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New York Employee Rights Law Blog

Thursday, September 5, 2013

Do You Need Meeting Minutes?

Do You Need Meeting Minutes?

Regardless of the size of the business, corporations (including those organized under Subchapter S) must observe all of the required formalities in order to maximize the benefits of a corporation. Corporate meeting minutes document the decisions made by the company’s board of directors, and are necessary to preserve the “corporate veil” in the event of a lawsuit or other claim against the company. If corporate formalities are not observed, your own personal assets may be at risk.

One such formality is the maintenance of a corporate record book containing minutes of meetings conducted in accordance with the company’s bylaws. Even in a one-person corporation, board resolutions must be drafted, signed and kept in the corporate records. Every major decision that affects the life of the business must be ratified by a board resolution contained in the corporate records.

There is no specific required format for meeting minutes, but the document should include any important decision made regarding the company, its policies and operations. Minutes should include, at a minimum:

  • Date, time and location of the meeting
  • Names of all officers, directors and others in attendance
  • Brief description of issues discussed and actions taken
  • Record of how each person voted, whether the vote was unanimous and whether anyone abstained from voting
  • Vote and approval of the prior meeting’s minutes

How do you know whether a decision needs to be documented in the meeting minutes? Generally, if a transaction is within the scope of the company’s ordinary course of business, it need not be addressed in the minutes. On the other hand, major decisions should be documented in the minutes, such as:

  • Significant contracts
  • Leases
  • Loans
  • Marketing campaigns
  • Reorganizations and mergers
  • Employee benefit plans
  • Elections of directors or officers

Non-incorporated entities such as limited liability companies are generally exempt from performing such formalities.
 


Monday, August 5, 2013

Email @ Work

Email @ Work: Is There Any Expectation of Privacy?

The proliferation of high-speed communication devices have made us more productive and more vulnerable in terms of our privacy. Desk-bound workers may be tempted to use the office email account to engage in personal communications – however, they do so at some risk to their privacy. How much privacy can employees expect for their electronic communications at work? Practically speaking, it is safe to presume everything may be monitored by your employer.

The law generally favors employers’ interests over employees’ privacy. Employers clearly have a legitimate business interest in tracking employee time and productivity. Additionally, employers must ensure their workers are not engaging in any illegal activity or releasing trade secrets. The law permits employers to read employee email messages; if there is a company policy in place that assures employees that email messages will remain private, a worker may be able to argue that there was a reasonable expectation of privacy, but the effectiveness of that argument varies. The courts have generally upheld employers’ rights to monitor and read their employees’ email messages, particularly when there is a compelling, business-related reason for doing so.

There is, however, a law that affords employees some protection of their privacy when accessing personal email accounts, such as Gmail or Hotmail. Should the password to a personal email account fall into the wrong hands, the employer is prohibited from using that information to access the employee’s personal emails without the employee’s permission. Under the Stored Communications Act, such conduct is a crime and also creates a civil cause of action for damages. Keep in mind that accessing these accounts from a work computer can give the employer the right to read messages employees send or receive using company equipment. However, the employer is not permitted to log in and view other personal email communications.
 


Friday, July 5, 2013

At-will Employment

At-will Employment: Does it Apply to You?

It may seem unfair, but an employer can fire an “at-will” employee at any time, without good cause – or even without any cause at all. It is a bitter pill, and one that many American workers must swallow. Under the law, you are generally deemed to be employed at-will, unless you can prove otherwise.

Workers who are employed at-will can be fired for no reason, but they cannot be fired for a bad reason. Some reasons are illegal under federal or state law, exceptions to the general doctrine of at-will employment. For example, you cannot be fired for complaining about discrimination, harassment, or safety violations in the workplace, or for complaining about illegal activity. The majority of employers are subject to anti-discrimination laws and cannot fire you based on certain characteristics, such as gender, race or religion. Similarly, you cannot be fired because you have exercised a legal right, such as taking time off for family and medical leave, military service, jury duty, or voting in an election.

Many employers take steps to ensure that the at-will nature of the employment is clearly established and agreed-to by all parties. This is typically spelled out in employment applications and contracts, employee policy and procedure manuals, and may be described as “at-will employment” or simply contain statements that you can be terminated at any time “without cause” or “for any reason.”

Still others have implemented written policies that protect their employees against being fired without good cause, and specify the reasons for which an employee can be terminated. If your employer has adopted such a policy, you are entitled to those protections.  Likewise, if you have signed an employment contract guaranteeing you job security, your employment is not at-will and you are entitled to the protections contained in the written agreement.

Should you sign an at-will employment agreement? Courts have generally held that an employee can be terminated, or not hired, for refusing or failing to sign an at-will employment agreement.While you are not technically required to sign the agreement, if you want to get hired or keep your job, it may be in your best interest to sign the agreement.

Nevertheless, if the at-will agreement contradicts what your employer previously promised you, you may want to think twice about signing on the dotted line. If you relied on the employer’s promises of job security when you accepted the position, you should consult an attorney before signing an at-will agreement. Courts will presume the signed at-will agreement controls your employment, regardless of any prior statements to the contrary.

Just because you sign the at-will agreement does not mean your employer will use it to fire you without cause. There is little to be gained in terminating a productive employee, and most employers will attempt to work with you to resolve any issues. Ultimately, the best way to avoid the perils of at-will employment is to be an outstanding employee. Delivering exceptional job performance is good for the company’s bottom line – and your own.  


Wednesday, June 5, 2013

Eight Common Mistakes Employers Make

Eight Common Mistakes Employers Make

American employers are subject to countless federal, state and local laws, imposing various requirements, including wage and hour and anti-discrimination laws. Unfortunately, many employers – particularly small businesses – are unaware of their obligations and violate various worker protection laws, often resulting in expensive lawsuits, civil settlements and criminal fines. Here are some common, costly mistakes employers make:

Misclassifying Non-Exempt Workers as Exempt
Generally, all workers are entitled to overtime pay and subject to minimum wage requirements. However, some employees – typically executive, managerial or professional employees – are “exempt” and receive a flat salary without overtime pay. The exemption only applies in certain situations, however, and many employees have improperly classified workers as “exempt” when they are legally entitled to overtime wages and minimum wage requirements.

Misclassifying Employees as Independent Contractors
Determining whether a worker is an employee or independent contractor depends on the level of independence or control the worker has in completing his or her tasks; the less control exercised by the worker, the more likely he or she will be classified as an employee. Factors to consider include how the worker is compensated, whether the worker faces any risk of loss in the transaction, whether the company pays the worker’s business expenses, whether the company can withhold payment for non-performance, and whether your industry as a whole considers workers in similar positions as employees or independent contractors.

Failing to Train Supervisors Regarding Employment and Labor Laws
Employment laws prohibit employers from taking action against an employee for certain reasons, including discrimination on the basis of a protected characteristic such as race, religion, etc. Employees are also protected from retaliation for complaints of discrimination or illegal activity. It is vital that supervisors be trained to manage their employees in accordance with all applicable laws.

Failing to Use an Employee Handbook
An employee handbook informs employees about the employer’s values and policies, and facilitates compliance with employment and labor laws.

Failing to Properly Document Employee Job Performance
Proper documentation clearly establishes the employer’s expectations and where the employee failed to reach them. Written job descriptions and employee evaluations serve as training tools, performance measures and critical evidence in the event you have to terminate an employee.

Failing to Accommodate Disabled Workers
The law not only prohibits employers from discriminating against those with disabilities, it also imposes a duty on employers to “reasonably accommodate” their disabled employees, so they can perform essential job functions. Accommodations may include assistive devices, a modified work schedule or a restructuring of job duties.

Failing to Comply with Wage Payment and Notification Requirements
Many states require employers to pay their employees in a certain manner, and provide written notice of pay periods and amounts. Failure to comply can subject the company to penalties.

Failing to Obtain Releases from Terminated Employees
When firing an employee, companies should obtain a signed release from the employee, waiving the employee’s right to pursue a legal claim against the employer. Often, this release is signed in exchange for a severance payment.
 


Sunday, May 5, 2013

Can You Be Fired for Having Bad Credit?

Can You Be Fired for Having Bad Credit?

If you are feeling the pinch, you are not alone. Many Americans have experienced a decline in income, while expenses have continued to increase. Many have taken a significant hit to their credit scores and are considering bankruptcy. Others who are on the eve of foreclosure may be considering a bankruptcy filing to stop an imminent foreclosure sale.

Whatever the reasons, a common concern of many consumers who face mounting debt, or are considering filing bankruptcy, is whether such credit issues can affect their ability to obtain or keep a job or get a promotion. In short, no. Bankruptcy is a protected, fundamental right granted by the U.S. Congress to all Americans. Under federal law, employers are prohibited from discriminating against a worker because of a bankruptcy filing. Bankruptcy courts across the country have weighed in on this issue and have consistently upheld the anti-discrimination protections contained in the U.S. Bankruptcy Code.

Employees who have filed bankruptcy and are subsequently fired must prove that bankruptcy was the primary factor in the termination. If the employer can prove there were other reasons for the termination, the employee’s wrongful termination claim will fail. Similarly, it is a violation of the law to refuse to hire or fail to promote an employee solely on the basis of a bankruptcy filing.
 


Friday, April 5, 2013

Are Job Applicant Criminal Background Checks Legal?

Are Job Applicant Criminal Background Checks Legal?

“You can never be too cautious.”

“An ounce of prevention is better than a pound of cure.”

These and other common sayings may make it seem like a smart business move to conduct criminal background checks of all job applicants and exclude any applicant who has ever been arrested for, or convicted of, any crime in the past.  Why hire a person with a criminal record when, surely, there are applicants out there with unblemished records?

In reality, however, the issue of job applicant criminal background checks is a complicated one.  It is not illegal to conduct a criminal background check, but employers must be careful about how they use the results of these background checks to exclude applicants.  

In some cases, it may be illegal discrimination for an employer to exclude an applicant because of the results of the background check.  For example, in January 2012, the U.S. Equal Employment Opportunity Commission (EEOC) reached a settlement with Pepsi Beverages regarding this precise issue.  Pepsi had a policy and practice of excluding job applicants who had arrest records but no convictions, as well as excluding applicants with convictions for minor crimes along with applicants convicted of more serious offenses.  The EEOC’s investigation determined that Pepsi’s policy unfairly excluded a higher number of African Americans from the job applicant pool.  Pepsi reached a settlement with the EEOC – making financial payments to affected job applicants, offering jobs to qualified applicants who had previously been excluded, and changing its background check policy.

The EEOC’s guidance on criminal background checks for job applicants is as follows:  Generally, any criterion used to screen job applicants must be relevant to the applicant’s ability to perform the job in question.

  • An arrest record is rarely, if ever, relevant because under American law, everyone is innocent until proven guilty.
  • Convictions for minor crimes may also be irrelevant and should not be considered.  As an example, a conviction for underage drinking may not be relevant, unless the person is applying for a bartender job where he or she has the responsibility to check identification.
  • Convictions in the distant past are rarely, if ever, relevant to an applicant’s ability to perform a job unless the conviction relates to the job in question.  For example, a conviction 20 years ago for writing one bad check may not be relevant to a job as a lifeguard.  However, if the job is for a position in a bank, then the conviction may still be relevant to the applicant’s ability to perform that job honestly.

Business owners and hiring managers are to be credited for wanting their workplaces to be safe and staffed by honest, trustworthy employees.  It is important, however, for employers to make sure that it uses the results of job applicant background checks in a fair manner to prevent illegal discrimination.  


Tuesday, March 5, 2013

Employers and Immigration Compliance

Employers and Immigration Compliance: What You Need to Know

The Immigration and Nationality Act (INA) makes it illegal for employers to knowingly hire undocumented workers and requires employers to verify each worker’s identity and eligibility by completing the I-9 Form. An employer’s failure to complete the I-9 Form can result in criminal and civil penalties.

The INA also protects individuals from employment discrimination based upon national origin, citizenship or immigration status. The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) enforces the INA’s anti-discrimination provisions.  Victims of discrimination may file a complaint with the OSC to seek back pay, reinstatement and other remedies.

With so much at stake and so many potential pitfalls, it is important for all employers to familiarize themselves with the requirements and implement policies and procedures to ensure compliance.

Employers are prohibited from:

  • Discriminating on the basis of citizenship or immigration status, with respect to hiring, firing, recruitment or referral. This rule applies to employers of four or more employees.
  • Discriminating on the basis of national origin, with respect to hiring, firing, recruitment or referral. This rule applies to employers of between three and 15 employees. Employers may not extend different treatment to different individuals based on their birth place, country of origin, native language, ancestry or because they may look or sound “foreign.”
  • Requesting more or different documents to verify a worker’s employment eligibility. An employer may not request different or additional documents for determination of citizenship or national origin than those documents specified on the I-9 Form.  Furthermore, an employer is not permitted to reject genuine-looking documents.
  • Retaliating against an individual who files charges with the OSC, cooperates with an investigation or contests an action that may be considered discriminatory or in violation of the INA.

To improve compliance in your employment procedures, consider implementing the following practices:

  • Refrain from using discriminatory language in job postings, such as “green card only” or “U.S. citizen only,” unless it is required by law or by a government contract.
  • In completing the I-9 Form, do not request specific documents over other permitted documents. Each employee is permitted to present any document from the list of acceptable documents stated on the form.
  • Refrain from selectively verifying work eligibility for only certain employees based on their citizenship status or national origin; whatever your policy, make sure it is applied consistently to all employees.
  • Avoid the appearance of discriminatory practices by verifying employment eligibility only after you have made a hiring decision, and give the employee three days to provide the required documentation.
  • Do not immediately terminate an employee if you receive a “no match” letter from the Social Security Administration. While such a letter may mean the individual is not authorized to work in the United States, it is also possible that there is a discrepancy in the record due to a clerical error or legal name change.
  • If you suspect that an employee is not legally eligible to work in this country, notify the employee and request valid employment eligibility documents before terminating or suspending employment.

Tuesday, February 5, 2013

Can My Employer Enforce a Covenant Not to Compete?

Can My Employer Enforce a Covenant Not to Compete?

Many employers require their employees to sign agreements which contain covenants not to compete with the company.  The enforceability of these restrictive provisions varies from state-to-state and depends on a variety of factors. A former employee who violates an enforceable non-compete agreement may be ordered to cease competitive activity and pay damages to the former employer.  In other covenants, the restrictions may be deemed too restrictive and an undue restraint of trade.

A covenant not to compete is a promise by an employee that he or she will not compete with his or her employer for a specified period of time and/or within a particular geographic location. It may be contained within an employment agreement, or may be a separate contract. Agreements which prevent employees from competing with the employer while employed are enforceable in every jurisdiction. However, agreements which affect an employee’s conduct after employment termination are subject to stricter requirements regarding “reasonableness,” and are generally disallowed in some states, such as California which has enacted statutes against such agreements except in very narrow circumstances.

Even in states where such covenants are enforceable, courts generally disfavor them because they are anti-competitive. Nevertheless, such agreements will be enforced if the former employer can demonstrate the following:
 

  • The employee received consideration at the time the agreement was signed;
  • The agreement protects the employers legitimate business interest; and
  • The agreement is reasonable to protect the employer, but not unduly burdensome to the employee who has a right to make a living.

Consideration

Under the principles of contract law, all agreements must be supported by consideration in order to be enforceable. The employee signing the covenant not to compete must receive something of value in exchange for making the promise. If the agreement is signed prior to employment, the employment itself constitutes consideration. If, however, the agreement is signed after employment commences, the employee must receive something else of value in exchange for the agreement to be enforceable.

Legitimate Business Interest

Legitimate business interests can include protecting and preserving confidential information (trade secrets) and customer relationships. Most states recognize an employer’s right to prevent an employee from taking advantage of information acquired or relationships developed as a result of the employment arrangement, in order to later compete against the employer.

Reasonableness

Based on the circumstances, a covenant must be reasonably necessary. If the covenant is overly broad, or unduly burdensome on the employee, the court may refuse to enforce the agreement. Therefore, the covenant must be reasonable in both duration and scope. If a covenant is overly broad, the court may narrow its scope or duration and enforce it accordingly. But if a covenant is so broad that is clearly was designed to prevent lawful competition, as opposed to protecting legitimate business interests, the court may strike down the agreement in its entirety.

To enforce a covenant not to compete, the employer can file a court action seeking an injunction against the employee’s continued violations of the agreement. The company can also seek monetary damages to cover losses resulting from the employee’s breach.




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