Employment Law Roundtable: Gavel-to-Gavel Guidance

Under President Obama, the National Labor Relations Board has been very active, which has enlivened the topic of employment law in areas ranging from social media to union elections. More recently, controversies over the minimum wage and overtime rules have made additional headlines.

The City of Madison and the State of Wisconsin also have their share of employment law activity, but many employers think the proper term is hyperactivity because it’s not easy to keep up with all this change. With that in mind, IB has convened a panel of employment law attorneys and a local human resources manager to help employers navigate this maze.

VANDEN PLAS: Let’s start with an issue that local employment attorneys and their clients are dealing with, and that’s job applicant arrest and conviction record issues. What we’re really talking about is background checks, which can be a bit of a minefield for employers. What are employers’ obligations and challenges here?

MIRUS: There are several issues to consider if you’re conducting background checks, especially in Wisconsin and Madison. Many employers don’t know that Wisconsin has an anti-discrimination law that prohibits discrimination against applicants and current employees on the basis of arrest or a conviction record. The guts of that are that arrests can’t be considered at all, and arrests show up on CCAP reports, so it can be a bit tricky. Convictions, in general terms, have to be substantially related to the job for which the person is applying in order to use that conviction as a consideration in whether or not to hire.
Madison has its own, even slightly more stringent law on the consideration of arrest and conviction records, putting time limitations on how far back convictions can be considered, and also limiting employers’ consideration of things like credit history and gathering of Social Security numbers in the hiring process. So there are layers of regulations to be aware of.

VANDEN PLAS: To what extent are employers aware of them?

MIRUS: I would say employers with good HR staffs usually are well aware of the laws, but I just had a conversation with a sophisticated employer who was clearly unaware of the laws, so there’s still misperception and simple lack of understanding.

THOMPSON: Legal compliance has become increasingly more complex for employers, especially in the last five to 10 years. Employers with full-time HR staffs, strong bench depth, are able to keep abreast of all the changes. Smaller to mid-sized employers, many of those locally, have a really difficult time staying on top of the changes. Background checks are a really important part of the hiring process. They are part of the employer’s due diligence in confirming that an applicant has the training, education, experience, and other credentials that they’ve claimed on the résumé. But an employer can get into trouble when it treats people differently, under similar circumstances, based on membership in a protected class, or when they have a policy that has an adverse impact on members of a particular class.

WARNOCK: It essentially takes a village to make sure that you have a good understanding of the laws and how quickly they change. I’ve read a lot of articles that say there’s been more change in the last five to 10 years than there has been in the last 20, maybe even 25. Having a good partner — a good, strong legal partner — is really the key to this, and so is having an HR team that stays abreast of all the different changes by staying in touch with the NLRB and getting their regular updates, and getting regular updates from the state. You have to do simple, practical things to keep up, but you can keep up.

But when we’re talking about background checks, you really have to pay attention to two things. One is the essential function of the role. What are you looking for? What does the job need to do? And two, is the conviction substantially related? You really have to be realistic. You have to be practical. Keeping all of these regulations in mind will help you make a good, fair hiring decision, and not having too many things that are too stringent in your policies or too stringent in your job descriptions will ensure that you make a fair and realistic decision.

VANDEN PLAS: Are there key differences between state, federal, and local law that you have to be aware of?

THOMPSON: Under federal law and local law, an employer has to conduct the substantial relationship test prior to making the decision. Under Wisconsin law, the analysis can be done after the fact. Many employers are unaware of that distinction, and it can come back to haunt them. In most cases, an employer should be conducting the analysis on the front end before a decision is made. But under Wisconsin law, the standard is an objective one that can be performed at any time, including after the decision is made. That is not the case under federal or local law.

VANDEN PLAS: Is one of the issues the current workforce and how it may view someone who’s convicted of a felony? Word can get around, and even if you’re trying to balance society’s desire to rehabilitate people, there still might be fears in your workforce. Is that another thing you have to get out in front of somehow?

THOMPSON: Under federal, state, and local law, employers can’t have a broad policy that discriminates against all individuals with a particular conviction record. At the same time, employers who know or should have known that an individual has characteristics or traits for untruthfulness or fraud would never want to put somebody like that in a position where they’d have access to customer credit cards or identifying information.

MIRUS: I would add there is a real delicate balance because I recently had an employer who conducted a background check on someone who the workforce was very high on as a candidate, and it turned out that that person, I believe, had a felony conviction for a serious personal battery type of activity, criminal activity. And we determined that the criminal conviction wasn’t substantially related to the position for which the person was applying.

And yet then there is the balance, for employers also, in Wisconsin and different states. The tort of negligent hiring supervision and monitoring is developing, and if an employer knowingly puts someone in a position where they could put others at physical risk or harm, employers have to balance that risk against the risk of rehabilitation, giving a person a second chance, and a potential claim under conviction record discrimination.

Now if the employee who is hired then harms someone in the workplace, a coworker, that would tend to be covered by workers’ compensation only. But if they harm a third party — for instance, if you’re hiring someone who makes deliveries to homes and goes and visits people in vulnerable positions — that could be a very significant negligence lawsuit for an employer to handle.

WARNOCK: Having a strong legal partnership is important, and you have to review these on a case-by-case basis. There is no peanut-butter-spread decision process that you can have. You have to look at each situation individually. You have to be fair. You have to be realistic. You have to look at it as substantially related or not. Are you potentially putting your workforce at harm or not? And make the right decision. Ultimately, you’ve got to review these on an individual basis, and if you do that, and if you follow those steps, you will make the right decision.

THOMPSON: Under the City of Madison’s Equal Opportunities Ordinance, an employer may only consider a past conviction record when the individual has been, within the past three years, placed on probation, paroled, released from incarceration, or paid a fine for a felony, misdemeanor, or other offense — the circumstances of which substantially relate to the circumstance of the particular job. Many employers are unaware of that. Many would disagree. Many would contend that three years isn’t enough, that employers ought to be able to back-cast further than that.

MIRUS: Another pitfall employers don’t recognize, or have a clue about, is if they use an outside vendor to conduct their background checks, that generally triggers compliance requirements under the Fair Credit Reporting Act, which is a federal law. If you looked at a sketchbook description of the law, it wouldn’t seem to apply, but it does apply. Under the Fair Credit Reporting Act, if third-party vendors who regularly engage in conducting background checks are doing that for your entity, you have to comply with notice requirements both on the front end of the background check process and in the event the background check shows something that’s going to make you not hire that person. Those are important compliance steps.

VANDEN PLAS: Documentation is very important with employment decisions.

MIRUS: We can’t say it enough — document, document, document.

THOMPSON: Always.

WARNOCK: If it’s not documented, it’s not done.

(Continued)

Status symbols

VANDEN PLAS: Let’s move on to the addition of unemployed status as a protected class under Madison’s Equal Opportunities Ordinance. It’s been suggested that this new classification is a plaintiff attorney’s dream and an employer’s nightmare. What compliance steps would you recommend?

THOMPSON: The city has a strong history of protecting employees against discrimination on many bases that are not also prohibited by federal or state law. Some of those examples include personal appearance, political affiliation, and credit history, as well as requesting an applicant’s Social Security number when the applicant is not otherwise required to disclose that by federal or state law. The city’s recent addition of unemployment as a protected classification is in keeping with its longstanding mission of protecting underrepresented persons. It’s not objectively unreasonable on its face.

At the same time, it causes a lot of anxiety for some employers. Employers do best when they’re permitted to focus their full time and attention on the operation of their businesses. We talked about the increasing complexity of legal compliance issues, and the city’s recent addition of unemployed persons as a protected classification raises concerns about frivolous claims. Most employers are committed to complying with the laws that apply to them. They are looking for the best-qualified individuals for an open position. At the same time, there’s a perception that adding an additional classification may result in more claims that distract from an employer’s core mission.

WARNOCK: It’s important not to overreact here. Unemployment status, generally speaking, is a temporary status for the most part, but it’s certainly a status that’s now been put into place and that we have to take into consideration as we’re going through the hiring process. When you’re going through the hiring process, practically speaking, you’re looking at whether the candidate has the real-life work experience — the education, if certifications are required — and you’re looking at those things to determine the most qualified candidate out of your entire pool of candidates for the role you’re trying to hire for. Focusing on those things will protect you in every case.

VANDEN PLAS: Does it matter how long they’re unemployed?

MIRUS: It does not matter. It’s anyone who’s in an unemployed status at the time, or at any time during the hiring process. This became a very hot issue post-recession, when there were long-term unemployed, and we had people out of work for 18, 24 months who simply couldn’t get in the door for interviews because they had been unemployed so long. And people made assumptions about their job skills, personalities — i.e., something must be wrong with you if you’ve been out of the workforce this long. There were lots of states and municipalities that proposed this legislation, but we are one of the first, if not the first, in the country to actually adopt it.

It does raise very practical risks, because at some point or another, people in your applicant pool are going to be unemployed. That happens. I’ve talked to some clients who have said to me, ‘Jennifer, 35% of our applicants tend to be currently unemployed.’ That’s a high percentage of people, and we now have to make sure their unemployed status is not entering into the equation in terms of whether they’re being given further consideration.

THOMPSON: That’s especially true in light of the fact that many HR professionals have been trained to look at whether an individual has had gaps in their employment record, because that is an indicator of the likelihood of success in a new employment position.

VANDEN PLAS: Are employers expected to take current economic conditions into consideration? If you look at just the monthly Bureau of Labor stats that come out, there are more long-term unemployed.

THOMPSON: Employers aren’t required to do that. However, most do, especially in these difficult economic times where it’s no longer a badge of dishonor to have been unemployed, because many people have found themselves without a job through no fault of their own.

WARNOCK: Again, it goes back to whether the candidate is qualified. Ultimately, looking at their résumé objectively and just looking at their skills, qualifications, and what they bring to the table is what’s important here. You could say up to 50%, depending on the position, have some sort of unemployment in their work history. Again, look at that entire body of work they’ve done over the life of their career, whether that’s three years or whether that’s 20 years, in determining whether or not this is a good fit for the essential functions of the position.

VANDEN PLAS: How do you, through documentation, prove that you didn’t discriminate if somebody was unemployed?

WARNOCK: Really, it’s through the interview process. As you go through the interview process, you’re asking questions that are real-life, work experience-based, that will help you get a good understanding as to whether the candidate has done the work that you’re looking for them to do. Do they have the skill sets? Do they have the certifications or the education? It’s through that process, and documenting all of that information with each of your candidates in a similar fashion, that will help you determine that.

VANDEN PLAS: Is this an example of the business community hearing about something the city’s doing and being alarmed at first before people really start thinking through it, and then eventually there’s more comfort with it?

THOMPSON: I don’t think the business concerns are without merit. It’s very rare that an employer would ever admit they considered an unlawful basis for declining to hire somebody. In many instances, hiring decisions are based upon subjective measures based on how the applicant presented at a job interview. Under the Fair Employment laws, including the Madison Equal Opportunities Ordinance, the burden shifts to the employer to articulate a legitimate non-discriminatory reason for the action that it took. It’s very difficult for the employer to prove its innocence when it has a large applicant pool, and a number of these applicants are, on paper, very similar. That is going to be a real challenge for Madison employers.

MIRUS: The whole issue of unemployment as a protected class raises an issue, which is employers can’t just have educated HR staffs or help or those resources. You must train hiring managers and supervisors and anyone involved in this process not to delve into a gap, not to ask, ‘Why are you unemployed?’ People who have very little to no HR knowledge are involved in the HR process, whether you like it or not, and you don’t need to make them experts. When I train supervisors, I say, ‘I’m not here to make you an expert in HR. I’m here to give you enough to know, so that you know when to go to HR and avoid the pitfalls.’ So training those involved in the process so that you’re not kicking people under the table when they’re asking illegal questions is critical.

WARNOCK: It’s helpful when you sit down with those individual managers, especially the inexperienced ones, and really walk through the job description, and you come up with questions about the role itself and focus on that. The whole point of an interview is, can this person do the job? So it’s important that as HR professionals, we sit down with those leaders and make sure we’re asking the same questions of every candidate, and that the questions are job related.

Waging war

VANDEN PLAS: President Obama has proposed raising the minimum wage to $10.10 an hour [recently blocked in the U.S. Senate]. If it does become law at some point in the future, how are employers likely to react? Does it depend on where an employee is on the wage scale?

WARNOCK: It does. A lot of employees who are at the minimum wage are in food-service type positions and retail positions. This isn’t going to necessarily impact every organization, but it will impact the smaller businesses and businesses that operate in retail and food service. In reality, employers are going to have to evaluate their cost structures. But some people tend to look at both sides of this issue. If we raise this, hypothetically, there’s more discretionary income out there.

VANDEN PLAS: If the job still exists after you raise it.

WARNOCK: If the job still exists, absolutely, but you have to take a balanced approach. This is something that’s been debated back and forth for the last few years with the president and with Congress, so we have to take this on a step-by-step basis. The president was able to raise the minimum wage for federal contracted workers within the last year. We’ll see where this goes in the end, but in reality, employers are going to have to react how they need to react to manage their cost structure.

MIRUS: I would just agree this is a political hot button. There are few issues that are more of a political hot button than this. For the sectors that have entry-level, low-wage earners, this will hit the bottom line. Whether it will cost jobs or cost changes in benefits being offered, that remains to be seen, but those are very possible outcomes. Employers, if they have to pay a significantly higher wage, I’m guessing they’ll be more proactive about managing performance and getting people out of the workforce who simply aren’t getting the job done.

THOMPSON: We’re blessed to have really good local employers. They take their jobs very seriously. They know that they are responsible to their employees and their employees’ families and do not want politicians interfering with their ability to be successful. Foisting upon small local employers a significant increase to the minimum wage can have a dramatic impact on their ability to meet obligations to their employees and continue their businesses. So I think you’re going to continue to see significant pushback from the business community to a significant increase in the minimum wage.

(Continued)

Social media no-nos

VANDEN PLAS: The National Labor Relations Board’s rulings on what employees can and cannot do about social media have attracted a lot of press attention. Gov. Walker just signed a law prohibiting employers from requiring access to personal social media accounts. What’s your best advice for employers?

MIRUS: Employers have to understand that at the core of the social media hype is the concept of concerted activity. The National Labor Relations Act [NLRA] and the NLRB are federal laws and the governing board that concern laws that, in many instances, apply only to unionized workplaces. Section 7 of the NLRA applies to almost all employers. One of the major provisions of that section concerns the fact that employees cannot be disciplined or terminated or have an adverse action taken against them for engaging in concerted activity. Concerted activity is when a group of employees, or one employee, speaks on behalf of a group; a group speaks on behalf of itself; or one comes forward and speaks on behalf of a group to an employer about wages, terms, and conditions of employment.

Again, there’s a lot of misinformation or lack of information on this very topic. We will see handbook provisions where employers say your salary information is confidential, and you may not discuss this with anyone else, and will be disciplined if you do so. That is a per se violation of the concerted activity rights of employees. They have the right to discuss their wages.
Social media comes into play because it has become everyone’s favorite gripe ground. Employees tend to go out and discuss workplace issues on social media, and employers have reacted to that technological development by developing policies that say ‘thou shall not do such-and-such on social media.’ But where employers are tripping up, and of all the issues where the NLRB has been very, very active, is if the employer’s policy is overly restrictive and can be reasonably interpreted as curbing concerted activity. That is invalid — a violation of the NLRA.

So, for instance, an employer’s social media policy can say you will not harass people. You will not physically threaten people. You will not defame or make untruthful statements about people. But when it branches into ‘you will not make disparaging, negative, critical comments of us, your coworkers,’ then it is, again, potentially violating the National Labor Relations Act. If I am an employee, and I am on social media discussing with a group of coworkers that I think we are underpaid, and our cheapskate employer better come to the table and talk with us, that is a concerted activity.

VANDEN PLAS: Hasn’t there been more recent guidance on the use of ridicule — ridicule is prohibited but making a critical remark is not?

MIRUS: Well, that’s interesting. The cases I’ve seen, employees are even protected when their concerted activity statements include profanity, extremely disparaging and negative comments, name-calling, and things that typically would not be protected in a workplace.

THOMPSON: Three years ago, most non-union employers were unaware that Section 7 of the NLRA even applied to them. In the last three years, the NLRB has done a good job of educating employers on the application of that law to non-union employers. That said, the NLRB will never convince employers that it’s acceptable for an employee to engage in conduct intended to harm the employer’s reputational interests, especially when the employer has bona fide performance or disciplinary concerns with an employee. Unfortunately, the law permits employees to use the law to leverage benefits from their employers. That was never intended, and that’s a primary concern.

WARNOCK: This is easily one of the toughest areas for an employer, an HR professional, to manage. Social media is an employer’s best friend and, potentially in some cases, their worst enemy. There are two different things at play here. Number one, if you do have a social media policy, this is something you, without question, need to have legal support on. Don’t try to go down the path of creating some sort of policy that is so sweeping, that’s so broad, that it actually puts you into a precarious position.

Part two is this idea of concerted activity, which we need to be compliant with, and it’s really about creating a transparent workplace and making sure that you have methodologies to get your employees’ feedback, whether that’s through sensing sessions or engagement analysis. There’s a variety of ways that you can get at feedback from your employees to hopefully prevent them from being disparaging on social media or defaming on social media to you as an employer. You do have to approach this in a two-prong fashion. You can’t do one without the other.

MIRUS: With Gov. Walker’s brand-new law, you certainly could not have a policy that says we will have the right to review or monitor your personal text messages at any time, unless there is a reasonable belief that an employee is violating a workplace policy, a law, something like that. Then you could gain access to those text messages, but there are many, many minefields to overreach with regard to privacy rights. The personal and the employment mix a lot.

THOMPSON: Employers can generally restrict employees from using social media during working time or using a computer, or using employer resources, including the employer’s computer systems and network systems.

Final arguments

VANDEN PLAS: Given current events in employment law, what final takeaways would you have?

WARNOCK: All of these topics that we’ve discussed are constantly changing. It’s important, as employers and as HR professionals, that we spend the amount of time it takes to stay abreast of these situations and really connect with your legal partner. If you have a question, or if you have a concern, don’t be afraid to reach out for those additional resources, to reach out to other employers in the local Madison area and connect with others. What practices are they implementing? If someone’s identified a best practice, get connected with that individual. It takes a village, it takes having a strong HR team, and that HR team translates that information to their management team, and then having strong legal representation to support you.

THOMPSON: Employers are looking for the best and brightest candidates for their positions. They want to do everything they can to help their employees be successful. They want to provide an enjoyable place for all to work. At the same time, they do have obligations under federal, state, and local laws, and it’s important that they understand their obligations and live up to them. The single best way for them to do that is through good performance management techniques, good communication with employees, so that reduces the likelihood of future disputes or misunderstandings among employees. When management and employees work together, the sky is the limit on the success organizations can enjoy.

MIRUS: I always tell people that it’s fun and relatively easy being a management employment lawyer in the Madison area because we do have collaborative workplaces. We have smart employers, the great majority of which want to comply with the law and go to great effort to comply with the law. It’s a pleasure working with people who are smart at running their business but also have smart emotional intelligence and know how to treat people in the workplace.

I would agree that open communication, fair-minded treatment of people, is critical to success for employers in today’s age. The key to the legal issues is not necessarily becoming an expert yourself or bogging down in the minutiae. Issue spotting, knowing when to reach out to legal counsel, knowing when to reach out to your HR expert to stave off the problems, that once they become problems are extremely time-, emotion-, and money-extensive. Avoiding the problems is really the key to successfully running your business.

VANDEN PLAS: As your colleague Bob Gregg used to tell me — happy law.

MIRUS: Happy law. Consult, don’t litigate.

(Continued)

Working Overtime

To address stagnant wages, President Obama has directed Labor Secretary Thomas Perez to draft new rules that determine which salaried workers can earn overtime pay. The current threshold is $455 a week, or about $23,660 per year, and that’s expected to be raised without the need for congressional approval.

How would employers react to raising the threshold? Our panel of employment law experts doubts a higher threshold would impact many Madison employers. However, for employers who are impacted, there is a constructive way to respond that does not involve cutting back on hiring, reducing salaries, or passing costs onto consumers.

To avoid reducing head count, the best proactive step is process improvement, says Mary Warnock (Spectrum Brands). “The focus should be on process improvement so that you can ensure that your employees are being as efficient as possible, therefore reducing the need for overtime,” she stated. “If you want to approach this from a proactive stance, that’s where you should start.”

Jennifer Mirus (Boardman Clark) noted the exempt/non-exempt status of employees is “a huge area of misinformation, misconception, and just lack of knowledge” among employers. “The general rule is that we have to pay all employees time-and-a-half their regular rate of pay for all hours worked over 40,” she noted.

Employees are overtime eligible unless employers can establish that an overtime exemption applies. The three primary exemptions are: professional executives (heads of a unit or department); administrative personnel, which Mirus considers the most difficult exemption to apply; and sales.

Mirus and Troy Thompson (Axley Brynelson) don’t believe that raising the threshold will be an earth-shattering development for Greater Madison employers because most local white-collar exempt employees generally are paid more than $455 a week. Noted Thompson: “In fact, it’s likely going help employers who might inadvertently misclassify a low-compensated employee who really doesn’t belong in the white collar professional exempt status.” — Joe Vanden Plas

(Continued)

Paying the Price

Pay equity for women is a front-and-center issue, with momentum building for another legislative attempt to close the pay disparity between men and women. But employers don’t have to wait for government action because there are best practices they can employ to both assess and deal with pay gaps.

As a human resources executive for Spectrum Brands, Mary Warnock sees three general steps employers should take. The first is making sure you have valid market data from outside the organization (perhaps data that you subscribe to) that provides a general idea of what different roles command in terms of compensation. One local resource for such data is the Greater Madison Area Society for Human Resource Management.

Using that data, step two is to make the right salary decisions at the time of hire, and step three is to review internal equity on a regular basis, as frequently as every six months. Pay determinations are crucial at the hiring stage because social science data indicates that men negotiate harder than women for initial pay, and employers must be aware of that because the gap could widen over time.

“Probably the best practice, at minimum, is to annually go through a review, and make sure that you don’t have any potential disparities within your organization,” Warnock advised.

In Warnock’s view, employers don’t want to put themselves in a position to play catch-up because they invite trouble on two ends of the spectrum. “First, you’re going to have a difficult time hiring talent if you’re too far behind,” she noted, “and, two, employees are smart. Employees are very engaged, and they understand. There’s so much information available on the Internet — whether we like the information or not, whether we believe the information is valid — there’s information that our employees are seeking outside of your own company to validate or invalidate their salary. So it’s important that you do a review of this.”

In some cases, there will be what Warnock called “an appropriate gap” between employees due to variances in experience, education, years in the role, and performance. But a segment-by-segment review of similar positions, using the above factors and any available market data, is a complicated but necessary audit process.

“This is a case-by-case, very detailed analysis, and certainly experience, education, and performance validly come into play,” added attorney Jennifer Mirus (Boardman Clark). “When an employer’s numbers are so tilted, and don’t really make logical sense in light of those factors, employers have to take a good, hard look at how they are paying people.” — Joe Vanden Plas

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