Employer Services Publication
Building Blocks for HR Excellence
By Michael
R. Hatcher
This article originally appeared as
a "Legal Brief" in the January 2007 issue of America's
Community Bankers Magazine and it has been reprinted with permission
from the publication.
Effective Human Resources policies and practices can significantly
enhance the performance of any organization. Large corporations
can and do deploy considerable resources to this discipline. But
whether your business is large or small, it is imperative to start
by achieving excellence in basic Human Resources compliance. This
article addresses three areas that the Human Resources department
just has to get right.
First, we address federal affirmative action requirements. Second,
we consider wage and hour compliance, one of the most litigated
areas of employment law. Next, we look at combating sexual harassment.
Federal Affirmative Action Requirements
While often used as a synonym for “diversity” and
other broad concepts, affirmative action specifically refers to
the requirements imposed on federal government contractors by Executive
Order 11426 and implementing regulations from the Office of Federal
Contract Compliance Programs (OFCCP) at the Department of Labor.1
Critically, financial institutions are frequently covered by the
Executive Order under special eligibility criteria.
Federal government contractors are covered by the non-discrimination
provisions of the E.O. 11426 and implementing regulations, subject
to several strictly defined exceptions, the broadest of which is
for contractors with less than $10,000 in federal contracts. Financial
institutions with federal share and deposit insurance are considered
to be government contractors within the meaning of Executive Order
11426 and, the “under $10,000” exception specifically
does not apply to depositories of federal funds and issuing and
paying agents for U.S. Savings bonds and notes.2
Further, government contractors are generally required to implement
formal, written affirmative action plans if they have fifty (50)
or more employees and federal contracts worth more than
$50,000. Once again, however, the dollar limitations on applicability
do not apply to financial institutions that are depositories of
federal funds or issuing and paying agents for U.S. savings bonds
and notes.3
Essentially, covered contractors must conduct reasonable self-analyses,
comparing utilization of women and racial/ethnic minorities to the
availability of qualified women and minorities in the relevant job
market. If “utilization” does not reach at least 80%
of “availability,” the contractor must establish goals
to reach “availability” with specific action plans for
attaining the goals.
One key element of affirmative action compliance that has recently
been clarified by OFCCP relates to internet applicants. Under the
new regulations, all employers with fifty or more employees must
solicit and retain demographic information regarding internet applicants.
Data, including gender, race, and ethnicity, on all applicants considered
for employment must be maintained for at least 1 year.
The new rule defines “internet applicant,” prescribes
the records the contractors must maintain, and explains the records
OFCCP will require contractors to produce when evaluating a contractor’s
compliance with adverse impact analysis.
It is imperative that financial institutions determine whether
they are covered by federal affirmative action requirements. Because
of the significant consequences of non-compliance, if covered, financial
institutions should ensure compliance, seeking expert advice and
counsel, as necessary.
Wage and Hour Compliance
The Fair Labor Standards Act (FLSA) requires that most employees
be paid at least the federal minimum wage for all hours worked and
overtime pay at time and one-half the regular rate of pay for all
hours worked over 40 in a work week.4
Several classes of employees may be exempted from application of
the overtime requirements if certain conditions are met. The potentially
exempt classes are:
- Executives
- Administrators
- Professionals
- Outside salespeople
- Some computer professionals
In order to be exempted, class members must meet two tests: (1)
salary basis test and (2) duties test.
Salary Basis Test
Pursuant to the Salary Basis Test, to be exempt, the employee must
be paid at least $455 gross per week ($23,660 annually). The salary
must not be dependent on job performance or the hours worked.
Duties Test
The work must relate directly to the management or general business
operations of the employer or the employer’s customers. In
general, the employee must exercise discretion and independent judgment
in significant matters.
In the financial services context, an exempt employee’s
specific duties may include:
- Collecting and analyzing information
- Determining appropriate financial products
- Advising the customer regarding financial products
- Marketing, servicing, or promoting the employer’s financial
products
Wage and hour claims are one of the largest areas of employment
related EEOC charges and federal lawsuits. There are many traps
for the unwary in this area, particular as relates to the classification
of employees as either “exempt” or “non-exempt.”
The rules arising out of the court cases are often counter-intuitive.
Human Resources professionals and in-house counsel need to work
together to ensure compliance in this critical area.
Sexual Harassment
Most companies recognize and address the most egregious instances
of sexual harassment. Many companies, however, do not adequately
educate their managers that sexual harassment includes much more
than inappropriate physical contact.
Sexual harassment includes quid pro quo harassment, where submission
to sexual conduct is made a condition of employment or submission
to or rejection of sexual conduct is used as a basis for making
employment decisions affecting the individual. As most employers
know, , hostile work environment claims can be asserted based on
sexually-charged jokes, pictures, overtures, etc. in the workplace
when that environment unreasonable interferes with an individual’s
work performance or creates an intimidating, hostile, or offensive
working environment.
Less obviously, claims may be made based on subtle behaviors and
actions including uninvited letters, phone calls, and gifts, as
well as uninvited touching.
There are several actions a company may take to lessen the risk
of sexual harassment claims. Courts have recognized an affirmative
defense to such claims if the employer:
- Has an anti-harassment policy with sufficient complaint procedures
- Exercises reasonable are to prevent and promptly correct any
sexually harassing behavior
- Acts promptly to resolve the complaint
- Complaining employee unreasonably fails to take advantage of
preventative or corrective opportunities
In order to minimize the risks of sexual harassment claims, all
employers should review and, as necessary, strengthen their anti-harassment
policies and complain procedures. All employees should be trained
on the policies and procedures and managers should be held accountable
for preventing such activity in the first instance and promptly
addressing any complaints that are brought to their attention.
A special word should be said about retaliation claims (whether
or not in the context of a sexual harassment claim). First, an employer
may be held liable for retaliation even if the underlying discrimination
claim is unproven – or even if the underlying claim is dismissed.
Second, a recent Supreme Court decision has extended liability to
a new category of claims for which previously companies would not
have been liable.
Retaliation can generally be defined as any adverse employment
action in response to protected activity. Adverse action can include
termination, harassment, reduction in hours, job transfers and denial
of training. Protected activity includes complaining of discrimination,
alleging harassment, going to a state agency, or requesting an accommodation.
A 2006 Supreme Court decision, in Burlington Northern v. White,
established for the first time that an adverse action supporting
a retaliation claim that does not cause tangible economic harm,
e.g., reassignment to a lesser job or suspension without pay that
is later repaid, can still constitute retaliation in violation of
Title VII. This is a significant departure from prior case law and
may require reevaluation of unresolved claims.
All managerial level employees should be trained (and periodically
re-trained) on their obligation to not engage in retaliatory conduct.
Employers should take special care to ensure that individuals who
have engaged in protected activity are not subject to decisions
that could be deemed retaliatory. It is often a good idea to require
an additional and higher level of review for any employment action
involving an employee with an unresolved sexual harassment complaint.
Conclusion
Human Resources professionals are responsible for a myriad of day-to-day
activities throughout an organization. It is imperative that they
be adequately trained, and provided with appropriate resources,
to avoid costly lawsuits or intrusive government enforcement actions.
Three areas of current high risk for employers are (1) federal affirmative
action compliance, (2) wage and hour claims, and (3) sexual harassment/retaliation
claims.
The purpose of this article is to highlight several of the more
common “traps for the unwary” and encourage all employers
to ensure that their Human Resources professionals are provided
the resources they need to protect the company from unnecessary
litigation.
FOOTNOTES
1
41 C.F.R. 60-1, et seq.
2
41 C.F.R. 60-1.5.
3
41 C.F.R. 60-1.7.
4 29
U.S.C. 206 and 207
For more information, please contact:
Davis Wright Tremaine has employment and labor lawyers in Alaska,
Oregon, Washington state, California and Washington, D.C. We represent
many clients nationally. For a specific referral for a DWT employment
and labor attorney in your state, please contact the above attorneys.
Thank you.
Copyright
© 2007, Davis Wright Tremaine LLP.
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