Pennsylvania Labor and Employment Lawyer & Attorney : McNees Wallace & Nurick Law Firm : Human Resources, Workplace and Business Law : Harrisburg, Lancaster, Allentown, Lehigh

As the economic meltdown cascades through the financial, banking and related sectors, many employers are planning staff cuts.  Selecting employees for lay off must be collaboration between managers and human resources. HR must be able to influence the process to reduce legal risks and assuage the anxiety of remaining employees:

Establishing Business Justification and Layoff Selection Criteria:

The business justification for the reduction in force or layoff must be established. The justification for layoff typically gives rise to the selection criteria. For example, if a large contract was lost, the production and support functions related to the lost contract will be the focus or the layoff.

Layoff decisions may be challenged under discrimination laws, so it is advisable to develop selection criteria that support the business reasons for selecting one employee over another. Unless dictated by union contract, employers have discretion in developing the selection criteria which can include factors like, seniority, relative skills, performance, and/or disciplinary record.  More than one factor may be used.

Forced Ranking Systems are sometimes utilized to rank employees against one another from the top down based on performance criteria. The subjectivity in forced ranking can be challenged as discriminatory unless uniformly and rationally applied.

Evaluating Impact of Selection Criteria including Bumping, Transfer and Recall Rights:

Once employees are identified for layoff, the results of the section criteria must be assessed in terms of disparate impact and other special circumstances. A disparate impact analysis should be conducted to assess whether the selection criteria have resulted in the disproportionate layoff of members of a protected class. Likewise, special circumstances should be evaluated such as employees with recent employment complaints, union activity, FMLA leaves, etc.  Consider documenting the final layoff decisions, but not the deliberations leading up to them.

Thought must be given to collateral job rights employees may have under employment policies and practices. Typical areas involve shift or department transfers, supervisor demotion in lieu of layoff, and voluntary layoffs. Likewise, the parameters of recall, if any, should be described.

WARNA Obligations:

Federal and state plant closing/mass layoff laws must be considered. Although Pennsylvania has no state law equivalent to WARNA, employers with multi-state operations must assess the application of such laws. Coverage under WARNA can be complex as it has look back rules which aggregate layoffs for determining triggering events. WARNA coverage will trigger the sixty-day notice period which has a tremendous impact on layoff planning raising issues of pay in lieu of notice, retention, and publicity.

Severance Benefits and Releases:

Careful consideration must be given to describing the benefit package, if any, offered to employees. If an employer is offering benefits that exceed those already provided by policy or mandated by law, it should consider obtaining a release. The federal Age Discrimination in Employment Act (ADEA) contains special rules for waivers of rights of claims of age discrimination including a 45-day consideration and seven-day revocation period for such releases. Furthermore, the ADEA contains informational requirements that mandate publication of summary of employee demographic information in connection with the release.

Communications Plan:

Effective communication is paramount in reducing employee legal claims and assuaging the anxiety of remaining employees. Everything that is said about the reasons for the layoff will be scrutinized in litigation. Consider scripting communications for group meetings and avoid individual discussions of the reason for selection. Large layoffs may generate news media interest for which a press release is a helpful way to influence the message.

 

UPDATE:

Jerry Kalish at the Retirement Plan Blog made a great observation about layoffs in his post Does a reduction in force or layoff beget a partial termination of a retirement plan?.  He refers to the IRS rules on partial termination of a retirement plan based on the significant reduction in plan participation resulting from the layoff.  IRS Guidance entitled 401(k) Resource Guide - Plan Participants - Plan Termination includes the following summary:

Although a 401(k) plan must be established with the intention of being continued indefinitely, an employer may (fully) terminate its 401(k) plan at its discretion. In certain cases, a partial plan termination is deemed to occur. Whether a partial termination occurs depends on the individual facts and circumstances of a given case. In general, a partial termination is deemed to occur when an employer-initiated action results in a significant decrease in plan participation. As an example, a partial termination may be deemed to occur when an employer reduces its workforce (and plan participation) by 20%.

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The specter of business failure and personal financial setbacks wreak havoc on employee morale challenging Human Resources with dual management problems. First, HR needs to formulate a communication strategy to address the concerns of employees surrounding job security and compensation. Employee jitters surround the viability of their employer and the security of their jobs. Retirement savings evaporate as the stock market plummets leading some to forego matching 401k contributions. Compensation packages and incentives tied to stock continue their downward spiral. Wordsmith the message that the CFO might send out: “They are lucky to have a job.”

Second, HR must manage the collateral effects of an employee’s personal financial problems, which can lead to bankruptcy, foreclosure and even divorce, any of which may influence his or her job and job performance. Businesses must be prepared to respond to employee performance issues created by financial problems. Employers should be aware of legal limitations placed on their actions with regard to an employee’s financial problems. In addition, human resource professionals should appreciate the relationship between their performance management program and other resources to address employee issues created by financial distress.

 

Pennsylvania and federal laws limit actions employers may take against employees that file for bankruptcy or are subject to wage attachments. Many employers, particularly those in the financial sector, face customer relation problems when one of their employees does not pay his or her bills or files for bankruptcy. Legal limitations on employer responses are as follows:

• Garnishment/Attachment of Wages. Pennsylvania prohibits garnishment/attachment of wages for the repayment of personal debts, except in limited circumstances for child support, alimony or student loans.   Employees may not be disciplined, discriminated against or discharged because of wage garnishments.
• Employee Bankruptcy. Section 575 of the Bankruptcy Act protects employees and applicants from discrimination if an individual:(1) is or has been a debtor under this title or a debtor or bankrupt under the Act; (2) has been insolvent before the commencement of a case under the Act or during the case but before the grant or denial of a discharge; or (3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Act. Courts have limited the reach of this provision by requiring that the discrimination be "solely because" of the individual's bankruptcy participation.
• Worries about Temptation for Theft. Businesses may become concerned that an employee in financial distress may be more likely to embezzle and react by trying to find out the scope of an employee’s credit problems. The Fair Credit Reporting Act limits an employer’s use of employee credit information. A business’ usual financial controls should be uniformly applied, but, if inadequate, should be revised for all employees.

Employees experience financial distress are subject to performance problems including declining productivity, absenteeism and depression.  The usual performance management tools can be used: however, special attention should be paid to other resources like the EAP and Debt/Credit counseling.

 

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The effective date of Pennsylvania’s Clean Indoor Air Act is fast approaching leaving many employers with questions about what they should be doing to comply with the new law. Here are some steps that employers may wish to consider in fostering good employee relations and avoiding the civil and criminal penalties associated with violations of the CIAA:

Get Familiar with the Requirements of the Law. An Employer Toolkit is available from the Department of Health setting out the basic requirements of the law. We have posted on the CIAA as follows:

Pennsylvania enacts Clean Indoor Air Act Prohibiting Smoking in most Public Places including Workplaces

Department of Health Issues Guidance for Employer Compliance with the Pennsylvania Clean Indoor Air Act

 

Post Required Signage Designating Nonsmoking Areas. Employers must post signs prohibiting smoking in the workplace and designating outdoor smoking areas that are not too close to entrances or exits. Downloadable signs for both “No Smoking” and “Smoking Permitted” in English and Spanish are available from DOH.

 

Adopt a Policy on Workplace Smoking for Employees and Customers. Adopting a policy is not an express requirement of the law but makes good sense for effective employee communications and to establish the employer’s good faith defense to civil and criminal penalties under the law. The DOH (through its partner PACT) has a sample policy, which I do not recommend. At a minimum, a policy should designate the all indoor workplace areas as nonsmoking and, if elected, those outdoor areas where smoking is permitted. Other restrictions on smoking such as time and frequency of breaks should be addressed. The consequences of violating the policy should be set forth along with acknowledgment of the CIAA anti-retaliation provisions for employees who complain about violations.

 

Conduct Training for Supervisors and Employees. Employers should notify employees of the new law and its restrictions either in conjunction with introduction of the policy or otherwise. Avoid pitting the smokers against the nonsmokers. This is a state law, you don’t have a choice. Mention of the criminal fines and consequences of violation of the law is appropriate.

 

Consider a Smoking Cessation Program to help Smokers Adapt to the New Law. As mentioned previously, the CIAA may be a chance to offer a wellness program including a smoking cessation component.

Tobacco Free Workplace Policies may be integrated with Wellness Programs

 

Apply for Necessary Exemptions.  Drinking Establishments, Cigar Bars, and Tobacco Shops should apply for an exemption if they intend to allow smoking under the exemptions provided in the CIAA. 

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Businesses face increasing uncertainty over the availability of financing because of the economic downturn and tightening of credit markets.   Financially troubled businesses may need to curtail operations through a plant closing or mass layoff if additional financing is not received. Employers need to manage compliance with the Worker Adjustment and Retraining Notification Act (WARN) as their negotiations with financial markets unfold.

WARN provides for an exception to the sixty-day notice requirement when a “faltering company” is confronted with a possible plant closing; however, the exception is a narrow one that requires careful employer analysis. An employer claiming the exception must prove: (1) it is actively seeking capital at the time the 60-day notice would have been required; (2) it had a realistic opportunity to obtain the financing sought; (3) the financing would have been sufficient, if obtained, to enable the employer to avoid or postpone the shutdown; and (4) the employer reasonably and in food faith believed that sending the 60-day notice would have precluded it form obtaining the financing.

A recent court decision in In Re: APA Transport Corp. Consolidated Litigation discussed several critical elements of the faltering company exception including the following:

Consolidation of related companies into a “Single Employer”

Related companies may be treated as a “single employer” for determining whether the employer meets the 100-employee coverage threshold for WARN and to assess whether the company is faltering. The faltering company exception is not available if a related has adequate capital to continue operations and it is treated as a single employer. Five factors are used to determine if related companies are liable under WARN on “single employer” grounds:

• Common ownership
• Common directors and/or officers
• De facto exercise of control, i.e., one company was the decision maker for the employment practice that gave rise to the litigation
• Unity of personnel policies emanating from a single source
• Dependency of operations, i.e., interchange of employees or equipment or commingling of finances.

Timing and Proof of “Actively Seeking Additional Financing” 

 

According to the court, WARN requires that steps to “actively seek financing” be taken “at the time that the 60-day notice would have been required.” Therefore, the actions of the company occurring during the period of time, which is sixty days before the plant closing, must demonstrate active pursuit of financing. The court rejected APA’s argument that a company may qualify for the faltering company defense irrespective of whether it was actively seeking capital at the time the notice was required, so long as it did no foresee the shutdown that occurred sixty days later. Employers must demonstrate the timing and steps it took to secure financing.  The court’s view of the exception places a degree of omniscience on employers to predict exactly when the company will shut down.

 

Incidentally, the faltering company exception does not apply to mass layoffs under WARN.

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The Department of Health (DOH) released additional Guidance and an application for an exemption for drinking establishments, cigar bars, and tobacco shops under Pennsylvania’s Clean Indoor Air Act (CIAA). The DOH information tangentially addresses the cross over between the prohibition on smoking in “workplaces” that may also be exempt “drinking establishments”.  For example, the law and guidance prohibit individuals less than 18 years of age in an exempt establishment at any time for any reason and require signage to that effect. Obviously, this creates a whole class of jobs that those under 18 may not perform supplementing existing child labor and liquor laws governing employment of minors.

The CIAA preempts local smoking ordinances except it does not apply to the City of Philadelphia, which has its own grandfathered Ordinance regulating smoking in public places.

 

Other postings on this subject include the following:

 

Pennsylvania enacts Clean Indoor Air Act Prohibiting Smoking in most Public Places including Workplaces

 

Department of Health Issued Guidance for Employer Compliance with Pennsylvania Clean Indoor Air Act

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In Makky v. Chertoff, the Third Circuit Court of Appeals recently addressed the importance of objective job qualifications in evaluating the merits of a discrimination claim. Employers that establish clear baseline standards for position through their job descriptions, advertisements and other records are better able to defend discrimination claims by showing that the applicant or employee does not meet minimum qualifications for the position.

The Makky case involved the termination of employment of Dr. Wagih Makky who was employed by the United States government in the Federal Aviation Administration and Transportation Safety Administration for fifteen years. In his various positions, Dr. Makky was required to obtain security clearance. A descendant of Egypt, Makky was the only Muslim and only person of Arab descent in his division. Makky's security clearance was suspended due to safety concerns, including his dual citizenship with Egypt, foreign relatives and associates, foreign countries visited, and alleged misuse of his government computer. Makky was placed on paid administrative and subsequently terminated when the TSA issued its final denial of security clearance. Although Makky appealed the determination through the government's processes, the determination was upheld.

Makky filed a lawsuit including a claim for employment discrimination under Title VII of the Civil Rights Act. Makky's Title VII claim was premised on a mixed motive theory of discrimination which recognizes that an employment decision can at times be based on both (1) a legitimate non-discriminatory reason and (2) discriminatory animus. Here, Makky argued that while he was suspended without pay and terminated because he did not pass the security clearance, the TSA's actions were also motivated by discriminatory animus based on his national origin because the agency did not offer him other positions or keep him on paid leave. Although the Court recognized that the analysis is factually sensitive , it held that when a plaintiff does not possess the objective baseline qualifications to do his or her job, the discrimination claim will fail on its face because he or she cannot establish a prima facie case of discrimination. Applying the holding to the facts at hand, the Court found that Makky's inability to retain a security clearance rendered him expressly unqualified for the TSA position. Analogizing Makky's situation to a more mainstream occupation, the Court explained, "if the hospital employing a person who has been performing surgery learns that the employee falsified his or her qualifications and never went to medical school, that employee could not establish a prima facie mixed-motive case irrespective of allegations of racial or ethnic discrimination."

So what can an H.R. specialist take away from Makky? When a position requires a baseline objective qualification, like a license or degree, make sure it is expressly stated in all hiring materials including: (1) job advertisements; (2) position descriptions; and (3) application materials. Notably, if the degree or license it is merely the company's "preference" for someone in the position, it is important to consider whether making the "preference" appear as a "qualification" may lead to problems in the future. For example, suppose that Company X states that a sales position requires a Bachelor's Degree. When Company X interviews its two top choices, however, the female candidate who possess a Bachelor's Degree has the personality of dry toast, while the male candidate who has waitered all his life and does not have a Bachelor's Degree has a dynamic sales personality and will surely do well with Company X. If Company X believes that the male applicant is better suited for the position than the female applicant, should the Bachelor's Degree have been a required qualification in the first place? Probably not. Accordingly, it is important to have a process in place to review your company's job advertisements and position descriptions before posting for openings. While certain baseline objective qualifications can often be beneficial in refuting a prima facie discrimination claim, turning a mere "preference" into a "qualification" can have the opposite result because it may be used as evidence of a discriminatory motive.

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A Federal Appeals Court in Philadelphia enjoined Temple University from enforcing its “facially overbroad” sexual harassment policy because some speech that creates a “hostile or offensive environment” may be protected speech under the First Amendment. In DeJohn v. Temple University, the Third Circuit Court of Appeals invalidated a public university’s Policy on Sexual Harassment that reads like that of many private employer’s, finding fault with the italicized language:

For all individuals who are part of the Temple community, all forms of sexual harassment are prohibited, including the following: an unwelcome sexual advance, request for sexual favors,  or other expressive, visual or physical conduct of a sexual or gender-motivated nature when… (c ) such conduct has the purpose and effect of unreasonably interfering with an individual’s work, educational performance, or status; or (d) such conduct has the purpose or effect of creating an intimidating, hostile or offensive environment.

The court found three areas of the policy language that were overboard so as to potentially stifle protected free speech:

• The phrase “gender-motivated nature” is too indefinite taking into account the speaker’s motivations not limiting only the affect of speech and possibly inhibiting expression of a broad range of social issues. The Court also cautioned that “we must be aware that ‘gender’ to some people, is a fluid concept.”
• The phrase “conduct which has the purpose and effect of unreasonably interfering” is too broad as it prohibits speech that “intends” to cause disruption. The university may only prohibited speeches that it reasonably believes will actually and materially disrupt the learning environment. (Interestingly, the “purpose and effect” language used by the EEOC.)
• The phrase “unreasonably interfere[s] with an individual’s work” is too restrictive because it may encompass speech that creates a hostile or offensive environment but is protected nonetheless. A policy may prohibit speech that “substantially” interferes by using an additional standard like “severe and pervasive.”

Many employees in the private sector believe they have a constitutional right to say whatever they want in the workplace.  This is not the case and employees in the private sector may be disciplined for violating workplace conduct standards.

Private employers are not subject to the free speech protections of the First Amendment.  They can also take solace in the fact that a federal court is less likely to wordsmith their employment policies. The case shows the difficulty that all employers face in regulating workplace speech and conduct.  There are obvious challenges in drafting a harassment policy that is not so replete with legalese that is becomes incomprehensible to the workforce.

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Hard economic times, perpetual threat of layoffs, workers stretched too thin could all be contributing to the “increasingly humorous American workplace” according to MSNBC author Eve Tahmincioglu in her post No joke! The workplace needs a good laugh. However, others are pointing to our legal system’s clamp down on “hostile work environments” as the cause of a joyless workplace:

What’s exacerbating the joylessness this recession has spawned, some believe, is decades of joke slap-downs in offices and factories. “The whole issue of political correctness has gone too far when it comes to the criteria for determining an offensive comment,” says Thierry Guedj, workplace psychology expert and professor at Boston University. “If anybody is offended, then it’s offensive. The criteria has become much too personalized. It only takes one person being slightly upset at something for it to become offensive.” It started in the 1980s, he continues, got worse in the 1990s and “has now reached its maximum.”

It is true that more claims of workplace harassment are being filed. The EEOC received 27,112 charges of harassment in 2007, up almost 18% from the prior year. Employer’s settlement payments of $65.6 million for these charges are no laughing matter. From a legal perspective, should employees be worried about injecting humor into the workplace and is an employer’s “joke slap-down” necessary? If your humor doesn’t demean people based on their membership in a protected class, then joke away.

It is the “off-color jokes” and other “humor” related to gender, race, national origin, religion or other protected classifications that can be considered harassment. These types of comments always find their way into allegations of discrimination or harassment when a complaint is filed. However, there is an important distinction between remarks uttered by a supervisor (quid pro quo harassment) verses those spoken by a co-worker (hostile environment harassment).

Potentially discriminatory remarks or jokes spoken by a decision maker are evidence of discriminatory motive in adverse employment decisions as noted by the Supreme Court in Ash v. Tyson Foods. A couple of off-color jokes followed up by a disciplinary suspension may give a discrimination charge some merit. On the other hand, mere utterance of a joke or other inappropriate remarks by a co-worker may not sufficiently affect conditions to create a hostile environment as noted in Meritor Savings Bank v. Vinson.   But that’s your risk.

According to EEOC Policy Guidance, a "hostile environment' harassment takes a variety of forms, many factors may affect this determination, including: (1) whether the conduct was verbal or physical, or both; (2) how frequently it was repeated; (3) whether the conduct was hostile and patently offensive; (4) whether the alleged harasser was a co-worker or a supervisor; (5) whether the others joined in perpetrating the harassment; and (6) whether the harassment was directed at more than one individual. 

Severity and the pervasiveness of alleged hostile activities are the focus of the legal analysis. This is a very fact sensitive inquiry which depends in part on what a reasonable person would find offensive. For example, the New Jersey Supreme Court has held that some racial slurs and jokes are so historically offensive that their use in the workplace, even once, can lead to liability for an employer who doesn’t respond appropriately. A single utterance of an epithet can create a hostile work environment if it is viewed as “severe” and it is aimed at the individual rather than a generalized comment.  

Professor Guedj is correct that workplace humor has changed; but, perhaps the change was needed.  The impact of hypersensitivity is theoretically mitigated by the reasonable person standard.  However, the gray of the law may have led some workplace humorist to abstinence. Alternatively, practicing “safe humor” could include the following prophylactic measures:

• Evaluate the content of the humor; some words and subjects are never appropriate for the workplace.
• Know your audience.
• Save your stand up routine for the comedy club where patrons are willing participants.
• Don’t make jokes personal by singling out one individual as the butt of your humor.
• Stop joking with people who seem uncomfortable with it.
• Don’t ridicule co-workers who don’t like your humor
• Try ask whether someone is offended by the humor.
• If a co-worker’s joke offends you, then say something to the jokester.
• Don’t e-mail jokes to everyone in the office.
• Take seriously complaints about inappropriate humor, but remember the conduct must offend a reasonable person.

 

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The prevalence of e-mail and texting communications can aid an employer in its investigation of workplace misconduct; provided, the employer’s policy adequately preserves its right to access the data. However, overstepping rights to access e-mail and other electronic communication media can result in criminal prosecution under state and federal law.

Recent high profile firings of Philadelphia TV anchors highlight the role of electronic evidence in an employer’s investigations and the pitfalls of illegal access to private computer data, in this case by an employee. Fired TV newscaster Larry Mendte was charged July 21, 2008 with hacking into the e-mail of his younger co-anchor. Mendte was previously fired based on an independent investigation by CBS as he allegedly hacked into Lane’s e-mail account from work and home and then revealed information to news outlets about Lane’s legal troubles. Lane was fired in January by CBS after she was accused of assaulting a New York City Police Officer and other public gaffes which gained media attention. Lane since sued KYW-TV, claiming that the station exploited her, tore her down and defamed her on her way out the door. She also claims that KYW management failed to investigate leaks of personal information about her and also engaged in a pattern of "deep-seated gender-discriminatory animus" toward her and other female employees.  Undoubtedly, CBS's investigation into the circumstances of both firings will be the critical issues in subsequent lawsuits.

Federal and State laws protect employers and employees from unauthorized access to computers, servers and electronic data. There may be additional limitations on an employer’s access to employee e-mails and text messages sent from employer accounts when the messages are stored on third party provider’s servers and are not stored on employer’s internal network. In Quon v. Arch Wireless Operating Co. Inc., a federal appeals court in California held that a public employer cannot access the content of text messages and e-mails sent at work because the data was stored on a third party service provider’s server and the employees had a reasonable expectation of privacy in these accounts. An employer’s e-mail policy may eliminate the expectation of privacy as to e-mails stored on its servers.  However, the text messages held by “remote computing service” are protected under the Stored Communications Act and cannot be obtained by an employer without the employee’s consent.

Employers must carefully draft policies related to employee use and access to all electronic media so as to preserve its property interest in the data, ensure rights to unfettered access and prevent misuse of the media and information.

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Traditional leave programs segregate time off into categories like vacation, sick time and personal time requiring HR professionals to track both the time off and the reason it is being taken. Sick time abuses are addressed by tightly monitoring the reasons for sickness-related absences and disciplining employees for excessive absenteeism. Many employers have decided to get away from policing the circumstances of an employee's absence by just creating a bank of paid time off that can be used for any reason. Once PTO is exhausted, time off is unpaid and subject to the attendance discipline policy. This certainly sounds like a great idea, but here are some practical and legal considerations in converting from a traditional sick pay program to a PTO plan:

Timing the Change Over to PTO:

Changes in leave policies should be coordinated with either the end of the leave year period or some other workplace change like moving to a four-day workweek. The obvious choice is converting to PTO bank at the end of the year, since most employers administer their time off programs on a calendar/fiscal year. For employers using anniversary date leave years, it is too difficult administratively to run dual programs, so they should pick a date and change over for everyone.

Effect on Four-Day Workweeks

Employers need to remember that a change in workweek from five eight days to four day ten hour days also affects time off policies. A handbook or CBA may describe time off (PTO, vacation, holidays, personal and sick time) in terms of “days”. However,

a workday, which used to be an 8-hour day, is now a 10-hour day. The 8-hour day was 20% or the workweek, but the 10-hour-workday is 25% of the workweek. If a day expands to 10 hours, employees are getting more time off and, as a result, the company is losing 5% productivity. If a day stays at 8 hours then employees can’t cover the whole day off. Converting the whole PTO bank to hours can address this situation. (see Energy Expenses And Gas Prices Motivate Employers To Move To Four Day Workweek: What Are The Legal Issues?)

Addressing the Perception of a "Take Away":

Converting to PTO means combining vacation, sick days, personal days, and other time off into one bank. Employers almost never credit the entire amount of sick time to PTO banks. Therefore, employers need to address the perception that employees are losing sick time. I have found that referring to the statistic mentioned in the prior posting (average 8 sick days, use 5) makes some sense. Based on this ratio, I convert 60% of sick days to PTO and couple it with an explanation about trade offs.

Dealing with Accumulated Sick Time:

Some employers allow the accumulation of unused sick time as an incentive not to use it. (This practice drives accountants crazy). The accumulated time may be used in some of the following ways: to satisfy a waiting period for STD/LTD; as a pay out upon separation, typically at a reduced percentage (50%); or it is simply forfeited. Employers may seize the opportunity to clean up their balance sheet and pay out a portion of the accumulated time or convert it to PTO. This approach softens the blow of the perceived take away mentioned above. However, an employer's flexibility in dealing with accumulated sick time depends on its written policy and practice with regard to payouts. Be careful not to create a claim for unpaid fringe benefits under the Pennsylvania Wage Payment and Collection Law.

Exhausting PTO:

Employees who use all of their PTO are unpaid for additional absences and are subject to discipline under the attendance policy. Some traps for the unwary include: the prohibition on salary docking for exempt employees; additional unpaid leave as an accommodation under the ADA, and discrimination claims under the ADA.

Administering FMLA:

FMLA administration becomes more challenging in a PTO program since the employer is not necessarily aware of the reason for an absence. A serious health condition under the FMLA triggers an obligation to notify an employee of his or her FMLA rights and starts the counting of the time against the 12 weeks of leave. Employers must also address the concurrent use of PTO and FMLA leave in their policies.

Integrating STD and other Leave Programs:

Some sick leave policies were designed to integrate with the waiting period for STD benefits. A move to PTO creates a disconnect. The disconnect can be mitigated by allowing an employee with accumulated sick time to use it to satisfy the waiting period if he or she becomes eligible for STD benefits. Otherwise, PTO or unpaid time is used during the waiting period. Employers might address hardships by creating a PTO donation program where employees may donate unused PTO to a fellow worker who needs additional time.

Contesting Unemployment Claims:

 An employer's proof of willful misconduct to deny unemployment benefits will generally look at the incident that gave rise to the discharge. If the reason is a violation of employer's attendance policy, the employee can show that the violation was not his or her fault. An employee who is fired for excessive absences after "squandering" PTO, may still be eligible for unemployment if the absence that gave rise to termination was for a legitimate illness.

Drafting a Policy:

A written policy on PTO is strongly suggested and it should address at least the following areas:

• Accrual Basis or Award Basis
• Notice of Absence
• Unused PTO carryover or forfeiture
• Concurrent use of FMLA and PTO
• Consequences of Exhausting PTO
• Discipline/Discharge

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HR professionals are reminded of their workplaces’ vulnerabilities every time an episode of workplace violence is reported in the media like this morning’s headline “6 dead in plastics factory shooting rampage.”  The scope of the problem set out in statistics. There were 5734 workplace fatalities reported to OSHA (2005 is the last year statistics are available). Assaults and Violent Acts accounted for 792 workplace fatalities.

Media accounts typically report about the “warning signs” that were missed and speculate on how the incident may have been prevented. There are, of course, psychological tests and assessment tools that are predictive of violent behavior, but there are significant legal restrictions on their use. Assessments that are not "medical tests" may be used on a pre-employment basis, but should not be used as the principal reason for a hiring or promotion decision.

There is no profile of a potential workplace violence perpetrator; however, there are traits when coupled with at risk situations that increase the likelihood of violent behavior. Sheryl and Mark Grimm of the Workplace Violence Headquarters have developed a Formula for Workplace Violence that includes a list of traits as follows:

• Previous history of violence, toward the vulnerable, e.g., women, children, animals
• Loner, withdrawn; feels nobody listens to him; views change with fear
• Emotional problems, e.g., substance abuse, depression, low self-esteem
• Career Frustration, either significant tenure on the same job of migratory job history
• Antagonistic relationships with others
• Some type of obsession, e.g., weapons, other acts of violence, romantic/sexual, zealot (political, religious, racial), the job itself, neatness and order.

There is a major legal distinction made between an employer's treatment of an applicant with a potentially violent personality and addressing employee conduct that expresses violent behavior. The EEOC has stated that its position on the distinction between perception and conduction in its  Enforcement Guidance for Individuals with Psychiatric Disabilities :

34. When can an employer refuse to hire someone based on his/her history of violence or threats of violence?

An employer may refuse to hire someone based on his/her history of violence or threats of violence if it can show that the individual poses a direct threat. A determination of "direct threat" must be based on an individualized assessment of the individual's present ability to safely perform the functions of the job, considering the most current medical knowledge and/or the best available objective evidence. To find that an individual with a psychiatric disability poses a direct threat, the employer must identify the specific behavior on the part of the individual that would pose the direct threat. This includes an assessment of the likelihood and imminence of future violence.

30. May an employer discipline an individual with a disability for violating a workplace conduct standard if the misconduct resulted from a disability?

Yes, provided that the workplace conduct standard is job-related for the position in question and is consistent with business necessity. For example, nothing in the ADA prevents an employer from maintaining a workplace free of violence or threats of violence, or from disciplining an employee who steals or destroys property. Thus, an employer may discipline an employee with a disability for engaging in such misconduct if it would impose the same discipline on an employee without a disability. Other conduct standards, however, may not be job-related for the position in question and consistent with business necessity. If they are not, imposing discipline under them could violate the ADA.

OSHA’s General Duty Clause requires employers to “furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” OSHA provides some resources to help employers meet this requirement.

Given the legal limitations confronting employers in their efforts to provide a safe workplace, the following are some suggestions in development of a Violence Program:

• Establish and communicate a written violence policy
• Consider pre-employment assessments and background checks
• Establish an Employee Assistance Program
• Train supervisors to recognize warning signs of employee violence
• Recognize "at risk" situations like employee discipline or discharge and plan accordingly
• Consider professional evaluations of at-risk employees based on objective signs of workplace problems
• Assess workplace security measures
• Develop and Communicate a Disaster Management Plan

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The scenario is a common one. An employee quits or is discharged before the end of the pay period. The employer has the employee's final paycheck, and the employee has certain property belonging to the employer (e.g., a uniform, laptop computer, cell phone). The employer explains to the employee that it will give the employee his/her final paycheck as soon as the employee returns the employer's property.

In Pennsylvania, the employer's proposed swap of paycheck for property may run afoul of the law. The Pennsylvania Wage Payment and Collection Law expressly states that whenever an employee is separated from employment, the wages or compensation earned "shall become due and payable not later than the next regular payday of his employer on which such wages would otherwise be due and payable." 

Simply put, a employer in Pennsylvania cannot use the final paycheck as leverage to recover its property, even if it is not disputed that the employer is legally entitled to the property. Holding the final paycheck exposes an employer to potential liquidated damages and liability for the employee's attorney fees, in addition to the value of the withheld wages.

Employers essentially have two options (neither of which are ideal) when giving employees property for their use that the employer wants returned at the end of the employment relationship. In the first option, the employer can get written authorization from the employee to deduct the cost of any unreturned equipment from the employee's final paycheck. This option, however, presents some risk. The Wage Payment and Collection Law allows deductions from the paycheck with the employee's written authorization if the deduction is "for the convenience of the employe[e]." It is unclear whether deducting the cost of an unreturned laptop from an employee's final paycheck is a deduction "for the convenience of the employee" and thus permissible. In addition, the final paycheck itself may be insufficient to cover the cost of the unreturned property. This problem is made worse by the fact that the deduction should not take an employee's wages during the final pay period below the statutory minimum wage.

The second option is to pursue legal action against the employee for the cost of the unreturned property. In many cases, such legal action would be in the form of a civil action filed with a District Justice. In many circumstances, an employer spends time and resources pursuing the property in such a legal action well in excess of the value of the property itself.

There exists no perfect solution to the problem of employees failing to return an employer's property upon separation of employment. Despite the lack of good solutions, holding the final paycheck as leverage is not a permissible option and may result in additional liability.

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The act of getting coffee is not a gender specific act that can form the basis for a sexual harassment claim according to a recent court decision in Klopfenstein v. National Sales and Supply. The plaintiff had asserted that being compelled to perform what she considered to be a ‘servile task’ was, in and of itself, gender discrimination and gender based harassment so clearly stereotypical as to not specifically require comparator evidence. In essence, the plaintiff was contending that asking a female employee, regardless of the position that she held, to get coffee for her boss was per se because of her gender. Keep in mind that the plaintiff was a receptionist who did not object to getting coffee and refreshments for clients and vendors.

Despite the absence of any contention that she was subject to sexual advances, the plaintiff also sought to characterize her being required to get coffee as what she called “quasi quid pro” harassment.   Rather than being required to submit to a sexual advance, the gravamen of a quid pro quo theory, the plaintiff contended that she was required to conform to an outdated gender stereotype. This theory also rejected.

Finally, the plaintiff sought an expansive interpretation of what may constitute adverse action sufficient to support a claim of retaliation. After being advised that she would be discharged and paid for the rest of her last day, the plaintiff implored her employer to work through the end of the day. When she subsequently indicated that she might file a complaint, she was told to leave but still was paid for the rest of the day. The court noted that this could not constitute materially adverse action by the employer that might well dissuade a reasonable person from making a complaint. If anything, the Court noted, such a worker’s resilience in pursuing a charge or complaint “would likely be emboldened”

The court granted the employer's motion for summary judgment ruling that a female receptionist/data entry clerk could not make out a prima facie case for retaliation, sexual harassment or gender discrimination. National Sales and Supply was represented by Brian F. Jackson and Marcy L. McCullough of McNees Wallace & Nurick LLC.

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Self-insured medical plans typically contain “subrogation clauses” that allow the plan to claim reimbursement from a personal injury recovery of a participant. The self-insured plan’s reimbursement right exists even if state laws prohibit such attachment as ERISA pre-empts the state limitation. For example, the Supreme Court ruled that ERISA trumped Pennsylvania’s anti-subrogation law allowing a self-insured plan to recoup payments it made for medical expenses from an injured participant’s tort recovery.

Recently in its decision in Sereboff v. Mid Atlantic Medical Services, Inc., the U.S. Supreme Court unanimously affirmed a self-insured health plan’s legal right of reimbursement from a participant’s personal injury recovery. Enforcement of this right requires that the plan sponsor include reimbursement language in both its plan document and summary plan description. Specifically, well-drafted documents should address the following:

• Identifying the individuals covered by the reimbursement right in addition to the participant (e.g., dependents, heirs, etc.). 
• Specifically reference the right of subrogation and reimbursement.
• Specifically reject common law doctrines such as the "make whole" and "common fund" doctrines.
• State that the plan has a first priority equitable lien with respect to any proceeds (from any source) that will be held in a "constructive trust" for the benefit of the plan and that the participant consents to both the lien and the constructive trust.
• Require participant cooperation with respect to the plan's ability to enforce its rights, including requiring participants to execute subrogation and reimbursement agreements as a condition to receiving benefits.
• Specifically reference the plan's right to offset future benefits to the participant.

Properly drafted (and consistent) language in plan documents and summary plan descriptions will serve to thwart any efforts to block the enforcement of a self-insured plan's reimbursement rights. However, a medical plan’s action in seeking reimbursement from an employee or dependent may not be without other repercussions.

Substantial adverse publicity and damage to employee relations could result when medical plans seek to recoup payments from accident victims. Consider the media firestorm that rained down on Wal-Mart after it tried to recoup $470,000 in medical reimbursements from a $1 million tort recovery of an injured employee. Wal-Mart’s was tarred with the title of “Worst Person in the World” from one media pundit. Ultimately, the Wal-Mart plan relented allowing a brain-damaged former employee to keep the money, even though Wal-Mart probably had a clear legal right to reimbursement.

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The Carnival of HR has its usual compliment of excellent postings on interesting topics.

Leading off is a discussion of the two sides of generational differences in the workforce. Dr. Ira Wolfe from the Perfect Labor Storm 2.0 posts on Gray ceiling disrupts succession plans for Gen Xers which discusses the recruiting challenges created by older workers remaining in the workforce and impeding the career advancement of younger employees. On the other side, Jon Agno of So Baby Boomer: Life Tips posts on Boomer Executive Challenges in which he fears that decades of institutional memory may be wiped out leaving organizations without many of the skills and insider knowledge businesses had taken for granted. 

Blogging is the subject of several of the Carnival submissions. Lisa Rosendahl at HR Thoughts asks the question “Why do you blog?” and answers it by stating that  “In doing so, you may very well be creating your legacy”. Her post is called "Moving Forward While Capturing the Past." Perhaps there is another answer to that question found in a post by Totally Consumed in which he comments On Personal Branding and Anonymous Blogging. The queen of anonymous blogging, The Evil HR Lady, chimes in recognizing that “I Haven’t Complained About Recruiters Lately.”

Legal risks sometimes cross the minds of HR pros.  Jon Ingham’s Strategic Capital Management (HCM) Blog assesses risk in his contribution Human Capital Risk and Reporting which argues that risk is an important area for all HR professionals. Dan Schwartz of the Connecticut Employment Law Blog kicks off our summer with some legal thoughts in his post called Start of the Summer Season: HR Topics to Ponder Now Before They Arise. Jon Hyman of the Ohio Employer’s Law Blog comes up with another compelling title for his post called Cat fight on aisle 6: court leaves open the possibility that a handbook can create a contract.  Most importantly, we should all keep in mind of Marcy McCullough’s post evaluating whether we can be dooced for On-Line Postings And Your Corporate Image: Can You Terminate Employees For Personal Postings?!?

Speaking of minds, Alvaro Fernandez at SharperBrains offers a superb introduction to what working memory is and why it is critical for our productivity, complemented with daily tips on Try Thinking and Learning Without Working Memory. Nina Simosko’s post describes "Comfortable Misery", a state of mind wherein you are miserable, but you have gotten used to it.  She states that far too many people live in "comfortable misery". A subsequent post offers a survey on the topic. If you are looking for a coping mechanism, the Career Encouragement Blog notes that it's okay to acknowledge that sometimes you are irrelevant on a particular project or even in a whole job. That’s Job Search Rule # 30 for those who are counting. I wonder if comfortable misery is one of the “10 Things I Learned About Working in HR” as recounted by Dan McCarthy at Great Leadership when he makes observations about his 18 month develop assignment as an HR generalist.

Employee benefits and compensation are the subjects of several posts. Michael D. Haberman at HR Observations advocates helping employees at the gas pump as an employee benefit in his post Pumping Up Your Employees: No Rah-Rah, Just Help With Gas.   Ann Bares at Compensation Force posits that merit pay systems create a dilemma that occurs when the short-term interests of individuals are at odds with the long-term interests of the grouping her post  “The Tragedy of the Commons and Merit Pay”.  Wayne Turmel who is the host of The Cranky Middle Manager Show submits a post called Lousy Quality and Small Portions in which he confronts the paradoxes of middle managers. Greg Pernula at i4cp writes about a recent survey that found a majority of companies lack various support, training or education when it comes to workplace diversity matters.

There are lots of insights on Talent Management and Employee Empowerment. Wally Block’s Three Star Leadership Blog observes that The best and the brightest are not always the best fit because setting out to hire "the best and the brightest" without attention to ethics, work habits, or organizational fit is just asking for trouble and minimizing your chances for success. Steve Roesler at All Things Workplace writes in his post titled “Making Change? Pay Attention to High Achievers” that, when it comes to making change, the talented people you think will be most helpful just might be the least. Chris Young of Maximizing Possibilities thinks that Talent Management is an increasingly important strategic issue for most organizations.  Given the value placed on effective talent management practices the question must be asked: “Is talent management too important to be left to HR?”   Alice Snell’s at Taleo’s Talent Drives Performance Blog  has a post called “Strategic Is As Strategic Does” that explains how embedding talent management into the business process—facilitated by HR and owned by line managers and employees—puts strategy into action. Susan Heathfield at About.com Guide to Human Resources discusses Employee Empowerment as the goal of forward thinking HR processes and practices in her post Want Empowerment? You Get What You Request and Reward.

To add to our international flair, Frank Mulligan at Talent in China tries to explain the skills shortage for both professionals and workers in a land of 1.3 billion people, with the added contradiction of a shortage of jobs for Chinese graduates in his post "The Ups & Downs of China's Labor Shortage".  Somewhere in Ireland, Rowan Manahan of Fortify Your Oasis conducted a radio interview on job equality somewhat irreverently titled and unlikely to pass prudish US internet filters.

All good stuff for us to consider as we address today’s challenges. Thanks for all those who contributed to this Carnival. Jon Ingham’s Strategic Capital Management (HCM) Blog will host the June 11^th Carnival of HR.

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Freedom of Speech is a right granted by The United States Constitution and enjoyed by all Americans. Employees exercising their free speech rights by blogging, posting on MySpace and YouTube may be surprised to learn limits of their Constitutional protections and should acquaint themselves with the term “dooced”.

Generally, employees of private sector employers have no constitutional “free speech” rights in the workplace and beyond.  A quick civics’ lesson reveals that the Bill of Rights creates limits on the government’s actions to curb constitutional rights but does not typically restrain private employers from restricting an employee's speech and expression.

Employees should pause before reporting to work wrapped solely in a flag, speaking their mind or blogging about the cruelties of their employer. Freedom of speech may only go as far as an employer’s tolerance for commentary. Pennsylvania courts have rejected wrongful discharge claims based on First Amendment protections asserted by employees who were terminated for criticisms of their employers. Geary v. U.S. Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974) and Wagner v. General Elec. Co., 760 F.Supp. 1146 (E.D. Pa. 1991).

Every employee owes the employer a duty of loyalty. The duty of loyalty owed by an employee to his or her employer is fairly broad and may encompass: "harmful speech, insubordination, neglect, disparagement, disruption of employer-employee relations, dishonor to the business name, product, reputation or operation, or nondisclosure of important information to the employer." Lee, Konrad, Anti-Employer Blogging: Employee Breach of the Duty of Loyalty and the Procedure for Allowing Discovery of Blogger's Identity Before Service of Process is Effected.

Employee comments need not be made at work. Employees have been fired for blogging and posting on MySpace. In one of the more infamous cases Ellen Simonetti, a flight attendant for Delta Air Lines, was fired in 2004 because of her "Queen of the Sky" blog content. Simonetti posted provocative pictures of herself in a Delta uniform on a Delta airplane.

The airline, concerned for its image, found her inappropriate actions to be grounds for her termination. While the case remains unsettled due to an administrative discharge under bankruptcy laws, Simonetti has gone on to publish a book and is reportedly trying to seal a movie deal—all based on her termination from employment for her blog. 

An employer’s power to terminate an employee for expressions of opinion is not absolute. Notable exceptions exist for “union activity”, anti-retaliation provisions of discrimination laws, and Sarbanes-Oxley Act compliance.  An excellent discussion of the law in these areas appears in a New York Law Journal article by Jeffery S. Klein and Nicholas J. Pappas entitled When Private Sector Employer Fires Worker for Blogging.

Many employers have chosen to adopt policies on employee communications for a whole range of purposes. Policies can be helpful in defining an employee’s actions in the following areas:

• Authority to comment to news media on official matters
• Authority to communicate with or about customers and vendors
• Use of work time
• Use of employer’s computer and other resources
• Disclosure of confidential or proprietary information
• Prohibition on content of communication that is disloyal, discriminatory, inflammatory, threatening, or disparaging of the company, its employees, customers, products, etc.

Since many corporations have blogs, they have also developed blogging policies and guidelines. IBM’s Blogging Policy is an example of one employer’s approach.

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Anyone who has spent any time recruiting knows that it is difficult to sift through a pile of applications without finding several job seekers with criminal convictions. About 3.2 percent of the U.S. adult population, or one in every 31 adults, was in the nation’s prisons or on probation or parole at the end of 2006.   Getting Out of Prison and Into a Job posted by Eve Tahmincioglu highlights the job search difficulties for convicted felons. It also reports that 700,000 people are released from prison annually, two-thirds of which are back in prison within 3 years. Similar demographic facts are compiled by Dr. Ira Wolfe in his book The Perfect Labor Storm 2.0 .

Many employers shy away from this pool of available labor even though it might be socially compelling to give someone a "second chance".  Federal and State governments have reacted to this situation by creating tax incentives for employers who hire convicted felons.  A federal tax credit of $2,400 is available for employers who hire ex-felons. Philadelphia offers a $10,000 tax incentive. Both programs have minimum employment periods.

Employers must weigh the following with regard to applicants with criminal convictions:

• Prohibited Employment: State and federal laws may prohibit employment of a convicted felon in certain jobs such as financial services, teaching, adult and childcare, law enforcement, etc.
• Negligent Hire:  Many states recognize legal claims by customers and employees when an employer negligently hires an employee when the employer knew or should have known that the employee would pose a safety risk to others. Applicants with criminal convictions for violent crimes may fall into this category.
• Disparate Impact Discrimination: The EEOC’s guidance on the consideration of arrest records notes that blanket exclusions from hiring will likely have an adverse impact on minorities. Employers should establish a business justification for use of criminal record by evaluating the nature and gravity of the offense, the time that has passed since the offense, and the requirements of the job sought.
• Limitations on the Use of Criminal History: Section 9125 of Pennsylvania’s Criminal History Record Information Act states that felony and misdemeanor convictions may be considered by an employer only to the extent to which they relate to the applicant's suitability for employment in the position for which he has applied. Employers must give a rejected applicant written notice that the criminal conviction was used in whole or in part as the basis for the employment decision.

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