With the current surge of women’s rights issues in the news, equal pay laws have been receiving a lot of attention. As an employer, you should be aware of both state and federal laws governing this area.
For example, California Labor Code 1197.5 prohibits the payment of wages at rates less than the rates paid to employees of the opposite sex in the same establishment if the job requires equal skill, effort, responsibility, and similar working conditions. Different pay rates may be allowed where they arise under a merit or seniority system, a system which measures earnings by quantity or quality of production, or a differential based on any factor other than sex (or else be faced with a sex discrimination lawsuit). The Federal Equal Pay Act is nearly identical to the California Statute.
Due to these laws, lawsuits regarding an employer’s failure to enact equal pay laws have steadily been on the rise. Typically in these cases, the focus is on the work product and qualifications of the employee filing the lawsuit versus the employee/gender of employees who are receiving better pay. The greater the disparity in pay, the more justification the employer will have to prove for such a disparity.
Judgments for these cases typically include not only the recovery of any wages lost but also liquidated damages. A party bringing such a suit may also recover attorney’s fees in a private action to enforce this section.
As a result of these laws and the recent Lilly Ledbetter Fair Pay Act which essentially resets the statute of limitations to file a discrimination lawsuit with the receipt of each new paycheck, class actions lawsuits are steadily on the rise. These can be very painful suits to defend. They are long, time consuming, comprised of multiple former employees and a lot of work. The fallout of such a lawsuit can be both devastating to you personally and to you business.
At the risk of being redundant, employers should audit their workforce! I’m going to keep saying it until they start doing it. It’s the best way to protect and defend against these types of suits. Remember that these lawsuits start with the big companies and slowly work their way down to small companies, so you aren’t safe simply by virtue of the fact that you have 20 employees instead of 20,000. Many of my clients know this by personal experience.
If you want to know whether you are at risk for an equal pay lawsuit (or any other lawsuit), sign up today for a free Business and Employment Law Planning Session, or contact our employment law attorneys at (800) 449-8992 for a consultation.
If you’ve ever watched reality TV, you know the producers go for a big shock factor on each show. Nothing shocks someone more than hearing those two dreaded words:
There’s one show in particular, on which the “boss” actually utters those words and makes a cobra-like gesture when he let’s a contestant know they been fired.
Queue the dramatic music. Cut to the scowl on the face of the “boss.” Pull the camera back to catch the look of shock on the face of the “employee.”
It’s good television for sure.
But in real life that is a dangerous scene.
In real life, in real business, that scene should never happen. Any time an employee is separated from his position, there should be an orderly process void of snap judgments and surprises.
There are four main reason people lose their jobs:
Reason 1: A Reduction in Force
Reason 2: Elimination of a Position
Reason 3: Poor Performance
Reason 4: Misconduct
Just about every job termination can be fit into one of these categories so let’s look at the business implications of each of them.
Quick reminder: This is not legal advice. You pay for legal advice. These workplace observations are free. Always consult an attorney (preferably me) before making a decision on terminating the employment of any employee.
1. Reduction in Force
Sometimes you have more employees than you need. Maybe sales have slowed. Maybe you have a seasonal shift in demand. Maybe you just hired too many people and you cannot pay all of them.
Regardless of the reason, if you have more employees than you can afford, it may be time to reduce the size of your workforce.
In this case, you can and should prepare written notification for each employee whose position is eliminated. The documents should be personalized and they should contain the specific dates when employment will be discontinued. They should also detail what, if any, severance pay and benefit packages are available.
You want to take great care to be fair and consistent in the methodology you use to calculate any severance or continuing benefits.
You also want to have your attorney review any documents the employee will need to sign as he departs. This is particularly the case for large workforce reductions, but certain Federal laws may apply, requiring notice and severance revocation periods.
If there will be some positions eliminated and some positions retained within one job classification, you definitely want to make sure you review each employee being retained and each employee whose position is eliminated, with your attorney. This should be done for a number of reasons (cough avoiding a discrimination lawsuit cough) not the least of which is fairness.
2. Elimination of a Position
Similar to a reduction in force, eliminating a position requires a legal review to test for fairness and objectivity.
You may need to prepare similar paperwork detailing the date the work period ends and what, if any, severance pay and benefits are available.
One of the things you want to focus on when you eliminate a position is how you will redistribute the workload from that position. Many employers expose themselves to liability when they simply change the title of the job but all the responsibilities remain the same.
Eliminating a position is not a shortcut to terminating a problem employee. It should only be done when a position is no longer required or when a job has drastically changed. Using that excuse for firing a poor performing employee can result in a wrongful termination lawsuit in which your defense (poor performance) looks like pretext or retaliation. It’s also cowardly.
3. Poor Performance
When an employee is not performing up to standard, his employment can be discontinued.
While it may not be required, it is always a good idea to have a documented discussion with the employee about his performance prior to job termination. This provides an opportunity for the employee to improve and it helps show your desire to correct the situation without additional disciplinary action.
Documentation should be carefully worded and you should always have your attorney review it before you present it to the employee.
In the event the employee’s performance does not improve, you have a record of the previous conversations and it should come as no surprise to the employee.
The key in addressing poor performance with an employee is to have a process in place and make the employee aware of the process at the outset of his employment. But that being said, you have to simultaneously make clear that the process is ideal, but not required, before a termination can occur. It’s a tricky line to walk, so a good handbook and training for you HR staff is key.
Rarely, you may need to address an incident of misconduct that warrants job termination. Incidents such as theft, harassment, dishonesty, violence and discrimination require immediate action. In fact, ignoring such conduct and not terminating right away can create serious liability issues for you as the employer. So take these things seriously and act swiftly.
These incidents almost always require the involvement of or guidance from an attorney. Other people’s rights may be implicated. Or you may get an excuse from the employee for his behavior (such as a disability) that make things tricky. You want to connect with your lawyer to review what to say, how to say it and what documentation to prepare and deliver to the employee.
In some cases, you may need to gather facts and investigate before making a final determination. Again, it is best to have an attorney involved in the matter to advise you on how to conduct and document this investigation.
The law, as it relates to employees, is complex and it varies from state to state. The best time to review these laws and address them with your attorney is before you hire your first employee. The second best time is right now.
Nobody likes surprises when it comes to employee issues. Let’s leave the drama to reality television.
Reach out to me today to discuss my Employer Protection Package. My employment law team and I will review your current state and make recommendations for improvement before they become expensive litigation matters.