TOP 10 TIPS EMPLOYERS SHOULD KNOW
ABOUT EMPLOYMENT LAW

10. Age Discrimination begins at age 40 (except in York City).

Employers who wish to negotiate a severance agreement with any employee over the age of 40, the Agreement must comply with the Age Employment and Discrimination Act (ADEA); specifically, the Older Workers Benefits Protection Act (OWBPA). The release must contain specific notices advising the employee to consult with an attorney in order to review the agreement, notifying the employee that he or she has 21 days to review the agreement and that a seven day revocation period is required. While the 21 day period to review the agreement may be waived, the revocation period is mandatory and cannot be waived. Thus, employers should not make any severance payment to the individual until the eighth day after the agreement is signed by the individual, providing that the employee does not revoke the agreement.

Further, if an employer is offering severance agreements to more than one individual over the age of 40, the notice requirements change to a 45 day period, with the added requirement that all employees be given a listing of the individuals in the same classification as the employee who are subject to the layoff, the individuals who are not subject to the layoff, and the ages of those individuals.

If the Employer is located in York City, the York City Human Relations Ordinance protects all employees age eighteen (18) or older. Although the provisions of the ADEA do not apply to individuals under the age of 40, employers may want to use the additional requirements for severance agreements for younger employees in order to ensure that the employee had adequate time to review the agreement and to establish in writing that the employee was advised to consult with counsel.

9. Summary Plan Documents are Required by ERISA

If an employer contracts with a third party provider in order to obtain health insurance for employees and is not a self insured entity for the purposes of health care coverage, it is important that the employer distribute a well-drafted summary plan document to all participating members as required by ERISA. The summary plan document is different from the Plan Contract provided by a health care plan or other employee benefit plan. In addition, a carefully drafted summary plan document (SPD) may reduce an employer's liability in the event that an employee who is not eligible for enrollment pursuant to the policies of the Company is injured or has a health care claim.

For example, an employer with a summary plan document that defines an eligible employee as a full time employee who has successfully completed the introductory period would not be liable for any health care related costs for an employee who is currently in his introductory period when he is injured or otherwise receives health care treatment. However, if the employer did not have a summary plan document accurately reflecting the exclusion, the employer would be subject to liability for these costs.

8. Carefully constructed employee handbooks may be used to successfully defend unemployment compensation claims and prevent future litigation.

When considering whether or not to invest in an employee handbook, an employer should consider that a carefully crafted handbook may provide defenses to unemployment compensation claims and reduce litigation arising out of employment issues or termination of employment. For example, if an employee is terminated for violating a company policy, most Referees will request proof of notice to the employee and proof that the former employee received a copy of any applicable policies. Therefore, it is necessary to have a handbook that spells out the company policies and provides notice to the employee that violation of such a policy is grounds for termination. In addition, the handbook should require that the employee sign proof of receipt and understanding of the employee handbook. This signed acknowledgement should be kept in each employee's personnel file.

Employers should keep a copy of the employee handbook for each year in a master file, with each handbook being preserved for use in future proceedings. Finally, in the event the handbooks are changed or amended from year to year, employers should retain proof of distribution of changes and receipt of the amended handbook or policies.

7. The Personnel File Act dictates what information is contained in the personnel file.

The Pennsylvania Personnel File Review Act, 42 PA.C.S.A. § 1321 limits the types of information that may be kept in an individual's personnel file. Information such as medical records and any investigation notes or documents that may be used in any civil or criminal proceeding or grievance proceeding should not be kept in the personnel file.

Employers should maintain medical records in a file marked "confidential" and place such medical records in a locked filing cabinet to guard against any inadvertent or unauthorized disclosure. In addition, investigative documents, notes or other memoranda that pertain to concerns or questions regarding the employee, but do not constitute disciplinary actions, should be kept in a separate "investigative" file from the personnel file.

The Act also provides that the employee has a right to review his or her file. However, the employer may dictate the conditions upon which the employee may review his or her file, i.e. by requiring a written form requesting the review of materials in the file. An individual who is not currently employed with the employer is not considered an employee and does not have the right to review his or her personnel file once employment is terminated.

6. Consistent Enforcement of Policies and Procedures is Vital.

Employers should have specific policies and procedures set forth in the handbook and enforce them consistently, as equal enforcement will likely defeat claims of discrimination. In a recent case from the Sixth Circuit Court of Appeals, the Court overturned a jury verdict in favor of the Plaintiff who alleged gender discrimination where she was fired for punching another female. The basis of her complaint focused on two earlier altercations involving male employees, where the men have been suspended rather than fired.

A jury found in Plaintiff's favor and awarded her $60,000 in back pay, $5,000 for emotional pain and suffering and $30,000 in punitive damages. The Sixth Circuit Court of Appeals reversed and held that Plaintiff did not prove the company discriminated against her because of her sex. The Court held that "the jury may not reject an employer's explanation . . . unless there is a sufficient basis and the evidence for doing so."

The employer said it fired Plaintiff for an intentional, premeditated assault on a coworker after she was warned by several supervisors not to do it. In order to provide sufficient basis for the jury to reject the employer's explanation, Plaintiff had to show that the company's stated reason for firing her had no basis, in fact, was not actually the reason she was fired, or was not a serious enough offense to motivate termination.

Instead, the evidence showed that the company's explanation was based in fact and serious enough to trigger termination as it was listed as a terminable offense in the company's rules. In addition, the situations regarding the male employees were less serious than the situation in the Plaintiffs case. Further, the men were suspended after spontaneously aggressive behavior, as opposed to premeditated behavior.

Therefore, employers should follow documented policies that are enforced equally across the board, with documentation for each instance carefully crafted and maintained in the personnel file.

5. Employee Terminations are Ripe Grounds for Defamation Claims.

Employers should ensure that personnel files and letters of termination and any medical information be kept confidential. Recently, a Federal Court held that where the employer leaves a termination letter in an unlocked office of an employee, the employer may be subject to claims of defamation. In that case, an employee was terminated for alleged sexual harassment.

The letter stated that the employee was being terminated for overall misconduct, and specified that the individual had violated the company's sexual harassment policy. The company hand delivered the termination letter to the individual, and a copy was left on his desk in his unlocked office at work. The employee alleged defamation claims stating that a co worker saw the letter and told other employees. The former employee sued the company alleging defamation. The case is currently scheduled for trial.

Therefore, employers are cautioned to send termination letters to the employee's home, via certified mail, but should not leave a copy in an inbox, official mail slot, or any other public place where the letter may be seen. In addition, meetings with employees concerning termination or violation of policies should be kept confidential on a need to know basis, and all information should be disclosed only to management who need to know of the circumstances in order to carry out the employer's business. Further, employers should know that it is a violation of Pennsylvania law to release any medical records or confidential personnel records without a proper authorization. In addition, Federal Law, the Health Insurance Portability and Accountability Act ("HIPAA"), may also apply to the employer. HIPAA imposes strict sanctions for violations of the privacy rights of individuals.

4. Document an Objective Basis to Support the Employment Action.

The employer should always document an objective and factual basis to support the employment action. However, the basis must be legitimate, as hollow or sham proposals will only harm the employer's case.

For example, if an employer believes a supervisor or other employee is behaving improperly, it is imperative that the employer specifically and objectively document any disciplinary actions taken. In addition, many employers are concerned that they do not possess enough "evidence" to take actions concerning individuals who allegedly are having an affair or a relationship and who are employees of the employer.

However, once an employer is notified of an alleged relationship, the employer must undertake investigatory actions even if there is no alleged "harassment". The employer should view all situations such as these as a potential liability, because when the relationship turns sour, the unhappy participant is likely to allege harassment. Therefore, individuals who report the relationship to the employer should be contacted by the Human Resources in person and advised that the matter is confidential, but that the employer would like the individual to write a written statement concerning the incident(s) and, if applicable, to confirm in writing that the relationship is consensual. The individuals should also be advised of the requirements to report sexual harassment and should receive a copy of the employer's anti-harassment policy. A witness should sign the statement and the employer should maintain those statements in a separate file regarding each employee involved in the alleged relationship.

The employer should advise each employee that they are not to contact each other during company time or when engaging in any company business. Ideally, the employer should separate the individuals immediately.

However, some employers are not able to separate the employees. Further, many employers are hesitant to take action when employees deny the relationship. Regardless of the situation, the employer must conduct an investigation and gather evidence which is maintained in a separate file. The evidence must support the employer's decisions.

3. Agreements not to Compete Require Careful Consideration (literally).

Agreements not to compete must be ancillary to the employment relationship, or, if negotiated after the individual is employed, must provide additional consideration in exchange for the Agreement not to compete in order to be valid and enforceable. Further, the Agreement not to compete must be limited in geographic scope and in length. The employer's primary customer contact territory or area is helpful in limiting the geographic scope of the contract.

Most Courts will not enforce covenants not to compete that are longer than two years. In addition, covenants not to compete should be limited to a narrow geographic area that will still serve the client's needs, while limiting the area in order to ensure enforceability of the Agreement.

Finally, it is imperative that any non compete agreements entered into after the employment relationship began are executed with sufficient consideration, such as a change in status from at will to an employee for a specific term, a raise, monetary increase or promotion.

2. Record Keeping Requirements May Return to Haunt Employers

Record keeping requirements are ever increasing, and include a multitude of federal and state statutes, some of which are as follows: The Occupational Safety and Health Act, The Immigration Reform and Control Act, the Family and Medical Leave Act, State Unemployment and Worker's Compensation Laws, State wage and hour laws, the Fair Labor Standards Act, and the Personnel Files Review Act.

Employers should be keep all performance records for at least four years after the date the record is made. Typically, the longest state statute of limitations for bringing an action against an employer is the statute of limitations for breach of contract claim, which is four years. However, when in doubt, maintain all records for at least six years after the date the record was made.

Employment applications for current employees should be kept throughout the duration of employment, and at least four years after the termination of employment or discharge from employment. Employment applications for past employees should be retained for a period of at least four years from the date of termination. Advertisements for open positions or job training programs and applications for persons not hired should be kept for at least two years from the date the record was made or two years after the date of the decision.

Any employee's physical examination should be kept for the duration of the employee's employment plus 30 years. Any verification of alienage and authorization to work must be retained by the employer for the latter of three years from the date of hiring or one year from the date of termination.

Family Medical Leave Act records must be retained for a period of three years. Wage and hour documents should be kept for a period of at least three years from the date of the record. However, it is recommended that the wage and hour documents be retained for a minimum of four years, and if the facilities permit, be kept indefinitely in the case of any future dispute.

1. Assess the Situation and Call a Professional before taking Adverse Action against the Employee.

When employers are confronted with a situation, they typically react first and then contact their attorney. The longer an employer waits to consult with a professional concerning an employment issue, or the longer an employer permits on ongoing problem to linger without taking appropriate steps to document or mitigate the negative effects, the more difficult it is to correct the situation and to support the eventual employment action.

By consulting with an attorney at the outset, the employer is apprised of the legal requirements and is informed of the actions that should be taken or avoided. The employer is able to assess the possible outcome of various actions and to make an informed decision about the situation.

Regardless of the situation, the employer waits to take any actions regarding the employment issue, the harder it may be protect the employer from potential claims of discrimination or wrongful termination.