination. The Supreme Court had previously ruled pay bias suits had to be filed within 180 days of the discriminatory decision.

But the new law gives employees a new 180-day window to sue every time they receive a paycheck in which they claim they are discriminated against.

The Act was effective immediately — and applies retroactively to lawsuits still pending as of May 28, 2007, the day before the Supreme Court’s decision.

It’s already made it tougher to prevent discrimination suits:

In one case, three women sued their employer, claiming they were unfairly demoted because of their gender.

The demotions occurred in 1990 — so the company argued the employees missed out on the statute of limitations.

But the court issued a ruling on February 2 — four days after the Ledbetter Act was signed. And, since the demotions resulted in a loss of pay that continued to the present day, the court ruled the new law applied to their lawsuit.

The judge noted that just a week earlier, the case would have been tossed on those grounds. But not anymore.

Eventually, the case was thrown out because the company proved the demotions were based on non-biased factors (Cite: Bush v. Orange Counry Corrections Dept.).

In another recent case, an employee believed he was being paid less than his colleagues based on his race and gender. He sued.

The company tried to have the case dismissed because his pay was set several years before — well outside the statute of limitations. But the judge let the case go forward, applying the Ledbetter Act to his claims (Cite: Rehman v. State University of New York at Stony Brook).

What can HR do now?

Given the law’s immediate impact, what steps can HR take now to prevent lawsuits based on decisions that occurred far in the past?

Workforce Solutions, Inc. recommends conducting a self-audit to uncover anything that could look like pay discrimination.

First, examine company policies on starting salaries and raises. Many companies don’t have a formal policy, giving individual managers wide discretion in pay decisions — which could turn out to be a liability under the new law.

Next, consider analyzing pay data to make sure no employees have been harmed by unfair decisions that violated your policy. Then, your company can remedy the situation without having to go to court.

Finally, if you feel that your company might be at risk, please contact Workforce Solutions HR department to schedule a meeting to discuss the particulars of your case.

The company tracked absences by dividing the hours employees missed by the hours they were scheduled to work. Employees were disciplined if they’d been absent for more than 4% of their scheduled hours.

Under the policy, time off for FMLA leave was not counted as an absence and not included in employees’ scheduled hours.

An employee was disciplined and later fired for repeatedly violating that attendance policy. However, that employee sued, claiming she’d have been compliant with the rule if it weren’t for a period of FMLA leave she had taken.

By the company’s calculation, her absence rate was more than 7%. But if those hours she would have worked if she didn’t take FMLA were counted, she would’ve been below 4%.

In other words, she claimed, she was being penalized for taking FMLA.

The company argued the policy was not biased against employees on medical leave, because FMLA was not factored into either part of the equation. But the court didn’t buy it.

The way the policy was set up, employees who took FMLA weren’t allowed as many non-FMLA absences as other employees. Therefore, the policy had a negative impact on employees who took leave.

If your company has questions about FMLA, please contact the Workforce Solutions, Inc HR Department

Don’t try to show resigning employees the door too early.

In one recent case, an employee gave her boss two-weeks notice that she was quitting.

The company starting looking for her replacement.It quickly found a new hire who could start immediately. Not wanting to pay the two employees simultaneously, the company told the woman she was terminated — three days before her resignation was set to take effect.

Claiming she’d been fired without cause, she filed for unemployment compensation — and won.

The company argued that she quit and just wasn’t needed for the entire two weeks. But the court disagreed. Drawing on similar cases, it ruled that being fired right before a resignation is about to take effect is still an involuntary termination for the sake of awarding unemployment benefits.

Help with Employee Termination is another benefit that our clients receive through the partnership of Workforce Solutions, Inc. By contacting Workforce Solutions, Inc before a client company terminates an employee, our HR Legal Department can make sure that all the necessary steps are taken to help our clients keep their unemployment costs to a minimum. Before you terminate your next employee don’t forget to give Workforce Solutions’ HR Legal Department a call for advice.