Employer’s Legal Handbook

14th Edition

Attorney Fred S. Steingold

Table of Contents
Chapter 1 – Hiring.................................................................................................................................. 1
Learning Objectives ............................................................................................................................. 1
Introduction.......................................................................................................................................... 1
Legal Guidelines for Hiring Employees ................................................................................................. 1
Avoiding Illegal Discrimination.......................................................................................................... 1
Respecting Applicants’ Privacy Rights.............................................................................................. 2
Avoiding False Promises of Job Security.......................................................................................... 3
Prevent Negligent Hiring Claims....................................................................................................... 4
Protect Against Unfair Competition................................................................................................... 5
Hiring Young Workers ...................................................................................................................... 7
Hiring Immigrants............................................................................................................................. 7
Job Descriptions .................................................................................................................................. 7
Necessary Elements ........................................................................................................................ 7
Permitted Discrimination .................................................................................................................. 8
Job Advertisements ............................................................................................................................. 8
Job Applications................................................................................................................................... 9
Avoiding Unlawful Questions............................................................................................................ 9
The Legal Effect of Job Applications .............................................................................................. 11
Interviews .......................................................................................................................................... 12
Interviewing Protocol...................................................................................................................... 12
Legal Restrictions on Questions ..................................................................................................... 13
Testing .............................................................................................................................................. 13
Skills Tests .................................................................................................................................... 14
Aptitude and Psychological Tests................................................................................................... 14
Honesty Tests................................................................................................................................ 14
Medical Tests ................................................................................................................................ 15
Drug Tests ..................................................................................................................................... 16
Investigations..................................................................................................................................... 17
The Fair Credit Reporting Act......................................................................................................... 17
Information from Former Employers ............................................................................................... 18
School Transcripts ......................................................................................................................... 19
Credit History ................................................................................................................................. 19
Criminal History ............................................................................................................................. 20
Driving Records ............................................................................................................................. 20
Making a Job Offer ............................................................................................................................ 21
Rejecting Applicants .......................................................................................................................... 23
Tax Compliance................................................................................................................................. 23
Immigration Law Requirements.......................................................................................................... 24
New Hire Reporting Form .................................................................................................................. 25
Review Questions .............................................................................................................................. 26
Review Answers ................................................................................................................................ 27

Chapter 2 – Personnel Practices ........................................................................................................ 29

Learning Objectives ........................................................................................................................... 29
Introduction........................................................................................................................................ 29
Employee Files .................................................................................................................................. 29
Correcting Mistakes ....................................................................................................................... 30
Confidentiality ................................................................................................................................ 30
Medical Information ....................................................................................................................... 30
Access by Employees .................................................................................................................... 31
Informing Employees ..................................................................................................................... 31
Employee Handbooks ........................................................................................................................ 32
Advantages ................................................................................................................................... 32
Contents ........................................................................................................................................ 32
 Table of Contents

Documenting an Employee’s Acceptance ...................................................................................... 34

Employee Performance Reviews ....................................................................................................... 35
Benefits of Evaluations .................................................................................................................. 35
The Evaluation Process ................................................................................................................. 36
Sample Employee Evaluation Form ............................................................................................... 37
Disciplining Employees ...................................................................................................................... 39
Review Questions .............................................................................................................................. 41
Review Answers ................................................................................................................................ 42

Chapter 3 – Wages and Hours ............................................................................................................ 45

Learning Objectives ........................................................................................................................... 45
Introduction........................................................................................................................................ 45
Overtime and Minimum Wage Requirements ..................................................................................... 45
Employees Who Are Always Nonexempt ....................................................................................... 46
Employees Who Are Always Exempt ............................................................................................. 47
Employees Who Are Exempt If They Meet Certain Requirements .................................................. 47
Employees Who Are Exempt from Overtime Only .......................................................................... 52
Paying a Minimum Wage ............................................................................................................... 53
Paying Overtime ............................................................................................................................ 53
Equal Pay Requirements ................................................................................................................... 55
How to Pay Employees ...................................................................................................................... 56
Calculating Work Hours ..................................................................................................................... 56
Commuting Time ........................................................................................................................... 57
On-Call Time ................................................................................................................................. 57
Sleep Time .................................................................................................................................... 57
Lectures, Meetings, and Training Seminars.................................................................................... 58
Meal and Rest Breaks.................................................................................................................... 58
Record-Keeping Requirements .......................................................................................................... 58
Child Labor Rules .............................................................................................................................. 59
Agricultural Jobs ............................................................................................................................ 59
Nonagricultural Jobs ...................................................................................................................... 60
Payroll Withholding ............................................................................................................................ 61
Meals, Housing, and Transportation ............................................................................................... 61
Debts Owed to an Employer .......................................................................................................... 61
Debts and Wage Garnishments ..................................................................................................... 62
Child Support ................................................................................................................................. 62
Back Taxes.................................................................................................................................... 62
The Consequences of Bending the Rules .......................................................................................... 62
Review Questions .............................................................................................................................. 64
Review Answers ................................................................................................................................ 66

Chapter 4 – Employee Benefits........................................................................................................... 69

Learning Objectives ........................................................................................................................... 69
Introduction........................................................................................................................................ 69
Health Care Coverage ....................................................................................................................... 69
Types of Coverage ........................................................................................................................ 70
Continuing Coverage for Former Employees .................................................................................. 71
Health Savings Accounts ............................................................................................................... 72
Retirement Plans ............................................................................................................................... 73
Defined Benefit Plans .................................................................................................................... 73
Defined Contribution Plans ............................................................................................................ 73
Meeting IRS and ERISA Requirements .......................................................................................... 75
Other Employee Benefits ................................................................................................................... 76
Life Insurance ................................................................................................................................ 76
Disability Insurance ........................................................................................................................ 76
Educational Assistance Programs .................................................................................................. 77
Dependent Care Assistance........................................................................................................... 77

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Adoption Assistance Programs ...................................................................................................... 78

Review Questions .............................................................................................................................. 79
Review Answers ................................................................................................................................ 80

Chapter 5 – Taxes ................................................................................................................................ 83

Learning Objectives ........................................................................................................................... 83
Introduction........................................................................................................................................ 83
Employer Identification Numbers........................................................................................................ 84
How to Apply ................................................................................................................................. 84
When to Get a New Number .......................................................................................................... 86
Federal Employment Taxes ............................................................................................................... 86
Federal Income Tax Withholding (FIT) ........................................................................................... 86
Social Security Taxes (FICA) ......................................................................................................... 86
Federal Unemployment Taxes (FUTA) ........................................................................................... 87
Periodic Payments ......................................................................................................................... 87
Federal Self-Employment Taxes ........................................................................................................ 88
Federal Tax Deductions for Salaries and Other Expenses .................................................................. 89
Salaries ......................................................................................................................................... 89
Vacation Pay ................................................................................................................................. 89
Bonuses and Gifts ......................................................................................................................... 89
Meals and Lodging ........................................................................................................................ 89
Fringe Benefits .............................................................................................................................. 90
Independent Contractors.................................................................................................................... 91
Statutory Employees .......................................................................................................................... 92
Review Questions .............................................................................................................................. 93
Review Answers ................................................................................................................................ 94

Chapter 6 – Family and Medical Leave ............................................................................................... 95

Learning Objectives ........................................................................................................................... 95
Introduction........................................................................................................................................ 95
Who Is Covered ................................................................................................................................. 95
Reasons for Taking a Leave .............................................................................................................. 96
Family Health Problems ................................................................................................................. 96
Employee’s Health Problems ......................................................................................................... 97
Birth, Adoption, or Foster Care ....................................................................................................... 97
Leave for Military Families ............................................................................................................. 97
Scheduling Leave .............................................................................................................................. 98
Temporary Transfer to another Job .................................................................................................... 99
Substituting Paid Leave ..................................................................................................................... 99
Advance Notice of Leave ................................................................................................................. 100
Certification ..................................................................................................................................... 100
Unclear or Incomplete Certifications ............................................................................................. 101
Second and Third Opinions.......................................................................................................... 102
Recertification .............................................................................................................................. 102
Health Benefits ................................................................................................................................ 102
Returning to Work ............................................................................................................................ 103
Job Protection.............................................................................................................................. 103
Exemption for Highly Paid Employees.......................................................................................... 103
Fitness to Work............................................................................................................................ 104
Related Laws ................................................................................................................................... 104
State Family and Medical Leave Laws ......................................................................................... 104
Americans with Disabilities Act ..................................................................................................... 104
Paid Sick Leave Laws .................................................................................................................. 105
Enforcement .................................................................................................................................... 105
Review Questions ............................................................................................................................ 106
Review Answers .............................................................................................................................. 107

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Chapter 7 – Health and Safety........................................................................................................... 109

Learning Objectives ......................................................................................................................... 109
Introduction...................................................................................................................................... 109
The Occupational Safety and Health Act .......................................................................................... 109
Covered Employers ..................................................................................................................... 110
Safety Standards ......................................................................................................................... 110
Posting, Reporting, and Record Keeping...................................................................................... 110
Training ....................................................................................................................................... 111
Inspections .................................................................................................................................. 112
Penalties for Violations ................................................................................................................ 113
Workers’ Rights ........................................................................................................................... 113
Getting Help .................................................................................................................................... 114
Worksite Consultations ................................................................................................................ 114
Safety Codes ............................................................................................................................... 114
State OSHA Laws ............................................................................................................................ 115
Hazardous Chemicals ...................................................................................................................... 116
Workers’ Compensation ................................................................................................................... 116
Coverage Requirements .............................................................................................................. 117
Arranging for Coverage................................................................................................................ 117
Controlling Costs ......................................................................................................................... 117
Injuries and Illnesses Covered ..................................................................................................... 118
Benefits Paid ............................................................................................................................... 119
Independent Contractors.............................................................................................................. 119
Disease Prevention.......................................................................................................................... 120
Tobacco Smoke............................................................................................................................... 120
Drug and Alcohol Abuse .................................................................................................................. 121
Illegal Drug Use ........................................................................................................................... 121
Alcoholism ................................................................................................................................... 123
Repetitive Stress Disorder ............................................................................................................... 123
Review Questions ............................................................................................................................ 124
Review Answers .............................................................................................................................. 125

Chapter 8 – Illegal Discrimination ..................................................................................................... 127

Learning Objectives ......................................................................................................................... 127
Introduction...................................................................................................................................... 127
Title VII of the Civil Rights Act .......................................................................................................... 128
Businesses Covered .................................................................................................................... 128
Discrimination Prohibited ............................................................................................................. 128
EEOC Enforcement of Title VII ..................................................................................................... 129
Retaliation ................................................................................................................................... 130
Harassment ..................................................................................................................................... 132
Sexual Harassment ..................................................................................................................... 132
Harassment Based on Other Characteristics ................................................................................ 133
Complying With the Law .............................................................................................................. 133
Preventing Harassment................................................................................................................ 135
Age.................................................................................................................................................. 135
The Age Discrimination in Employment Act .................................................................................. 135
Older Workers Benefit Protection Act ........................................................................................... 136
Pregnancy ....................................................................................................................................... 137
Citizenship ....................................................................................................................................... 138
Genetic Information ......................................................................................................................... 138
Religion ........................................................................................................................................... 139
Sexual Orientation ........................................................................................................................... 140
Gender Identity ................................................................................................................................ 140
State and Local Antidiscrimination Laws .......................................................................................... 141
Review Questions ............................................................................................................................ 142
Review Answers .............................................................................................................................. 144

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Chapter 9 – Workers With Disabilities .............................................................................................. 147

Learning Objectives ......................................................................................................................... 147
Introduction...................................................................................................................................... 147
The Americans with Disabilities Act .................................................................................................. 147
Businesses That Are Covered.......................................................................................................... 147
Who Is Protected ............................................................................................................................. 148
People With Disabilities................................................................................................................ 148
Regarded as Impaired ................................................................................................................. 149
People Who Are Qualified for the Job .......................................................................................... 150
Exceptions to Coverage ................................................................................................................... 151
Users of Illegal Drugs................................................................................................................... 151
Gays and Lesbian Workers .......................................................................................................... 151
Specified Conditions and Behaviors ............................................................................................. 151
Physical and Psychological Characteristics .................................................................................. 151
Providing Reasonable Accommodations .......................................................................................... 152
When Accommodations Are Required.......................................................................................... 152
Undue Hardship ........................................................................................................................... 152
Deciding What Accommodations Are Needed .............................................................................. 153
Improving Accessibility................................................................................................................. 154
Other Types of Accommodations ................................................................................................. 154
Workers With Emotional or Mental Impairments ............................................................................... 155
Covered Disorders ....................................................................................................................... 155
Handling Psychiatric Information .................................................................................................. 156
Reasonable Accommodations...................................................................................................... 156
Unacceptable Conduct ................................................................................................................. 157
Financial Assistance ........................................................................................................................ 157
Tax Credit for Small Businesses .................................................................................................. 157
Tax Deduction for Removing Barriers........................................................................................... 157
Health and Safety Standards ........................................................................................................... 158
Medical Exams ................................................................................................................................ 159
Enforcement .................................................................................................................................... 159
Review Questions ............................................................................................................................ 161
Review Answers .............................................................................................................................. 163

Chapter 10 – Termination .................................................................................................................. 165

Learning Objectives ......................................................................................................................... 165
Introduction...................................................................................................................................... 165
Wrongful Discharge Cases............................................................................................................... 165
Statutes ....................................................................................................................................... 165
Court Decisions ........................................................................................................................... 166
Violation of Public Policy .............................................................................................................. 167
Guarding Against Legal Claims ........................................................................................................ 167
Having a Valid Reason ................................................................................................................ 167
Safely Handling Layoffs ............................................................................................................... 168
Guidelines for Firing Employees....................................................................................................... 168
Contractual Commitments............................................................................................................ 168
Lawful Reasons for Firing ............................................................................................................ 169
Independent Review .................................................................................................................... 170
Investigating Complaints Against Workers........................................................................................ 170
The Investigation ......................................................................................................................... 170
Hiring Investigators ...................................................................................................................... 171
Alternatives to Firing ........................................................................................................................ 171
The Firing Process........................................................................................................................... 172
Severance Packages ................................................................................................................... 172
Preparing the Paperwork ............................................................................................................. 173
Return of Property ....................................................................................................................... 174
The Termination Meeting ............................................................................................................. 174

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Heading Off Trouble......................................................................................................................... 175

Offering a Chance to Resign ........................................................................................................ 175
Offering a Favorable Reference ................................................................................................... 175
Help Finding a New Job ............................................................................................................... 175
Final Paychecks............................................................................................................................... 176
Continuing Health Insurance ............................................................................................................ 176
Unemployment Compensation ......................................................................................................... 176
The Claims Process ..................................................................................................................... 176
Saving Money .............................................................................................................................. 177
Protecting Your Business Information .............................................................................................. 178
Enforcing Noncompete Agreements ............................................................................................. 178
Protecting Trade Secrets ............................................................................................................. 179
Handling Postemployment Inquiries ................................................................................................. 179
Legal Requirements..................................................................................................................... 180
Deciding What to Say .................................................................................................................. 180
Review Questions ............................................................................................................................ 182
Review Answers .............................................................................................................................. 184

Chapter 11 – Employee Privacy ........................................................................................................ 187

Learning Objectives ......................................................................................................................... 187
Introduction...................................................................................................................................... 187
Monitoring Employees at Work......................................................................................................... 188
Internet Use ................................................................................................................................. 188
Phone Calls ................................................................................................................................. 189
Email ........................................................................................................................................... 191
Monitoring Performance and Workplace Behavior ........................................................................ 191
Searches ......................................................................................................................................... 191
Other Off-Duty Activities................................................................................................................... 192
Review Questions ............................................................................................................................ 194
Review Answers .............................................................................................................................. 195

Chapter 12 – Independent Contractors ............................................................................................ 197

Learning Objectives ......................................................................................................................... 197
Introduction...................................................................................................................................... 197
Comparing Employees and Independent Contractors ....................................................................... 197
Tax Obligations............................................................................................................................ 197
Workers’ Compensation ............................................................................................................... 197
Unemployment Compensation ..................................................................................................... 198
Job Benefits................................................................................................................................. 198
Workspace .................................................................................................................................. 198
Firing the Worker ......................................................................................................................... 198
Cost ............................................................................................................................................. 198
Governmental Regulations........................................................................................................... 198
Liability for Worker’s Actions ........................................................................................................ 199
Liability for Injury to Worker.......................................................................................................... 199
Worker’s Preferences .................................................................................................................. 199
Employer’s Preferences ............................................................................................................... 199
The IRS Rules ................................................................................................................................. 199
Behavioral Control ....................................................................................................................... 200
The Relationship .......................................................................................................................... 202
Facts of Lesser Importance .......................................................................................................... 203
Workers Automatically Classified as Employees .............................................................................. 204
State Laws....................................................................................................................................... 205
The Risks of Misclassification .......................................................................................................... 205
Hiring Independent Contractors........................................................................................................ 206
Review Questions ............................................................................................................................ 208
Review Answers .............................................................................................................................. 210

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Chapter 13 – Unions .......................................................................................................................... 213

Learning Objectives ......................................................................................................................... 213
Introduction...................................................................................................................................... 213
The National Labor Relations Act ..................................................................................................... 213
Unionizing a Workplace ................................................................................................................... 213
The Bargaining Unit ..................................................................................................................... 214
Authorization Cards ..................................................................................................................... 214
NLRB Elections ........................................................................................................................... 214
Negotiating a Contract ................................................................................................................. 215
Employer Rights and Limitations ...................................................................................................... 215
What Is Permitted ........................................................................................................................ 215
What Is Not Permitted .................................................................................................................. 215
Employee Rights and Limitations ..................................................................................................... 216
Making Unions Unnecessary............................................................................................................ 216
Review Questions ............................................................................................................................ 218
Review Answers .............................................................................................................................. 219

Chapter 14 – Lawyers and Legal Research ...................................................................................... 221

Learning Objectives ......................................................................................................................... 221
Introduction...................................................................................................................................... 221
Getting Help From a Lawyer ............................................................................................................ 221
Getting Leads .............................................................................................................................. 221
Shopping Around ......................................................................................................................... 222
Paying a Lawyer .............................................................................................................................. 223
Types of Fee Arrangements......................................................................................................... 223
Saving on Legal Fees .................................................................................................................. 224
Resolving Problems With Your Lawyer............................................................................................. 224
Legal Research ............................................................................................................................... 225
Finding a Law Library................................................................................................................... 225
Federal and State Laws ............................................................................................................... 226
Sources of Legal Research .......................................................................................................... 226
How to Begin Your Legal Research.............................................................................................. 226
Online Research .......................................................................................................................... 227
Review Questions ............................................................................................................................ 228
Review Answers .............................................................................................................................. 229

Appendix............................................................................................................................................ 231
Labor Departments and Agencies .................................................................................................... 231
State Labor Departments ............................................................................................................. 231
State Drug and Alcohol Testing Laws ............................................................................................... 232
State Laws on Employee Arrest and Conviction Records ................................................................. 240
State Laws on Access to Personnel Records ................................................................................... 247
State Minimum Wage Laws for Tipped and Regular Employees ....................................................... 251
State Meal and Rest Break Laws ..................................................................................................... 256
State Health Insurance Continuation Laws ....................................................................................... 261
State Family and Medical Leave Laws ............................................................................................. 269
State Laws Prohibiting Discrimination in Employment....................................................................... 275
Agencies That Enforce Laws Prohibiting Discrimination in Employment............................................ 284
State Laws That Control Final Paychecks ........................................................................................ 287

Glossary ............................................................................................................................................. 291

Index .................................................................................................................................................. 293

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