Categories
Coronavirus/COVID-19

COVID-19 and Unions

COVID-19 and Unions

By Richard H. Wessels of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Coronavirus/COVID-19 on Tuesday, April 14, 2020.

COVID-19 is about the only subject being discussed at Wessels Sherman these days. Of course, there are some exceptions, but COVID-19 is the 800-pound gorilla! While most legal commentaries on COVID-19 focus on minutiae of legislation and regulations, for this commentary we are going to focus on practical information and solutions. And, we will do so in a checklist format with resources of practical use.

  1. Good format for fostering positive communications with your union while at the same time giving you a good defense against a unilateral change ULP. Click here.
  2. Hazard pay commentary with detailed surveys. Click here.
  3. Typical communications from unions about COVID-19. Click here
  4. Template for contract extension agreement because negotiations are delayed by COVID-19. Click here.
  5. Up to the minute hazard pay survey. Click here.
  6. Resource and union steward guides put out by various unions (SEIU-1021; AFL-CIO; UE)
  7. NLRB’s memorandum on unilateral change. Click here.
  8. CARES Act and union neutrality. The CARES Act contains a hidden provision that came as a surprise to most in the business community. This provision mandates union neutrality. An employer obtaining a loan under the CARES Act must certify that the Company will remain “neutral in any union organizing effort for the term of the loan”. Before you get scared, this applies only to mid-sized companies which are defined as having 500 to 10,000 employees. A neutrality commitment is devastating if a Company wants to remain union free. There are no details in the Act itself as to precisely what union neutrality means. We have seen union neutrality agreements in the past, particularly where major companies have included such a commitment in collective bargaining agreements. Whatever the details might be, such a commitment would presumably include a mandate that the employer gives up the right of free speech to explain to employees the disadvantages a union. A Company giving this sort of a commitment will lose elections. It’s that simple. Worse yet, depending upon how the details come out, a Company may give up a right to a secret ballot election and be required to accept a union with a card check. Here is a link to the applicable provisions in the CARES Act. Click here.

Questions? Contact attorney Richard Wessels in our St. Charles, IL office at (630) 377-1554 or by email at riwessels@wesselssherman.com.

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Categories
Wage and Hour

Who Is That Knocking On My Door???

Who Is That Knocking On My Door???

By Walter J. Liszka of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Wage and Hour on Thursday, December 5, 2013.

For those of us over 50, “Who’s that knocking on my door?” reminds us of the three little pigs and the wolf who would huff and puff and blow your house down. Unfortunately, the child-like tale of the three little pigs and the wolf has had a difficult time transferring to the Internet, but is now being replaced – you guessed it – by our big brother, the United States Government. There are more and more investigations being conducted on a daily basis by the various agencies of the United States Government and one of the most active is the United States Department of Labor (USDOL).

Over the last few years, investigations by the USDOL primarily dealing with enforcement of Wage and Hour Laws have greatly increased due to “enhanced budgets” ($117 billion allocation in 2011/2012) and adding 250 additional investigators. It should be very clear to any employer that has been the recipient of a USDOL investigation that this has become a very protracted process and usually results in serious financial issues. The author suggests five (5) tips for dealing with a USDOL investigation.

1. Never underestimate the possible breadth of an investigation and understand that there may be problems with payroll practices.

In today’s complicated economy, problems have developed dealing with various facets of Wage and Hour Law (failure to pay overtime pay; tip credits; failure to pay an intern; failure to keep competent records). The findings of a Wage and Hour investigation may often result in a requirement that an employer pay additional wages to its employees, interest and/or liquidated damages, and, if serious enough, the potential of possible criminal liability. If an employer has the possibility of violating Wage and Hour Laws, it should engage in straightforward and honest discussions to resolve the investigation before it heads for an administrative hearing or court proceeding. Administrative Law Judges and the Courts will generally give deference to the USDOL findings against an employer with regard to any “alleged violation” unless there is actual proof of arbitrary behavior/investigative techniques; capriciousness; or lack of proof to substantiate the USDOL findings. An employer can achieve a much better and less costly result by working with the investigator directly and not letting the matter proceed to litigation. If a problem is found, work with the investigator to solve it, not fight about it!

2. Cooperate fully.

USDOL investigators have a great amount of discretion as to how they proceed through the investigative process. An employer who is uncooperative or attempts to aggravate and forestall the investigation will find itself in a costly nightmare if the investigator feels that the business is failing or refusing to cooperate. Consequences may be severe – subpoenas may be issued requiring the production of documents or subpoenas for actual questioning; court action may occur which will cost the employer substantially, and, as a last alternative, if an employer is truly refusing to cooperate, the USDOL may just accept the Complainant’s allegations at their face value and assess costs to the employer. Be cooperative, not just on liability issues, but also on a willingness to provide to the USDOL information that may lead to limiting the scope of the investigation and documents required.

3. Have competent counsel.

I am suggesting that an employer retain competent and able counsel to represent their interests in an investigation. Competent counsel can help in clarifying the investigation and in limiting the extent of the investigation. Competent counsel may be able to “short circuit” the process and get it over quickly. Competent counsel may also provide an ability to substantiate Tip No. 2: cooperation in the investigation. Please make absolutely certain that counsel has the right to speak to and get accurate information from accountants and/or other individuals who are typically entrusted with preparing or maintaining payroll records in the first place. This may help in providing counsel a basis to control or limit the investigation.

4. Make the investigation a positive – an opportunity to come to compliance.

Rather than resisting the investigation or continuing to deny that there is a problem, employers may use the efforts of the investigator to come into compliance and mitigate their damages – the day that an investigator concludes that an employer is in compliance, the liability is cut off. From a practical standpoint, using the investigation to come into compliance will condition the USDOL personnel to establish that the employer is trying to work with them rather than against them.

5. Control the process.

If an employer can gain control over an investigation, it will have the ability to limit the scope of records that will be provided and, therefore, limit its potential exposure. Treating the investigator with respect and dignity will help the employer gain control. Also, dependent on the case at hand, a self-assessment of the employer predicated on the initial scope of the investigation submitted to the USDOL based on its payroll records may not only limit the extent of the investigation, but the financial penalty.

Following the aforementioned five (5) tips may position the employer to have “no reason to be concerned as to who is knocking on the door.”

Questions? Contact Walter J. Liszka in the Chicago office at waliszka@wesselssherman.com or by phone at (312) 629-9300. 

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Categories
Independent Contractor

New Prime Loses In Its Attempt To Compel Arbitration In Interstate Trucking Case

New Prime Loses In Its Attempt To Compel Arbitration In Interstate Trucking Case

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Arbitration on Friday, February 8, 2019.

On January 15, 2019, the U.S. Supreme Court issued a decision in New Prime Inc. v. Oliveira, a case concerning the enforceability of arbitration agreements in the interstate trucking sector of our economy.

The decision was unanimous (and very anxiously watched by the trucking community nationwide).

INDEPENDENT CONTRACTOR OWNER-OPERATOR SOUGHT MINIMUM WAGE THROUGH A CLASS ACTION SUIT AGAINST NEW PRIME: The facts of the case were not at issue. New Prime Inc. (“New Prime”) is an interstate trucking company that engaged plaintiff Dominic Oliveira to drive his own truck under an Independent Contractor Operating Agreement (“Agreement”). The Agreement had both an arbitration clause and a delegation clause (granting the arbitrator authority to evaluate, and then decide, questions of arbitrability).

Plaintiff Dominic Oliveira filed a class action lawsuit against New Prime seeking minimum wage (in Federal District court in Massachusetts).

DRIVER ARGUED THAT NEW PRIME COULD NOT COMPEL ARBITRATION DUE TO TRANSPORTATION WORKERS EXCLUSION: New Prime defended itself by filing a motion to compel arbitration per the Agreement under Section 4 of the Federal Arbitration Act (“FAA”).

In response, Oliveira argued that (despite the signed Agreement) New Prime cannot compel arbitration because Section 1 of the Federal Arbitration Act expressly excludes “contracts of employment of …seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” This is commonly known as the transportation workers exclusion.

The Federal District Court in Massachusetts ruled that the transportation workers exclusion does not extend to independent contractors (and therefore ordered the parties to conduct discovery as to whether Oliveira was an independent contractor or an employee).

On appeal, the First Circuit Court of Appeals (“First Circuit”) overturned the Federal

District Court’s holding that the transportation workers exclusion does not apply to independent contractors. The First Circuit looked at the historic meaning of the statutory phrase “contracts of employment” as used in 1925! when Congress first enacted the Federal Arbitration Act.

U.S. SUPREME COURT FOCUSED ON TWO LEGAL ISSUES: The United States Supreme Court decided to hear the New Prime case on appeal. The Court focused on two legal issues:

1. Should a court determine whether a Section 1 exclusion to the Federal Arbitration Act applies before ordering arbitration where the parties’ contract contains a delegation clause? and,

2. Does the transportation workers exclusion apply to independent contractors as well as employees? [especially considering the use (in the Federal Arbitration Act) of the term “contracts of employment”].

The U.S. Supreme Court answered “Yes” to both legal issues (with no dissent!) Justice Gorsuch wrote the opinion for the U.S. Supreme Court. Justice Kavanaugh recused himself, and Justice Ginsburg submitted a brief concurring opinion.

MEANING OF “CONTRACTS OF EMPLOYMENT”: The U.S. Supreme Court looked back to the meaning of “contracts of employment” as that phrase was used at the time when the Federal Arbitration Act was adopted in 1925. The U.S. Supreme Court sought to avoid attaching new meanings to “old statutory terms” in a way that would improperly change legislation as passed by Congress.

The U.S. Supreme Court concluded that the phrase “contracts of employment” was intended by Congress back in 1925 to cover any “work,” such as work by independent contractor owner-operators, not just work in a formal employer-employee relationship. The Court looked at early twentieth-century decisions and laws that interpret this phrase “contracts of employment” to broadly cover work agreements involving independent contractors.

So, Oliveira won, and the U.S. Supreme Court turned down New Prime’s claim for arbitration. New Prime is the first Supreme Court decision in years to ultimately reject a claim for arbitration. (Note that the U.S. Supreme Court took no position as to whether Oliveira should be classified as an independent contractor or an employee.)

The U.S. Supreme Court’s decision in New Prime in no way extends the transportation workers exclusion to cover workers in other industries. The transportation workers exclusion in the Federal Arbitration Act is narrowly limited by Congress to transportation workers in interstate commerce.

Also, New Prime only focuses on Federal law and arbitration (and the transportation workers exclusion). The New Prime holding did not address whether courts may enforce arbitration agreements under other areas of legal authority, such as state arbitration laws.

STATE ARBITRATION STATUTES: It is predictable that courts presented in the future with arbitration agreements involving transportation workers in interstate commerce may need to determine the enforceability of the arbitration agreements under state law.

The New Prime decision will now encourage trucking companies to consider relying on state arbitration law or state contract law. One obvious and vexing problem with a state law-based collection of decisions is lack of uniformity from state to state. In any event, trucking companies should consider adding broad severability clauses in their arbitration agreements. And class and collective action waivers still are recommended by many attorneys for trucking companies in their arbitration agreements, even if these waivers must be evaluated under state law.

In New Prime, the U.S. Supreme Court did not address (at all) whether New Prime could use a state statute to compel arbitration. The First Circuit stated in its decision: “We emphasize that our holding is limited: It applies only when arbitration is sought under the Federal Arbitration Act, and it has no impact on other avenues (such as state law) by which a party may compel arbitration.”

Many states have arbitration enforcement statutes that do not exempt contracts involving transportation workers in interstate commerce. Whether or not those state statutes’ are preempted by the Federal Arbitration Act’s exemption for transportation workers is an important legal question to be decided by courts in the future.

GIG ECONOMY: Some legal analysts speculate as to whether the New Prime decision impacts the gig economy (Uber, GrubHub, Lyft, et al). “On-demand companies” are likely to insist that New Prime does not apply to their drivers as they do not participate in “Interstate Commerce.” Many on-demand companies will likely argue that the transportation workers exclusion does not apply to their workers and therefore their arbitration agreements (with class action waivers) are enforceable.

CONCLUSION: The key legal outcome of New Prime is that interstate truck drivers operating as employees or independent contractors cannot be compelled to arbitrate work-related claims (at least not under the Federal Arbitration Act).

If any readers want to discuss any aspect of the increasing trend to have mandatory Arbitration Agreements with Class Action Waivers (or want to discuss establishing such an agreement for their company), please contact Attorney Nancy E. Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

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Categories
Independent Contractor

One Crucial Legal Difference Between An Independent Contractor And An Employee

One Crucial Legal Difference Between An Independent Contractor And An Employee

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Independent Contractor on Monday, July 15, 2019.

The IRS uses a Questionnaire called the IRS Form SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding) to determine when a particular “worker” is an independent contractor and when the “worker” is an employee.

This Questionnaire has been used by the IRS for decades. One of the key questions on the IRS Form SS-8 is: Can the relationship be terminated by either party without incurring liability or penalty?

State unemployment insurance agencies across the United States have their own Questionnaires to determine when workers are independent contractors or employees. In Illinois, the Illinois Department of Employment Security (IDES) asks the question that almost every State asks which is: “Can the firm discharge the worker at any time?”

Another question almost universally asked by State unemployment insurance agencies is: “Can the worker terminate his/her services at any time?”

These questions, state and Federal, have the same legal purpose. The government agency is trying to figure out 1) whether the Company can end the relationship with the worker on a whim without giving any notice, and 2) whether the worker quit without giving any notice of any kind and without incurring any liability.

NO NOTICE INDICATES AN EMPLOYEE: Government agencies reason that if a worker can simply walk off the job (or if a company can fire a worker with no notice whatsoever), then that relationship is the classic employment-at-will relationship, not an independent contractor relationship.

IF NOTICE IS REQUIRED, IT POINTS MORE TO AN INDEPENDENT CONTRACTOR RELATIONSHIP: However, if the company has to give some kind of notice before firing the worker (or if the worker is contractually obligated to give some kind of notice before leaving), then that relationship is closer to an independent contractor relationship.

MAKE SURE INDEPENDENT CONTRACTOR AGREEMENT CONTAINS A NOTICE PROVISION: If a company uses independent contractors, the company should carefully review the Independent Contractor Agreement to see if the Agreement permits the parties to terminate the relationship at will with no notice or if the relationship can only be ended with a specified notice period.

If an Independent Contractor Agreement has a provision under which the independent contractor can quit at any time or the independent contractor relationship can be severed at any time, then that provision weakens independent contractor status.

If an Independent Contractor Agreement has a provision under which the parties must, for example, give one weeks’ notice before termination of the independent contractor relationship, then that notice provision strengthens independent contractor status.

MISCONCEPTION: These distinctions confuse many people because it is a commonly held belief (really a misconception) that if a worker is truly “free,” he can simply walk away from the job at any time. But the reverse is actually true-it is a stronger independent contractor relationship when the worker is contractually bound to a specified notice period.

To discuss your potential liability in using independent contractors (as well as strategies for reducing your liability in using independent contractors), please contact Attorney Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

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Categories
Hiring/Firing

The New Illinois Law Regarding Severance And Release Agreements: Five Commonly Asked Questions

The New Illinois Law Regarding Severance And Release Agreements: Five Commonly Asked Questions

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Hiring/Firing on Thursday, January 30, 2020.

Illinois employers have been truly shell-shocked with many new (and sometimes vague or confusing!) employment laws that became effective January 1, 2020. One big and somewhat surprising change in Illinois law is the new requirement that Illinois employers give certain special treatment to Separation and Release Agreements. The following are five commonly asked questions from our clients:

Question 1: Do we have to use a Separation and Release Agreement every time we fire an employee in Illinois?

Answer: No. This is a decision that an Illinois employer makes within its sole discretion. The only time an Illinois employer must give severance is when there is a contract or a company policy mandating it.

Question 2: If an employee is under the age of 40, must I still give the employee 21 days to think over signing a Separation and Release Agreement?

Answer: Yes, under the new Illinois Workplace Transparency Act effective January 1, 2020, regardless of age, the employee must be given 21 calendar days to consider whether he/she wants to sign the Separation and Release Agreement.

Question 3: Can the Illinois employee sign the Separation and Release Agreement at any time before the end of the 21-day review period?

Answer: Yes, the Illinois employee can knowingly and voluntarily waive in writing any further time for consideration. Caution: Such a waiver MUST be in writing.

Question 4: Under the Illinois Workplace Transparency Act effective January 1, 2020, does the Illinois employer have to give the Illinois employee (regardless of age) seven (7) calendar days to revoke his/her acceptance (i.e., change his/her mind about entering into the Separation and Release Agreement)?

Answer: Yes, the Illinois employee, regardless of age, must be given 7 calendar days to revoke his/her acceptance of a Separation and Release Agreement.

Question 5: Can the Illinois employee waive the 7 days to revoke his/her acceptance of the Separation and Release Agreement?

Answer: Yes, the 7-day revocation period can be knowingly and voluntarily waived by the employee, but only in writing. This kind of written waiver should be written in clear language and also signed and dated by the employee. A witness is advisable.

Note that under the Federal law (Older Workers Benefit Protection Act of 1990), the employee may not waive the 7-day revocation period, even if put in writing and done so willingly and voluntarily. Under Federal law, the employee must be given the 7 days in which the employee may change his/her mind after signing a Separation and Release Agreement.

Caution about Group Terminations: Under Federal law, when Separation and Release Agreements are offered to two or more departing employees (for example, as part of a reduction in force), this fact pattern creates a group termination situation under which the employer will need to use a very special kind of “group release.” For example, under Federal law, one of the requirements for a group release is that each employee be given a 45-day period to consider signing the Separation and Release Agreement.

There is sure to be much confusion this year about how the Federal law differs from Illinois state law under the new Illinois Workplace Transparency Act impacting the legalities of a Separation and Release Agreement in Illinois.

For assistance with Separation and Release Agreements, difficult terminations, IDES benefits claims, etc., contact Attorney Nancy E. Joerg who can be reached at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

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Categories
Employment Policies and Procedures

Dealing with Post-Election Conflict in the Workplace

Dealing with Post-Election Conflict in the Workplace

By Alan E. Seneczko of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Employment Policies and Procedures on Friday, November 11, 2016.

As we all know, events occurring outside the workplace usually find their way into the workplace – but generally with little disruption or impact. It is therefore not surprising that the results of the recent election and the divisiveness that it has produced have spilled into the workplace – only this time with disruptive and serious consequences.

We are receiving reports of conflicts flaring up as a result of employees seeking to stir the pot, gloat, reject the results, or engage in similar conduct that, not surprisingly, has offended, upset and/or enraged fellow workers who hold differing opinions. Conflict and hard feelings ensue and, ultimately, workplace harmony and productivity suffer. In light of the unique and serious circumstances that are now happening as a result of the election, employers who may be experiencing similar problems or conflicts should consider communicating with their employees, through meetings or memos, about the following issues: 

  • Just as the President, the President-elect and Secretary Clinton have all stated, the election is over and it is now time for all of us to come together and work in harmony toward a common goal – and the same holds true in the workplace. We expect all employees to respect the opinions of fellow employees, regardless of whether they coincide with your own.
  • Given the emotions and divisiveness that the campaign and election results have evoked, employees are prohibited from wearing open displays expressing political opinions, preferences or commentary on the election results, and are encouraged to avoid discussions of a political nature that are intended or can be expected to create hard feelings, conflict or division among your fellow employees in the workplace. [ Note: This provision would be particularly important in circumstances where such displays have already occurred. It is also recommended only for employers in the private sector. Public sector employers would have to balance First Amendment considerations.]
  • Consistent with company policy, employees who engage in intimidating, harassing or threatening behavior will be subject to discipline, up to and including discharge.
  • We understand that everyone has strong opinions on the results of the election, but we are all here for a different reason, with a common objective. Let’s focus on that, understanding, and above all, respect for each other.

Hopefully, in another week or so, there will be no need for this discussion. Until then, if you have any questions or wish to discuss this further, please do not hesitate to contact Wessels Sherman Attorney Alan E. Seneczko at (262) 560-9696 or alseneczko@wesselssherman.com, or one of the attorneys at any of our four offices.

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Categories
Employment Policies and Procedures

Good Employer Documentation

Good Employer Documentation

By Walter J. Liszka of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Employment Policies and Procedures on Tuesday, March 7, 2017.

One of the most difficult and time consuming tasks that has confronted me over my lengthy career as a Management Labor Employment Lawyer is the continuing lack of documentation – i.e. evidence – that exists when I am attempting to defend either a Union Grievance, an EEOC Charge, etc. The most important thing that a Supervisor, HR Professional or Employer Representative must remember is that you have to accurately and completely document any event dealing with Employee Discipline.

Here are some very simple rules to follow to establish good documentation:

  1. Any document should clearly reflect who prepared the document for future reference. Make sure that any document that is prepared is signed by its preparer for future reference.
  2. Make sure that the document reflects the full name of the involved parties – complaining Employee, complained about Employee and any witnesses. It is extremely important that these individuals be fully identified for future reference.
  3. Make absolutely certain that the documentation reflects the full story, including dates, times, and places if applicable and has a very clear statement as to what happened and who was involved.
  4. Make certain that the documentation is legible. If it is being hand written, make sure that it is written in a way that the reader does not have to try to interpret what is being said. The documentation should use the KIS System (Keep it Simple). If it is hand written and then typed, make sure the hand written document is attached to the typed document.
  5. Make sure that the document provides enough explanation and background information so that it will make sense to not only you, but any additional reader, which may include outside Counsel for the Employer, opposing Counsel, and possibly Government Agency Judges and Juries.
  6. When an individual who is listed as the complained of Employee is interviewed, make certain that the complained of Employee has an opportunity to review any report that you prepared. In an investigative scenario, clearly document that the complained of Employee was shown documentation that was prepared and was able to make their statement about the incident and its investigation after reviewing the initial data.
  7. Make sure the documents reflect facts, not conclusions. It is extremely important that the document exist as an evidentiary piece of material stating facts, not an indictment or support for the complaint.
  8. Please annotate documentation to reflect if, in fact, the complained of Employee has been involved in similar incidents in the past with clearly documented dates, time, places, etc.
  9. Make sure that the report or documentation reflects the complained of Employee’s story so that the incident is fully documented.
  10. If a document is being used as a disciplinary record, please state very clearly that the complained of Employee is advised that if incidents like this continue to occur, they will be subject to further discipline, including the possibility of termination.

Accurate and complete documentation may prove a way to quickly and cost effectively resolve the matter!

Questions? Contact Attorney Walter J. Liszka in our Chicago office at (312)629-9300 or by email at waliszka@wesselssherman.com

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Categories
Employment Policies and Procedures

Avoiding Employment Lawsuits

It reached a similar conclusion with respect to her FMLA claim:

Avoiding Employment Lawsuits

By Walter J. Liszka of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Employment Policies and Procedures on Monday, February 12, 2018.

Over my rather lengthy career as a Management-Oriented Labor/Employment Lawyer (started November 6, 1972 with the Walgreen Company), I have seen a drastic and very unfortunate change in the Employer-Employee relationship. Over the last ten (10) years, there has been an over 500% increase in Employee Litigation. You do not need a Lawyer to tell you that Employment Litigation is expensive, both in the financial commitment and the time-productivity loss commitment. Here are a few of my suggestions for trying to eliminate or limit Employee Litigation:

1. Make Complaint Reporting Easier. The earlier you learn about an Employee issue or complaint, the better it is for you. No one can fix a problem that they do not know exists. Make your Complaint Reporting multifaceted, where an individual can file a complaint with their immediate Supervisor and/or Human Resources Personnel and/or a Complaint Line. If an individual Employee has various ways to complain about an issue available to them and does not use any of them, this is a big chip for the defense in any Litigation.

2. Be Timely in Your Response. If you get a problem or complaint, you must respond. Simply documenting the fact that there was a complaint is not the solution. A company must act and must address the problem with the complaining Employee.

3. Document Disciplinary Issues. If you want to discourage Litigation, make sure that you clearly document every Disciplinary Event involving your Employees. Whether it be job performance related, attendance related, or rule violation related, there is nothing sweeter for a Defense Lawyer than to have a pile of Disciplinary Records to question a Complainant about Disciplinary Records during their Deposition or before a Jury.

4. Every Employee in Your Organization Must Be Treated the Same. A consistent application of rules is an absolute necessity to maintain morale and assure that there is no favoritism.

5. Train Your First Line Supervisors. There is no organization that can survive without competent First Line Supervision. It is an absolute necessity that these individuals handle the day-to-day issues and assure the productivity of the Employee Complement. Make sure that the First Line Supervisors are accurately trained to spot issues, to be active in resolving those issues and, most importantly, to be consistent.

6. Create Specialties. Have someone in your organization responsible for application of Federal and State Legal Requirement (i.e. FMLA, ADA, etc.). You certainly can use outside Counsel for these issues, but that, in and of itself, may become costly. It is better for you to have someone on staff who can handle these day-to-day issues quickly and efficiently.

7. Employee Handbook – An Effective Tool or Stumbling Block. An Employee Handbook should clearly identify the rules and regulations that apply in your organization and clearly establish, at least in the State of Illinois, the Employment At Will Concept. However, it is important that the Employee Handbook is not written as a Legal Treatise or Legal Document. It should be easy to read and understand by members of Management, First Line Supervision and Employees. Simply stated, follow the KISS System – Keep It Simple Stupid.

8. Termination Question. I am always surprised when I counsel companies about Employee Litigation and Termination Issues. Remember, you as the Employer do not have to terminate an individual immediately. You can wait twenty-four (24) or forty-eight (48) hours to complete a thorough and documented investigation. Terminating an individual immediately because of emotional pressure can lead to heartache later.

9. Severance Agreements. Over my career, the use of Severance Agreements to resolve Employee Separations has increased dramatically. Of course, with the recent new Tax Law and the provisions of Section 162(q) – that businesses can no longer deduct for settlements of sexual abuse/sexual harassment if the Severance Agreements contains a Nondisclosure Clause, may impact Severance Agreement use in the future. In my opinion, they are still valuable, but must be tailored to each situation.

10. The Golden Rule. All of us at one time during our educational progression were advised of the “golden rule”, be it by parents or teachers. The “golden rule” is – treat others as you want to be treated, with dignity and respect. That “golden rule” still applies. Regardless of the situation, always treat individuals with dignity and respect, even in situations of termination. You avoid more problems by being dignified and respectful than by belittling or humiliating anyone.

While these rules may not save all of you from Employment Litigation, they may help make the day-to-day operations of your companies better.

Questions? Contact Attorney Walter Liszka in our Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com

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Arbitration

Arbitration Agreements and Class Action Litigation

Arbitration Agreements and Class Action Litigation

By Alan E. Seneczko of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Arbitration on Monday, April 29, 2019.

It has now become almost axiomatic that any given alleged violation of the Fair Labor Standards Act – calculation of the overtime rate, rounding procedures, travel time, exempt status, etc., can, and most certainly will, become the basis for a class action lawsuit, since a violation toward the one generally involves a violation toward the many (surely there is a Latin phrase for this).

In response to such actions, and litigation in general, it is also becoming increasingly common for employers to require employees to enter into arbitration agreements as a condition of employment, under which employees agree to resolve alleged violations of employment law through arbitration and not in the courts – including claims of alleged “class” violations. Not surprisingly, such agreements themselves have, in turn, also become the source of litigation – and multiple decisions from the US Supreme Court, most recently in Lamps Plus, Inc. v. Frank Varela, Case No. 17-988 (April 24, 2019).

In 2018, the Supreme Court upheld the validity of arbitration agreements as they applied to an employee’s right to join a class or collective action. Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018). The Court held that an employee who signs a contract providing for individualized arbitration of employment disputes waives his/her right to participate in a class action litigation of those disputes, including collective actions under the FLSA. But what if the agreement is ambiguous as to the underlying nature of the arbitration proceeding agreed upon? Is it to be an individualized proceeding, applying only to each individual employee, or a “class arbitration,” under which the claims of all employees are to be resolved in a single proceeding?

In Lamps Plus, the Court found that when an arbitration agreement is ambiguous on the issue of class arbitration, it cannot be compelled. The Court relied on a previous decision, Stolt-Nelson v. Animal Feeds Int’l, 559 US 662 (2010), which held that a court cannot compel classwide arbitration of a dispute if the agreement is silent on the availability of such arbitration, since class arbitration fundamentally changes the “traditionally individualized” nature of arbitration envisioned by the Federal Arbitration Act. The Lamps Plus Court found that the same reasoning applies to ambiguous arbitration agreements. In other words, unless the parties have specifically agreed to resolve disputes through class arbitration, not individually, arbitration on a class basis cannot be compelled by the court.

What does this mean? First, with the continued increase in class action litigation, employers may want to seriously consider entering into arbitration agreements with employees, especially with respect to wage claims under the Fair Labor Standards Act. Second, any such agreements must be carefully written, especially with respect to the nature of the arbitration being agreed upon (i.e., individualized).

If you would like more information, or have questions about arbitration agreements, class action litigation or collective actions under the FLSA, contact Attorney Alan E. Seneczko at (262) 560-9696, or alseneczko@wesselssherman.com.

Tags: FLSA collective actions, Inc. v. Frank Varela, Lamps Plus, arbitration, arbitration agreements, class action waivers

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