With seven hundred and fifty million people actively using Facebook, there is a significant chance that a post about working conditions, compensation or other issues related to their employment will spark a conversation with an employee’s colleagues, and such conversations may constitute concerted activity under the National Labor Relations Act.

The question remains, if your employees say something negative on Facebook about your company, their fellow employees or their supervisors, can you terminate without running afoul of the National Labor Relations Act?

The answer depends on the facts surrounding the post(s). The test is whether the employee is engaging in activity solely for himself or on behalf of other employees.

Individual social media griping activity that is the “logical outgrowth of concerns expressed by the employees collectively” are considered “concerted” and protected under Section 8(a)(1) of the the National Labor Relations Act (“Act”). “Concerted activity includes ‘circumstances where individual employees seek to initiate or to induce or to prepare for group action’ and where individual employees bring ‘truly group complaints’ to management’s attention.” Meyers Industries, 281 NLRB 882, 885 (1986)

The following factors should be considered:

1. Is the post concerted activity?
2. Is the post directed at other employees?
3. Does the post suggest that the employees take some action?
4. Is the employee posting a Spokesperson for Common Concerns?
5. Does the post arise out of a previous union or employee group?

What this means is that not all online posts are protected. Two Advice Memorandums issued this July by the National Labor Relations Board, Office of The General Counsel regarding non-union companies provide guidance. In JT’s Porch Saloon & Eatery, Ltd., the NLRB found no concerted activity when a bartender complained to his step-sister on Facebook that he had not received a raise in five years, he was performing waiter’s work without tips, the Company’s customers were “rednecks” and he hoped the customers choked on glass as they drove home drunk. The Board found that the termination was not in violation of the Act because the post was not discussed with any other employees, before or after he wrote it and there had been no employee meetings or attempt to initiate group action regarding the tipping policy.

Similarly, in Wal-Mart, the NLRB found no concerted activity when a customer service employee, after an interaction with the Assistant Manager, posted the following comment on his Facebook page: “Wuck Falmart! I swear if this tyranny doesn’t end in this store they are about to get a wakeup call because lots are about to quit.” The Facebook friend responses were mixed with some friends responding favorably and others not. The customer service employee responded further by making negative comments regarding his supervisor, using profanity and claiming false advertisement on behalf of Walmart. Of course, a co- worker “friend” gave a copy of the post to the supervisor at issue and the supervisor required him to take down the post, suspended him for a “decision day,” and prepared a discipline report.

In defense, Walmart claimed that the postings were not concerted activity for mutual aid or protection, and even assuming so, the Charging Party’s use of profanity was so “opprobrious” as to deprive him of the Act’s protection. The Advice Memorandum found the customer service employee’s comments were solely about him and were “mere griping.” The comments did not look toward group action.

In contrast, the National Labor Relations Board issued a complaint alleging that the Hispanics United of Buffalo unlawfully discharged five employees because they took to Facebook to criticize working conditions, including work load and staffing issues. In this case, an employee, in advance of a meeting with management regarding working conditions, posted an allegation that employees did not do enough to help the organization’s clients. Five employees responded and defended citing work loads and staffing issues. The organization terminated the five defending employees because their defense constituted harassment of the employee originally mentioned in the post. The National Labor Relations Board Complaint claims that the Facebook discussion was protected concerted activity. Outcome of this complaint is not known at time of this post.

Social Media has been likened to a “loaded gun.” For all its benefits, it can be quite dangerous to the employer as well as the employees if it is not used appropriately. It is in the employer’s best interest to establish legal social media policies and train employees on the ramifications of their social media use as it relates to their employment.

However, employers should not impair an employee’s ability to act in concert or to effect some change in the terms and conditions of the workplace.

Just as employees should think before posting on Facebook, employers should think carefully before disciplining employees to avoid running afoul of the National Labor Relations Act. As unwise as it may be to complain about one’s employer on Facebook, it may be unlawful for an employer to discipline an employee for voicing such a complaint.

For more information and guidance, please check out the National Labor Relations Board Acting General Counsel Report on Social Media Cases.

Posted by Attorney Ruth A. Binger. Binger serves both emerging and mature businesses concentrating in corporate law, intellectual property and technology law, and labor and employment law. Her commitment to the success of small to medium-sized businesses, and her understanding of multi-faceted issues inherent in operations, are what distinguish Binger’s practice.

In a struggling economy, employers have to make difficult decisions pertaining to their businesses and employees. Faced with “hopefully” temporary losses in business, many employers are forced to terminate employees losing their experience and knowledge. On the other hand, if the employer elects to reduce hours, the employees receive lesser pay and are ineligible to collect unemployment benefits.

Fortunately, employers do have a unique alternative under the Missouri Employment Security Law whereby they can retain their hourly workforce and reduce hours while at the same time allowing their employees to receive a proportional supplement of unemployment benefits. This article applies only to such programs that involve hourly-paid employees.

Shared Work Program-Unemployment

Under Missouri law, employers can develop a shared work program with the Division of Employment Security of the Missouri Department of Labor and Industrial Relations. The program allows an employer to decrease the working hours of a specific group of employees, which includes a specified department, shift, or other unit of three or more employees.

The affected employees can continue to work for the employer at a reduced number of hours and also receive unemployment benefits in proportion to the reduction in hours and pay. For example, if the employer reduces work hours by 20% to 32 hours per week, the employee will receive 20% of her weekly benefit amount under unemployment insurance. Thus, an employee who earns $2,500 per month and is entitled to a $300 weekly benefit amount would receive 80% of her pre-plan wages and $60 in benefits each week under the plan. This program allows the employer to retain the knowledge and experience of the employees without having to drain the cash reserves of the company due to unneeded work hours.

Requirements to File – Missouri Law

A shared work plan under this program must satisfy the following requirements:

1. The plan applies to an affected unit of not less than three employees; 
2. The plan applies to at least 10% of the employees in the affected unit; 
3. The plan reduces the normal weekly hours of work of the employees by not less than 20% and not more than 40%; 
4. The plan describes the manner in which the employer treats the fringe benefits of each employee in the affected unit; 
5. The employer certifies that the implementation of a shared work plan is in lieu of temporary layoffs that would affect at least 10% of the employees in the affected unit and that would result in an equivalent reduction in work hours; and 
6. The plan must be approved by the collective bargaining agent if any of the employees in the plan are covered by a collective bargaining agreement.

Submission to Division of Unemployment

When an employer has drafted a shared work plan, it must submit the plan to the Division of Employment Security. The Division will accept or deny the plan within 30 days of receipt. If the plan is denied, the employer may either elect to exhaust its administrative remedies or file a new plan with the Division within 45 days. Any accepted plan remains in effect for only 12 full months.

The employer has the right to modify the plan to meet changed circumstances, but the modification cannot affect the expiration date originally set by the plan. The employer can always freely suspend the plan in order to return the employees to full-time employment. Given the restriction on plan modifications, it is critical for an employer to properly plan before implementing or modifying a shared work program.

Requirements to Maintain Plan

Once the plan is accepted by the Division, the employees affected still must satisfy the following requirements to receive unemployment benefits:

1. The individual is able to work, is available for work and works all available hours with the employer; 
2. The individual does not work more than the reduced hours specified in the plan; and 
3. The individual’s normal weekly hours of work have been reduced by at least 20% but not more than 40%, with a corresponding reduction in wages.

Under the shared work plan, the employee is under no obligation to seek other employment and will not be denied benefits on this ground. However, the employee may not receive shared work benefits for more than 26 calendar weeks during the 12-month plan.

Ramifications of Plan on Employer Tax Rates

Although the shared work program can aid the employer in reducing the number of employees who are terminated, the program will still affect the employer’s unemployment taxes in the same manner and to the same extent as other chargebacks of benefits. Thus, all benefits paid under the plan will be charged to the account of the participating employer for use in computing general tax rates. Although this will increase the employer’s tax rate, it may cause more or less of an economic impact than a termination depending upon the structure of the shared work plan. Therefore, an employer must carefully set the terms of the plan so it remains advantageous despite the increased unemployment tax rate.

With the shared work program, Missouri law provides employers with an opportunity to retain their full workforce through a reduction in hours and a proportional supplement of unemployment benefits. However, there are some drawbacks to the program such as the employer’s increase in unemployment tax rates. Depending upon the circumstances, the program may be a less attractive solution than an outright termination of employees. Despite these issues, the shared work program may provide Missouri employers and their employees a unique reduced hour program.

This article was co-authored by Ruth Binger & David Binder.

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Secondly, the EFCA forces companies to reach an agreement with the union within 90 days of the National Labor Relations Board certification of the union or either party can demand mediation. If an agreement is not reached at the mediation table within 30 days, the contract is referred to binding arbitration and the arbitration results will then be binding on both parties for two years.

Finally, the EFCA grants the Board the power to award liquidated damages at twice the amount of back pay and to impose civil penalties of up to $20,000 per violation.

These changes may seem overwhelming, unreasonable, and highly skewed in the union’s favor, yet the company is still in control. The company has the opportunity to create a culture now that encourages informed, engaged, and productive workers that have little incentive to organize.

Create your own competitive advantage in your industry by taking the actions below so the union walks away from your workforce and shows up at a competitor’s door instead. Wage your election campaign now by thinking and acting proactively!

1. Competitive Wages & Benefits—Outside & Inside

Companies should evaluate wages of similarly situated employees of other companies to determine if their workers are being paid a competitive wage. Similarly, companies should analyze their internal compensation system (salary/wage ranges and rates) to determine if compensation is set for “position” rather than individual and whether a uniform approach is used for length of service and experience. If there are disparities that cannot be justified, they should be evaluated.

2. Communication with Employees—What are the Wants?

Companies should allow employees to communicate with management regarding complaints and concerns. Methods of communication include having open door policies when appropriate, surveys, suggestion boxes, bulletin boards, job orientation, forms which communicate to the employee various hidden employee benefits, and company events such as picnics and holiday parties.

3. Education of Employees

Employees should be educated about what changes will occur should they unionize. Companies should point out that unionization brings changes to the company environment such as lack of ability to communicate directly with management, dues and fees which may go to international union efforts and political causes, fines for crossing picket lines, and employees being replaced if the union strikes.

4. Identification/Training of Supervisors

True supervisors may not vote in a union election. Thus, it is critical to identify who the supervisors are within the organization and define their job responsibility. Passage of the Re-Employment of Skilled Professional Employees and Construction Trade Workers Act (“Respect”) would cause workers who do not spend more than 50 percent of their time directly supervising others to lose their classification as a supervisor (currently only 10 to 15 percent) and thus be part of the proposed employee unit.

Analyze the duties of your employees to determine who is tasked with supervisory jobs and define their titles as such. Once identified, training, attitude and ownership mentality is crucial. Taking ownership of policies and decisions of management and not blaming unpopular decisions on management is essential to leadership.

Finally, train supervisors on the “do” and the “don’t do” of a union campaign—what to say and not to say, what management acts are prohibited and the importance of enforcing policies consistently.

5. Education of Management

Management should be educated as to the company’s position and strategy for dealing with union activity. Being familiar with whether competitors are facing unionization, having an ability to identify the major unions in your area, researching their organizing tendencies, strengths and tactics, and recognizing union advertising are critical.

Management should be able to respond to employees’ questions about union activity taking place within the company.

6. Obtain Legal Counsel

Legal counsel can help you review employment agreements, the company’s bulletin board announcements, confidentiality policies, and assist with the education of management about labor laws. Legal counsel can also help you train your management on how to wage a legal campaign. Legal counsel can also assist with terminating employees with a history of poor work performance.

7. Hiring & Promotion Policies—Who are the Agitators?

Companies should regularly review their hiring and promotion policies. Processes should include centralized final review by a human resource manager to ensure supervisors are consistent and use appropriate documentation. Poor and marginal employees almost always vote for a union; therefore, such employees should be terminated as soon as poor work performance is discovered.

Consistent and regular review processes that use objective determination to the extent possible and require specific examples and documentation in subjective cases will assist in indentifying both employees with stellar work performance and those with marginal work performance. Ensure that disciplinary action is reflected on employee’s performance evaluations.

8. Quality Working Conditions

Working conditions should be clean and safe. Companies should work to identify areas that could use improvement and maintain general safety standards.

9. Resolve Complaints Efficiently & Effectively

Companies should make sure the right people are placed in supervisory positions. Complaints by employees should be immediately and fairly resolved. The process should be viewed as fair and not needing the outside influence of a union. If employees complain about favoritism or disparate treatment by a supervisor, the company should address it immediately. Unions tend to exploit unaddressed employee complaints about supervisors when initially forming.

10. Teamwork

Employees that feel invested in a company as part of a team are less likely to be swayed by union leaders. Holding regular meetings where management communicates with the employees about the company and allowing communication by the employees regarding suggestions for process/ production, etc. improvements can help employees feel invested in the company.

Conclusion

Whether or not the Employee Free Choice Act is enacted, use this threat to improve your culture thus improving your productivity and profit. Study after study shows that when employees feel valued and heard, they don’t look to unions to protect them from the very one who is providing them the job. Likewise, with a 92 percent unorganized private sector, unions won’t throw “good money after bad” but will target work places that are more vulnerable to union representation.

Simply said, a union cannot create a vote of no confidence in management policy unless management gives it the keys.

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In the agrarian and manufacturing-oriented economy of the 1930′s and 1940′s, white collar workers had clearly defined decision-making responsibilities, were closer to management and were paid better than today. In such an economy, white collar workers were middle class in income, outlook, attitude and life.

In contrast, in a service-oriented economy, white collar workers are no longer middle class managers, but more likely to share traits associated with blue collar jobs such as repetitive, mechanical duties, rather than intellectual, creative responsibilities. Moreover, most white collar workers earn less than unionized blue collar workers and skilled craftsmen.

Summary. The Fair Labor Standards Act, as amended (“Act”), Section 13 (1)(1), provides an exemption from its minimum wage and overtime requirements for any employee employed in a bona fide executive, administrative or professional capacity (including any employee employed in the capacity of academic administrative, personnel or teacher in elementary or secondary schools or in the capacity of an outside sales employee).

Further, Section 13 (a)(17) of the Act provides an exemption from the minimum wage and overtime requirements for computer systems analysts, computer programmers, software engineers, and other similarly skilled computer engineers. The Act does not define terms, but charges the United States Department of Labor (“DOL”) with the duty to delineate and define white collar exemptions from “time to time.”

Test. Job titles are insufficient to establish exempt status. Whether an employee meets the exempt test is determined by whether the employees meet the (1) salary level test, (2) salary basis test, and (3) duties test under the Code of Federal Regulations (“CFR”). 29 CFR §541.2.

State Wage and Hour Laws. Employers in 18 states must check their workers’ status using both the new federal regulations and their own state law. States with laws governing overtime are Alaska, Arkansas, California, Colorado, Connecticut, Hawaii, Illinois, Kentucky, Maryland, Minnesota, Montana, New Jersey, North Dakota, Oregon, Pennsylvania, Washington, West Virginia and Wisconsin.

Salary Level Test

Automatic Exemption for Highly Compensated Employees

Rule. Highly compensated employees who earn a total of at least $100,000 per year will not be entitled to overtime pay if “the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, professional or administrative employee” and is paid at least $455 per week on a salary basis. 29 CFR §541.601(a)-(b).

The primary duty must consist of performing office, non-manual work. Manual workers, no matter how highly paid, are not eligible for this exemption. 29 CFR §541.601(d). The total annual compensation of $100,000 or more may consist of commissions, nondiscretionary bonuses and other nondiscretionary compensation earned during a 52 week period.

This compensation does not include credit for board or lodging, payments for medical or life insurance, or contributions to retirement plans or other fringe benefits. Employer may use any 52 week period as a year. If employer does not identify the 52 week year period in advance, a calendar year will provide. 29 CFR §541.601(b)(4).

For example, the employer pays the employee $80,000 as a base and $20,000 in commissions. If the employee does not earn the commission amount under the plan, the employer, in all events, must pay at least the remaining $20,000 within one month of year end for the prior year.

For example, the employers must pay employees, who fail to work a full year, a pro rata portion of the minimum amount based upon the number of weeks that employee has been employed. 29 CFR §541.601(b)(3).

Salary Basis Test

Docking. An employee must regularly receive a predetermined amount of salary on a weekly or less frequent basis that is not subject to reductions because of quality or quantity of work performed. Within the salary basis test, the  no-docking rule has always caused considerable consternation. 29 CFR §541.602.

Docking Rule. Employers can make deductions from guaranteed pay only under narrow circumstances, including: (i) when an employee was absent from work for a full day for personal reasons, other than sickness or disability; (ii) for absences of a full day or more due to sickness or disability, (iii) if taken in accordance with a bonafide plan, policy or practice providing wage replacement benefits; or (iv) for FMLA leave, jury duty, or for infractions of safety rules of major significance.

Now, one can also dock employees for unpaid disciplinary suspensions for a full day or more imposed in good faith for infractions of workplace conduct rules (that are in writing) such as sexual harassment policies or workplace violence.

Window of Correction. Under 29 CFR §541.603(c), “improper deductions that are isolated or inadvertent will not result in loss of the exemption for any employees subject to such improper deductions if the employer reimburses the employees for such improper deductions.” Reimbursement can be made at any time, even five days before trial. Employers can preserve the exemption by taking advantage of the safe harbor provision.

Safe Harbor. Employers must issue a clearly communicated policy prohibiting improper deductions, which includes a mechanism for employee complaints and immediate reimbursement of monies if the complaint is found valid. The policy, either oral or written, must be issued before the violation. This protects the employer from both inadvertent and/or deliberate deductions. “Clearly communicated” is met, for example, by “providing a copy of the policy to employees at the time of hire, publishing the policy in an employee handbook or publishing the policy on the employer’s Intranet.” 29 CFR §541.603(d).

If the employer fails to reimburse the employees for improper deductions after receiving employee complaints, final subsection (d) clarifies that the “exemption is lost during the time period in which the improper deductions were made for employees in the same job classification working for the same managers responsible for the actual improper deductions.” Id.

Minimum Guarantee PLUS Extras. Under §541.604 an exempt employee may receive additional compensation for hours worked beyond a normal workweek so long as a reasonable relationship exists between guaranteed amount and the actual amount earned. Interestingly, in contrast, an employer may also prospectively make adjustments to salary with a like adjustment to scheduled hours to accommodate its business needs.

If, however, the salary changes are so frequent as to make the salary the functional equivalent of an hourly wage, the court will treat “salary” as a sham. Wal-Mart Stores, Inc., Fair Labor Standards Act Litigation, 2005 WL 226227 (10^th Cir. (Col.)).

Always Non-Exempt. Laborers or other blue collar workers who perform repetitive work using their hands, physical skills, and energy, are not exempt. Such non-exempt “blue collar” employees gain skills and knowledge through apprenticeship and on the job training and not through a prolonged course of specialized instruction. 29 CFR §541.3(a).

Thus non-management production-line employees and non-management employees in maintenance, construction and similar occupations, such as carpenters, electricians, mechanics, plumbers, ironworkers, craftsmen, longshoremen, construction workers, laborers, and similar workers must be paid overtime.

Further, first responders (police officers, sheriffs, state troopers, police investigators or detectives, park rangers, firefighters, paramedics and other public safety or emergency personnel) who perform work such as preventing, controlling, or extinguishing fires; rescuing fire, accident, or crime victims, preventing or detecting crimes, conducting investigations or inspections for law violations, and pursuing, restraining, and apprehending suspects are eligible for overtime regardless of rank or whether they also have some supervisory duties. 29 CFR §541.3(b)(i).

Duties Test

Bona Fide Executive Exempt Classifications.
29 CFR §541.100. Includes titles such as chief executive officer, controller, vice president, director.

Test.

Salary Basis Test. 29 CFR §541.000(a)(1). Is paid at least $23,660 annually ($455 weekly) salary and regularly receives a predetermined amount constituting all or part of the employee’s salary, which is not subject to reduction because of variations in the quality or quantity of work performed.

Duties Test. 29 CFR §541.100(a)(2).

• Primary duty consists of managing the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof. Note, a customarily recognized department or subdivision must have a permanent status and a continuing function. 29 CFR §541.103.

• Customarily and regularly directs the work of two or more full-time employees or their equivalents (for example, one full-time employee and two half-time employees or four half-time employees).

• Has the authority to hire or fire other employees OR makes recommendations that carry particular weight as to the hiring, firing, advancement, promotion or any other change in status of other employees. (This is a new test.)

Examples of Management. 29 CFR §541.102. Management includes activities such as interviewing, selecting and training, setting and adjusting employees’ rate of pay and hours of work, directing the work of employees and maintaining production or sales records for use in supervision or control, etc.

Exemption of Business Owners. 29 CFR §541.101. Employees who own at least a bona fide 20% equity in the enterprise in which the employee is employed and who are actively involved in management. Employee does not have to meet the salary basis test nor supervise two or more
employees.

Supervision of Two Employees Test. 29 CFR §541.104.  Supervision can be distributed among two, three or more
employees. Each such employee, however, must customarily and regularly direct the work of two or more other employees or their equivalent. Further, with respect to a “shared employee,” hours worked by an employee cannot be credited more than once for different executives.

However, an employee who merely assists the manager of a particular department and supervises two or more employees only in the actual manager’s absence does not meet the requirement.

Particular Weight Test. 29 CFR §541.105. In determining “particular weight” factors to be considered include, but are not limited to, whether it is part of the employee’s job duties to make such suggestion and recommendation, the frequency with which such suggestions and recommendations are made or requested, and the frequency with which the employee’s suggestions and recommendations are relied upon.

Concurrent Duties. 29 CFR §541.106. A relief supervisor or working supervisor whose primary duty is performing nonexempt work on the production line in a manufacturing plant does not become exempt merely because the nonexempt production line employee occasionally has some responsibility for directing the work of other exempt employees when supervisor is not available. The analysis should be qualitative (i.e., the most important duty) rather than quantitative (i.e., the percentage of time spent performing management functions).

Administrative Exemption. Section 541.200 et seq.

Title Examples. Administrative employees assist with the running or servicing of the business. This category includes, but is not limited to, work in functional areas such as: tax, finance, accounting and budgeting, auditing, insurance, quality control, purchasing, procurement, safety and health, quality control, government relations, internet and database administration, legal, advertising and marketing, personnel management, human resources, employee benefits, public relations, and similar activities. 29 C.F.R. §541.201(b).

This would include an executive/administrative assistant to a business owner or senior executive, of a large business if such employee, without specific instructions or prescribed procedures, has been delegated authority regarding matters of significance. 29 CFR §541.203(d).

Salary. 29 CFR §541.200(a)(1). Is paid at least $23,660 annually ($455 weekly) and regularly receives a predetermined amount constituting all or part of the employee’s salary, which is not subject to reduction because of variations in the quality or quantity of work performed.

Duty. 20 CFR §541.200(a)(2)-(3).

• Primary duty consists of performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and whose primary dutyincludes the exercise of discretion and independent judgment with respect to matters of significance.

Administrative Tips.

Factors. Work must include the exercise of discretion and independent judgment with respect to matters of significance. 29 C.F.R. §541.202(b) lists some factors to consider:

(i) whether the employee has authority to formulate, affect, interpret, or implement management policies or operating procedures;

(ii) whether the employee carries out major assignments in conducting the operations of the business;

(iii) whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business;

(iv) whether the employee has authority to commit the employer in matters that have significant financial impact;

(v) whether the employee has authority to waive or deviate from established policies and procedures without prior approval;

(vi) whether the employee has authority to negotiate and bind the company on significant matters;

(vii) whether the employee provides consultation or expert advice to management;

(viii) whether the employee is involved in planning long or short term business objectives;

(ix) whether the employee investigates and resolves matters of significance on behalf of management;

(x) whether the employee represents the company in handling complaints, arbitrating disputes or
resolving grievances.

Other Examples of Administrative Employees. 29 CFR §541.203. Insurance claims adjusters, certain employees in the financial services industry, executive or administrative assistants to business owners or senior executives of large businesses, persons leading teams to complete the employer’s major projects (project manager), purchasing agents with authority to bind the company and human resource managers are examples listed in the regulations of employees who commonly qualify under the administrative employee exemption.

Administrative duties also include working directly with the management or business operations of an employer’s customers. Thus, employees acting as consultants to clients or customers may be exempt.

Not Covered. Employees performing examining work, grading, or those working as comparison shoppers do not commonly qualify under the administrative employee exemption. 29 CFR §541.203(h). The exercise of discretion and independent judgment must be more than the use of skill in applying well established techniques, procedures or specific standards described in manuals.

Therefore, clerical or secretarial work, recording or tabulating data or performing repetitive recurrent or routine work is not considered exempt work. Further, the fact that the employer may suffer financial losses if employee fails to perform does not meet the test (operating expensive equipment, manager entrusted with large sums of money).

Professional: Learned and Creative. 29 CFR §541.300. Includes titles such as accountant, nurse, engineer, composer, singer, graphic designer.

Test. 29 CFR §541.300(a)(1).

Salary. Is paid at least $23,660 annually ($455 weekly). Regularly receives a predetermined amount constituting all or part of the employee’s salary, which is not subject to reduction because of variations in the quality or quantity of work performed.

Note: For teachers, licensed or certified practitioners of law and medicine, medical interns and residents covered under this exemption, the salary basis and salary requirements do NOT apply.

Duties for Learned Professional.

Learned Professional. 29 CFR §541.301. To qualify for the learned professional exemption, an employee’s primary duty must be the performance of work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction. This primary duty test includes three
elements:

• The employee must perform work requiring advanced knowledge (generally not obtained at high school level);

• The advanced knowledge must be in a field of science or learning (mechanical act classifications areexcluded); and

• The advanced knowledge must be customarily acquired course of specialized intellectual instruction.

Administrative Tips for Learned Professional.

• Work Requiring Advanced Knowledge. 29 CFR §541.301(b). The phrase “work requiring advanced knowledge” means work which is predominately intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment, as distinguished from performance of routine menial, manual, mechanical or physical work. Advanced knowledge cannot be obtained at the high school level.

• “Science or Learning”. 29 CFR §541.301(c). The phrase “field of science or learning” includes the traditional professions of law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, chemical, and biological sciences, pharmacy and other similar occupations that have a recognized professional status as distinguished from the mechanical arts or skilled trades where in some instances the knowledge is of a fairly advanced type, but is not in a field of science or learning.

• “Customarily Acquired by Prolonged Study”. 29 CFR §541.301(d). The phrase “customarily acquired by a prolonged course of specialized intellectual instruction” restricts the exemption to professions where specialized academic training is a standard prerequisite for entrance into the profession. The best prima facie evidence that an employee meets this requirement is possession of the appropriate academic degree.

However, the word “customarily” means that the exemption is also available to employees in such professions who have substantially the same knowledge level and perform substantially the same work as the degreed employees but who attained the advanced knowledge through a combination of work experience and intellectual instruction.

Thus, for example, the learned professional exemption is available to the occasional lawyer who has not gone to law school, or the occasional chemist who does not possess a degree in chemistry. However, the learned professional exemption is not available for occupations that customarily may be performed with only the general knowledge acquired by an academic degree in any field, with knowledge acquired through an apprenticeship or with training in the performance of routine mental, manual, mechanical or physical processes.

The learned professional exemption also does not apply to occupation in which most employees have acquired their skill by experience rather than by advanced specialized intellectual instruction.

Duties for Creative Professional Exemptions. 29 CFR §541.302.

Creative Professional Examples. Includes titles such as actors, musicians, composers, painters, cartoonists, or persons holding more responsible writing positions in advertising agencies.

Test for Creative Professional.

• Primary duty consists of the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, manual, mechanical or physical work. 29 CFR §541.302(a).

• “Recognized field of artistic or creative “endeavor” includes writing, acting and the graphic arts. Inventive work is distinguishable from work that primarily depends on intelligence, diligence and accuracy. Determination must be on a case by case basis.29 CFR §541.302.

Computer-Related Exemptions. 29 CFR §541.400.

Job Titles. Employees who qualify for this exemption are highly-skilled and have achieved a level of proficiency in the theoretical and practical application of a body of highly specialized knowledge in computer systems analysis, programming or related work in software functions.

Although job titles alone are not determinative of the exemption applicability, the DOL lists the following as common job titles for this exemption: computer programmer, systems analyst, computer systems analyst, computer programmer analyst, applications programmer, application systems analyst, application systems analyst/programmer, software engineer, software specialist, systems engineer and systems specialist.

Test.

Salary. 29 CFR §541.400(b). Is paid at least $23,660 annually ($455 weekly) OR $27.63 per hour. That is, this exemption does NOT have to meet the salary basis requirement to regularly receive a predetermined amount constituting all or part of the employee’s salary, which is not subject to reduction because of variations in the quality or quantity of work performed IF paid at least $27.63 on an hourly basis.

Primary Duty consists of:

• The application of system-analyst techniques and procedures, including consulting with users to determine hardware, software or systems functional specifications;

• The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on andrelated to user or system design specifications;

• The design, development, testing, creation or modification of computer programs related to machine operating systems; or

• A combination of the aforementioned duties, the performance of which provides the same level of skills. 29 CFR §541.400(b)(1)-(4).

Administrative Tips.

Trainees. 29 CFR §541.705. Does not include trainees learning to become proficient in such areas or employees in these computer-related occupations who have not attained a level of skill and expertise which allows them to work independently and generally without close
supervision.

Computer Manufacture/Repair. 29 CFR §541.401. Does not include employees engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment. Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs, e.g. engineers, drafters and others skilled in computer-aided design software like CAD/CAM but who are not in computer systems analysis and programming occupations are excluded from the exception.

No Degree Required. Level of expertise and skill required is generally attained through a combination of education and experience in the field. Although employees commonly have a bachelor degree, no particular degree is
required.

Cases.

Data Process Manager – Not Covered. A data process manager was held not to be a bonafide executive where his primary duty was operating relatively simple data processing equipment and he supervised only one full-time and one part-time employee. Brennan v. Carl Roessler, Inc., 361 F.Supp. 229 (D. Conn. 1973).

Information Support Specialist – Not Covered. An information support specialist who installed and upgraded hardware and software on workstations, configured desktops, checked cables, replaced parts and “troubleshooted” Windows problems, all pursuant to predetermined specifications in the system design created by others, was not exempt. Maintaining computer systems within predetermined parameters does not rise of the level of “theoretical and practical application of highly-specialized knowledge. Martin v. Indiana Michigan Power Company, 381 F.3d 574, 581 (6^th Cir. 2004).

With respect to an employee who had very similar duties to the Martin employee above, a Court held that the administrative exemption was also not applicable because the duties were not directly related to management policies or general business operations of the employer. Jackson v. McKesson Health Solutions, LLC, 2004 WL 2453000 (D. Mass.) See also Turner v. Human Genome Sciences, Inc., 292 F.Supp. 2d 738 (D. Md. 2003); Burke v. County of Monroe, 225 F.Supp. 2d 306 (W.D. N.Y. 2002); and Koppinger v. American Interiors, Inc., 295 F. Supp. 2d 797 (N.D. Ohio 2003).

Senior Network Administrator – Not Covered. Senior network administrator/project manager who assists the User Support Manager with projects, assumes responsibility for network activities and oversees other information technology department personnel, performs operation system installations, troubleshoots, system integrates, and schedules work pertaining to network problems and software upgrades is not exempt either as an administrative or professional exemption according to the Department of Labor. Opinion Letter, Wage and Hour Division. May 11, 2001.

Outside Sales Person. 29 CFR §541.500 Includes titles such as salespersons, contract negotiators.

Test.

Salary. The salary basis and salary requirements do NOT apply for this exemption. That is, this exemption does NOT have the salary basis requirement to regularly receive a predetermined amount constituting all or part of the employee’s salary, which is not subject to reduction because of variations in the quality or quantity of work performed, AND this exemption does NOT require payment of $23,660 annually ($455 weekly).

Duties. 29 CFR §541.500(a).

Primary duty consists of making sales or obtaining orders for contracts for services or for the use of facilities for which consideration will be paid by the client or customer. Customarily and regularly is engaged away from the employer’s place or places of business.

Administrative Tips.

Outside Sales – Away from Employer’s Business. 29 CFR §541.502. The DOL eliminated the percentage limitation for time spent on outside sales work. An outside sales person typically makes sales at the customer’s place of business or home. “Outside sales” do not include sales made by mail, telephone, or over the Internet unless such contact is used together with personal sales calls.

Promotional Work. 29 CFR §541.503(a). Promotional work may or may not be exempt, depending on the situation. If the promotion activities are directed toward consummation of the employee’s own sales, it is exempt. If promotional activities (manufacturer’s representative) are designed to stimulate sales that will be made by someone else, activities are not exempt sales work.

Replenishing Stock. 29 CFR §541.503(c). Arrangement of merchandise on shelves or replenishing of stock is not exempt work unless it is incidental to and in conjunction with the employee’s own outside sales.

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What to Expect from Franchise System

Although the franchise model is no guarantee, the model does increase your chance of staying in business. Banks are more willing to lend to franchisees, given that 80% of independent small businesses close within seven to eight years of opening, compared to an estimated 10% of franchisees. Why the deviation? Primarily because a good franchisor should eliminate, control or manage many of the common mistakes small businesses make. From a good franchisor, at the minimum, you should expect name recognition, quality control, site selection, training, operational guidance, advertising and promotion.

Information regarding these critical facts should be obtained by a careful review of the franchisor’s offering circular or prospectus as required by the Federal Trade Commission Rule and various site registration and disclosure states (“Disclosure Documents”). Disclosure Requirements place you in a knowledgeable position at the earliest possible time in the business relationship and help you make an informed decision.

Your Due Diligence

If you have a passion for a certain type of business, and have found a model that you think will work, you need to perform as much due diligence as possible with the particular franchise system and model. Work in the business industry (if you don’t like what you are selling, you will fail), and visit with existing and terminated franchisees (from the Disclosure Documents, you will find the names and addresses). Check rival franchisors’ information and compare Disclosure Documents. Spend time determining the credibility and seasoning of the franchisor, given you are paying for the franchisor’s experience, honesty and past performance models. Keep in mind that many franchisors are startups themselves and may go out of business in a few years.

Accountant Input

Sit down with your accountant and ask him/her to review the franchisor’s numbers as to what it will “realistically” take in capital to start and maintain the business in the first couple of long lean years. You need to have an economic sense of the investment, including whether extensive remodeling may be acquired, whether the property where the unit is located will be leased or owned, whether there will be sufficient time to recoup the investment if the franchise is for a limited time. You will generally need to locate financing sources for the initial investment and working capital for at least the first year of operation. For example, a major fast food franchisee may require upwards of $300,000 in working capital plus a franchisee fee of at least $40,000 where a temporary help service or a dry-cleaning operation may require well under $80,000 in working capital and a considerably smaller franchise fee.

Attorney Guidance and Negotiation

Your attorney will help you evaluate the fairness of the deal from your point of view considering such key questions as: (i) whether you have an exclusive or nonexclusive territory and the significance of same; (ii) what controls the franchisor has over you as to the purchase of supplies, hours of operation, and choice of personnel, etc.; (iii) the specifications of your franchise term and whether your renewal rights are reasonable (remember, you are licensing a business model, you do not own it); (iv) the ramifications of the non-compete; (v) what fees (initial amount or down stroke), royalties and advertising fees are due and how are they paid; (vi) under what grounds may a franchisor terminate the franchise relationship and whether you are given a notice of default and opportunity to cure; and finally (vii) under what conditions you will be able to transfer your franchisee rights to a third party.

Conclusion

If you are looking to own your own small business, the franchise model may be right for you. You must, however, choose the particular franchise model and franchisor with a great deal of thought and research.

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Text of the Notice

The Veterans Benefit Improvement Act of 2004 (VBIA) amended the USERRA to require the employers to provide the notice “to persons entitled to rights and benefits under USERRA.” The Department of Labor has issued an interim final rule containing the text of the notice. Employers may meet this requirement by prominently displaying a poster with the notice where they customarily place notices for employees.

Over four hundred and sixty thousand members of the National Guard and Reserves have been mobilized since the President’s declaration of a national emergency following the attacks of September 11, 2001. As service members conclude their tour of duty and return to civilian employment, Congress has attempted to ensure that service members be fully informed of their USERRA rights, benefits and obligations. It is estimated that approximately eight million employers are affected.

Guaranteed Re-employment Rights

Under the USERRA, 38 U.S.C. Section 4301 et seq., Reservists receive the broadest and strongest of employment rights available under law: 1) for a five-year period, Reservists are legally guaranteed re-employment rights to the same job with the same status and salary; 2) employers are prohibited from discriminating against Reservists based on their military service; and 3) Reservists are also entitled to the same benefits of employment from their private employers as if they had not taken a break in military service. The USERRA is purposely set up to be Reservist-friendly, so beware. The burden of proof is placed upon the employer.

Under Section 4312, members of the armed forces are entitled to re-employment if they: 1) properly notify their employers of their need for a service-related absence; 2) take cumulative absence of no more than 5 years; and 3) properly reapply or report to work after their service ends. Any attempt to have an employee waive these rights is unenforceable. Courts have found that Section 4312 creates an unqualified right to reemployment to those who satisfy the service duration and notice requirements. Jordan v. Air Products and Chemicals, Inc., 225 F.Supp.2d 1206 (Pen D.C. 2002).

Guaranteed Benefit Right

Once re-employed, the service person cannot be denied any benefit of employment. The term “benefit” is defined as “any advantage, profit, privilege, gain status, account or interest (other than wages or salary for work performed) that accrues by reason of an employment contract or agreement or an employer policy, plan or practice and includes rights and benefits under a pension plan, a health plan, an employee stock ownership plan, insurance coverage and awards, bonuses, severance plans, supplemental unemployment benefits, vacations, and the opportunity to select work hours or location of employment”. Section 4303(2).

Examples of Denials of Benefits

Some examples of denials of benefits of employment would include the following: 1) transferring an employee to a job requiring him to work a less regular schedule with longer workdays; 2) denial of leave and “paper suspension” recorded in employee’s personnel file but never served, as the latter was disciplinary in nature and affected employee’s status or interest; 3) harassing an employee because of his military service; 4) denying an employee the opportunity to retain previous level of seniority or to advance employee to previous level he would have obtained; 5) treating employees on reserve duty differently than employees on other types of leave with regard to vacation leave; or 6) denying a Reservist a holiday because he did not work the day before or the day after the holiday. The Supreme Court in Fishgod v. Sullivan Drydock Repair Corp, 328 U.S. 275 (1946) aptly described the standard as: “The Veteran does not step back on the seniority escalator at the time he stepped off. He steps back at the precise point had he kept his position.” When you are grappling with the benefits to which a service person is entitled, visualize the employment escalator. Additionally, USERRA also requires that reasonable efforts (such as training) be made to enable returning service members to refresh or upgrade their skills to help them qualify for reemployment.

Terminated Only for “Cause”

After being re-employed, the service person is protected further under Section 4316. Section 4316(c) provides that a person who serves for over thirty days and is reemployed under the USERRA shall not be discharged from such employment “except for cause” for certain time periods. The decision to terminate cannot be motivated, even in part, by the employee’s membership, application, or participation in the armed forces. Section 4311(c)(1). Such military service is a “motivating factor” for termination if, at the time of termination the employer was asked what were its reasons, and if it gave a truthful response, one of those reasons would be the employee’s military position or related obligations. Robinson v. Morris Moore Chevrolet Buick, 974 F.Supp. 571 (E.D. Tex. 1997). In fact, immediate termination following re-employment can be a factor in inferring discrimination. Lisek v. Brightwood Corp., 278 F.3d 895 (9th Cir. 2002).

Conclusion

The new posting requirement should help both employers and Reservists understand the nature and extent of the rights, obligations and benefits given to returning Reservists under USERRA.

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There are three possible applicable exemptions available to avoid overtime pay for information technology jobs. They are: (1) the computer related exemption under 29 CFR Section 541.400; (2) the administrative exemption under 29 CFR Section 541.200; and (3) the executive exemption under 29 CFR Section 641.100. This article will focus only on the computer related exemption.

Computer Exemption Requires Skill & Proficiency

Under the applicable regulations, employees who qualify for the computer exemption must not only be highly skilled but they also must have achieved a level of proficiency in the “theoretical and practical application of a body of highly specialized knowledge in computer systems analysis, programming or related work in software functions.” Although a job title alone is not determinative of the exemption’s applicability, the Department of Labor lists the following as common job titles for this exemption: computer programmer, systems analyst, computer systems analyst, computer programmer analyst, applications programmer, application systems analyst, application systems analyst/programmer, software engineer, software specialist, systems engineer and systems specialist. 29 CFR Sections 541.400-402. Although covered employees commonly have a bachelor’s degree, it is not required and expertise and skill can be combined through a combination of education and experience in the field.

Two Pronged Test — Salary & Primary Duty

Turning to the applicable two pronged test, companies must look at the employee’s salary and the nature of the employee’s primary duty. First, the employee must be paid at least $23,660 annually ($455 weekly) or $27.53 per hour. Very favorably, payment of $27.53 per hour allows the company to avoid the salary basis test. The salary basis test requires the employee to regularly receive a predetermined amount constituting all or part of the employee’s salary. That amount cannot be subject to reduction because of variations in the quality or quantity of work performed.

Secondly, the employee’s primary duty must consist of the following: (1) the application of system-analyst techniques and procedures, including consulting with users to determine hardware, software or systems functional specifications; (2) the design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; (3) the design, documentation, testing, creation or modification of computer programs related to machine operating systems; or (4) a combination or the aforementioned duties, the performance of which provides the same level of skills. 29 CFR Section 541.400.

For example, applying the above test to “help desk” employees, a common misclassification, a recent Court decision holds that “help desk” employees are nonexempt. In Martin v. Indiana Michigan Power Company, 381 F.3d 574 (6th Cir. 2004), the Court ruled that the employee’s maintenance of computer systems within predetermined parameters does not rise to the level of “theoretical and practical application of highly specialized knowledge.” Martin was an information support specialist working in the company’s self described “maintenance organization that takes care of computer systems.” He had no education or training in systems engineering. He was responsible for installing and upgrading hardware and software on workstations, configuring desktops, checking cables, replacing parts, testing and troubleshooting Windows problems. The Court held that Martin merely consulted with users for purposes of repair and user support versus actually determining hardware, software or system functional specifications. Likewise, any testing that Martin did was for the purpose of testing things to determine what was wrong with the workstation, not the type of testing involved in actually creating a system.

Additional Exclusions from “Computer Exemption”

Trainees learning to become proficient in the areas cited above are similarly not covered. Neither are employees, although having a title, who have not attained the level of skill and expertise which allow them to work independently and generally without close supervision.

Also excluded from the exemption are employees engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment. Further, employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs, e.g. engineers, drafters and other skilled in computer-aided design software like CAD/CAM but who are not in computer systems analysis and programming occupations, are also excluded from the exemption 29 CFR Section 541.401.

Conclusion — Offensive and Defensive Strategy

Companies should be prepared to defend their computer related exemption conclusions by compiling detailed information about the employee’s primary duties, the processes actually assigned to the employee, and the applicable computer systems analysis, programming or software engineering required.

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When an employee approaches a lawyer to remedy that workplace “wrong”, the lawyer is often forced to advise the anguished employee that he or she attended law school, not justice school. Nonetheless, a lawyer’s duty to that complaining client is to look for certain acts, suspect classifications and/or factual patterns that evidence illegal aniums or unlawful motive. Accordingly, companies should plan for the worst, and attempt to avoid the more common minefields with sound policies and training.

First Reason – Involvement of “love” in the workplace – Sex Harassment Issues

Yes, the workplace can be like high school charged with ever ending dramas that encourage unprofessional interactions. Yet, most love affairs in the workplace do not end happily. Rather, the most likely results are hurt feelings, low productivity, appearance of inequality, and unfortunately, the junior employee being terminated/demoted or placed on the non-performing list. Query, what should companies do to prevent what some people would argue are failties and inevitabilities of the human condition?

Simply increase the cost of bad choices and promulgate and enforce a strict anti-harassment policy. Companies should promulgate policies that prohibit or strongly discourage supervisor/subordinate or co-worker dating. Policies should require supervisors, on penalty of termination, to disclose such relationships. Failure to disclose should mean loss of the person’s livelihood. Companies should further prohibit manager from supervising relatives, spouse or others whom they are having a non-professional relationship. In addition, Companies should promulgate anti-harassment policies, actively and immediately investigate all complaints, and take the appropriate steps to stop the harassment.

Second Reason – Missing the “Forest for the Trees” – Protested Activity

Employees who engage in protected activity cannot be retaliated against by the Company with respect to their terms and conditions of employment. So, what is protected activity? Of course, it is filing an agency charge with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor, Occupational Safety & Health Administration or the applicable civil rights state agency. It also arises, however, when an employee requests family and medical leave act, files a worker’s compensation claim, files an internal complaint of harassment/discrimination or reports a Sarbanes-Oxley issue.

So, what overall prevention/execution strategy should a wise company use? A company should proceed on two tracks with discipline/discharge decisions. First, human resources should fairly, impartially and thoroughly investigate and determine whether the employee actually did/did not do what is alleged. Secondly, human resources should review the employee’s file and determine what protected activity the employee actually engaged in during the last year. If protected activity is an issue, companies must be able to prove (i) that a reasonable rule exists that is consistently enforced in an even handed manner and/or (ii) the company treated other similarly situated employees in the past in a similar manner. If the company cannot meet these tests, the company should stop, back up and reconsider the discipline strategy. Human beings are consistent; the unacceptable behavior will most surely surface again and the company will be better armed with a defense.

Third Reason – Employing all “Chiefs and no Indians” – Exempting Salaried Employees from Overtime

Companies abhor overtime. Yet, employees also hate being called “hourly” because of a perceived lack of prestige. Companies and employees prefer the “salaried designation” and interpret it as “exempt” under the Fair Labor Standards Act. The word “exempt”, which is a legal principle allowing an employer to pay no overtime for hours worked over forty, is a simple word that belies its complexity. The exempt regulations, along with those newly issued in April of 2004, are confusing and complicated with respect to how to identify an exempt employee. Many class action lawsuits are filed in this area and employers have paid millions of dollars to remedy incorrect designations. For instance, in the last 36 months, Bank of America paid its employees 4.1 million, Perdue Farms paid its employees 10 million and Starbucks Corporation paid its employees 18 million.

So, what does a company do given the complexity of the issue? All companies should keep time records, whether employees are exempt or not, since the burden of proof rests with the company. Without records, the employee’s recollection and set of records trump. Secondly, given the newly issued exempt regulations, companies should carefully review the exempt categories of executive, administrative, professional and outside salesperson to determine if the employee’s salary and job duties actually fit categories. Many job titles and classifications are ancient and have no real relation to the actual job duties performed. Job duties have changed remarkably in the last ten years. Much of the “discretion and independent judgment” that employees exercised in the past, a prerequisitie for many exempt categories, has been eliminated through technology.

Many garden variety employee claims fall in one of the three areas above. Think ahead, and avoid the obvious traps by preventive and thoughtful strategies. Or as one wise person stated, “Having done all – stand.”

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Workplace violence is unfortunately part of the employment landscape and should be anticipated and minimized. There are many legal doctrines that create employer liability in this area. Under the common law doctrine of respondeat superior, an employer is vicariously liable for the tortious acts its employees commit within their scope of employment. More specifically, the legal theories of negligent hiring, supervision and retention are premised on the principle that a person carrying on a business through employees is responsible for the harm resulting to employees who are forced to come into contact with other employees who are reasonably foreseeable to cause harm.

Under Section 571.030 of the Missouri Revised Statutes, a person with a valid concealed carry endorsement may carry a firearm on his/her person or in his vehicle and not commit the crime of unlawful use of a weapon. In order to obtain the endorsement, the person must apply to the sheriff of a city or county where the person resides. The person must be at least twenty-three years old, a United States Citizen and either a Missouri resident for six months or a member of the armed forces stationed in Missouri. The Statute attempts to weed out applicants with criminal convictions, dishonorable discharges from the military, etc. but leaves it up to the sheriff to verify the information. Endorsement holders must also pass background checks (fingerprint checks) and prove firearms training. Upon receiving certification of qualification from the sheriff’s office, the person must then apply to the Director of Revenue and have his/her driver’s license or non-driver’s license reissued containing the concealed weapon endorsement. A person’s status as a holder and any information submitted on their application is not public information.

The statute does list places where endorsement holders are not allowed to carry concealed weapons. This list includes airports, police stations, school and universities, day care centers, courts, establishments that primarily serve alcoholic beverages, casinos, amusement parks, places of worship, sports arenas or stadiums seating at least 5,000 people, and hospitals. Governments and private property owners can also join this list if they choose.

If a property owner, business or commercial lessee, wants to “opt out” and prohibit persons holding the endorsement from carrying a concealed weapon on their premises, they must place signs relating this message in one or more conspicuous places. The signs must be 11×14 inches in size with letters of at least one inch. The employer can prohibit both employees and other persons with endorsements from carrying concealed weapons on their company premises. An employer may also prevent employees or others from carrying concealed weapons in the employer’s vehicles.

Many states with similar laws, such as Tennessee, are having a difficult time in processing all of the endorsement applications with the required statutory detail. Employers cannot, as seen in other states, rely exclusively on the thoroughness of such checks to screen employees. Employers may want to consider performing their own background checks to avoid claims of negligent hiring or retention.

At the minimum, employers should consider doing two things. First, consider adopting a well-drafted written policy prohibiting weapons in the workplace and then be prepared to implement it and enforce the policy. Such a policy should:

• note that it is based on the employer’s duty to provide a safe workplace
• be broad enough to include concealed weapons brought onto the premises by employees and their invitees
• expressly state that the employer is allowed to prohibit concealed weapons by statute
• contain precise definitions of terms such as “employees,” “weapons” and “possess”
• incorporate a notice requirement, such as the statutorily-mandated signage
• include a provision authorizing the employer to conduct searches
• require employees to sign consent forms authorizing the employer to search lockers, desks, etc. on company property

Employers should review the policy with their employees and require them to sign an acknowledgment that each employee reviewed the policy. Furthermore, and most importantly, employers should strictly enforce the policy and do so equally among the employees. Although the policy’s existence itself may provide protection against legal liability, failure to enforce it may be evidence of an employer’s negligence.

Secondly, the employer should consider placing sign(s) meeting the statutory requirements mentioned above at their place of business prohibiting weapons in the workplace.

In light of the new concealed carry law, such steps should help employers protect themselves against legal liability for workplace violence.

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Mandatory employment arbitration agreements are entered prior to a dispute via a written contract. Arbitration clauses are commonly found in employment applications, employment manuals, or stand alone agreements. Such clauses require employees to submit any employment dispute to one or more impartial arbitrators for final and binding arbitration. Employment arbitration differs from other commercial arbitration proceedings; a mandatory employment arbitration clause must not remove remedies that an employee would otherwise have if the employee pursued the matter in civil litigation. Those remedies include the recovery of litigation expenses, including expert witness fees, attorneys’ fees, compensatory damages and punitive damages. This unique requirement for employment arbitration clauses is sometimes referred to as the “Remedy Rule.”

This article explores six critical factors in evaluating the pros and cons of employment arbitration. Mandatory employment arbitration is not a panacea, and many small employers may be better off relying on the civil litigation system.

Factor One

Arbitration is less expensive than civil litigation. Dispute resolution through arbitration proceeds more rapidly than litigation; an arbitration case is generally resolved in six months, whereas an average civil litigation case takes twenty-one months. The relatively rapid resolution achieved in arbitration reduces average attorneys’ fees from $130,000.00 in litigation to $20,000.00 in arbitration. In addition to providing a more expedius resolution, arbitration discovery and pre-trial proceedings are more streamlined, further reducing the cost of resolution. Discovery is limited, the legal rules are less formal, and parties to arbitration do not have to wait for a backlog to clear. Although written discovery is allowed, depositions are generally few (which can each cost between $5,000.00 and $10,000.00.

However, negatives of arbitration include the costs by the employer for administering the private dispute resolution system. The Remedy Rule requires the employer to pay the arbitrator’s fees ($1000 to $1200 per day per arbitrator) and the filing cost ($300.00 and up, depending upon the amount claimed). Additionally, employees receive more of an advantage in arbitration in that they are allowed to introduce evidence that may not have been allowed in civil litigation. Therefore, although the cost advantages benefit both sides, the more lenient rules in arbitration benefit employees.

Factor Two

Unlike civil proceedings that contain screening mechanisms such as pre-trial motions, arbitration does not allow for filtering and disposal of cases before trial. This useful tool in litigation includes pre-trial motions such as motions to dismiss for failure to state a claim, failure to exhaust administrative remedies, and summary judgment. In 1994, 3500 discrimination cases were filed in federal court; sixty percent of these cases were decided by a pre-trial motion, with the employer succeeding in an overwhelming 98% of these pre-trial determinations.

Factor Three

Arbitration is more predictable than litigation. Arbitration is presided over by an arbitrator with expertise in a given field of law, and the absence of a jury generally predicates consistency in damage rewards. This predictability inevitably increases the pressure on both parties to settle for more reasonable amounts due to a fear of a runaway jury. On the other hand, huge verdicts are frequently overturned. Many of the most highly publicized employment verdicts have been reduced or even overturned either as a matter of law or on appeal. Nonetheless, employers would be foolish not to give predictability extra weight if the employer faced a suit in a plaintiff-friendly jurisdiction.

Factor Four

Arbitration programs allow employees more access to the legal system. This increased access adversely affects employers by increasing the total number of active claims and therefore increasing costs. Without an arbitration alternative, many employees abandon meritorious claims because of the high cost associated with litigation. With an arbitration program, the employees are assured access. Employers, accordingly, will have to invest more in human resource professionals and create internal systems that minimize the number of disputes. Thus, an arbitration policy will increase the overall number of active disputes by facilitating the process by which employees and applicants bring employment related claims.

Factor Five

Arbitration awards are generally final and binding. Arbitration decisions are typically not subject to appeal except in extraordinary situations; judicial review of arbitration awards is therefore limited. This leaves a party with little means to challenge an award that it believes is unjust or not supported by law. An employer who loses an arbitration proceedings generally will not obtain a review of the award, leaving the door open to ghastly awards with which the employer is stuck. In a civil proceeding, there is some evidence that decisions on appeal favor employers. Thus, appeals process afforded by the civil system undeniably gives employers bargaining leverage over prevailing, but financially tapped, plaintiffs.

Factor Six

The limited studies available all indicate employees win more often in arbitration, but are awarded lesser amounts.

Accordingly, the key question for your business is, given the factors set forth above, would a mandatory arbitration program create a cost savings for your business. Mandatory arbitration programs are best suited for large employers who invest heavily in human resource professionals. For small employers, the increased number of employment disputes will require more investment in human resources and payment for the costs of the private dispute system. These costs may not overweigh the runaway jury consideration factor given the filtering and appeal opportunities available in civil litigation. For smaller employers, the critical inquiry is whether the costs of implementing a preventative strategy like a mandatory arbitration program outweigh the risks of reliance on the unfriendly civil litigation model to shield it form lawsuits?

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