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PORTLAND, Ore. -- These can be difficult and frustrating times for employers. Laws designed to protect employees have become more complicated. At the same time, potential remedies against employers have become more severe. In addition to these factors, there has been a dramatic rise in the number of class-action lawsuits being brought against employers by employees.
If a business is just getting started, there are unique windows of opportunity to create and implement policies and precautionary measures to avoid many of these problems. New employers have the distinct advantage of learning from the many problems currently being faced by existing employers. Many of these issues can be avoided by careful planning at the outset, said George Cooper, an attorney specializing in employer rights with Portland, Ore.-based Dunn Carney Allen Higgins & Tongue LLP.
Cooper said the following are the major employment issues currently facing startup businesses, together with an overview of steps that can be taken to avoid the inevitable letter from a lawyer or investigating agency.
* Hiring Practices. From the application process through initial hiring, employers can inadvertently create potential legal problems. "Anyone interviewing job applicants should have a quick refresher course as to which questions are appropriate and which should be avoided," Cooper said. "Reference inquiries and other background checks are becoming increasingly important. Be sure to pay careful attention to job applicants who may be subject to nondisclosure or noncompetition restrictions. Finally, check compliance with documentation and record-keeping requirements, particularly as to immigration and work eligibility issues."
* Classification of Employees. Be careful to properly draw the line between "exempt" employees -- those entitled to receive overtime pay -- and "nonexempt." "Until the U.S. Department of Labor finalizes a proposed overhaul of its regulations, probably in late 2003, the test definitions remain very imprecise," Cooper said. "Misclassification of employees can result in serious penalties. It is not unusual for a departing employee to question an `exempt? classification, and present a demand for several years of unpaid overtime."
*Special Wage and Hour Rules. When docking the hours or pay of exempt employees, the general rule is that if an exempt employee works any part of a work week, that employee is entitled to be paid for the entire week. Absences for illness must generally be taken in blocks of at least one day. "These rules can be complicated, and are not well understood by many employers," Cooper said.
* Employee Handbooks. It is tempting for new employers to believe that they are better off without an employee handbook, or that such a handbook can wait until later. But Cooper warns that personnel policies that are simple and unambiguous can prevent misunderstandings and lawsuits. This is a rare opportunity for employers to unilaterally implement policies, without bargaining or negotiating.
* At-Will Employment. Most employment relationships are presumed to be "at-will" in nature. Both the employer and the employee remain free to terminate their relationship at any time, with or without cause. However, it is important to affirm this relationship at the outset of employment. It should be emphasized during your application process, in your employee handbook, and in employment agreements. However, it is relatively easy to inadvertently fall outside of this doctrine. Work closely with your legal advisor to avoid this.
* Harassment Policies. Create and maintain a comprehensive and tough anti-harassment policy, specifically covering sexual harassment and hostile work environments. Courts and agencies are now expecting employers to have such policies in place. "If you don't, you may not be able to take advantage of defenses that courts have recognized in certain situations," Cooper said. "Don't just bury the policy in a thick handbook; post it where your other required notices are posted. Educate and train your managers and supervisors. What they do, and when they do it, will ultimately determine corporate liability. And make sure your employees are aware of their obligations -- most claims result from inappropriate behavior of co-workers.?
* Family and Medical Leaves. If your workplace will be covered by federal or state family medical leave laws ? generally employers with more than 25 employees ? "make sure you understand your legal obligations," Cooper warned. "This can be a very confusing area for employer compliance. Maintain adequate internal recordkeeping and monitoring safeguards to track absences. If you don't, you will be unable to determine when an employee's statutory protections may expire, and may inadvertently create additional leave time."
* OSHA/Safety Rule Compliance. Many employers, particularly those just starting out, are not aware of the overlapping federal and state laws regulating workplace safety. Employers are generally responsible to create and maintain a safe and healthy work environment, and to adopt policies and practices such as accident prevention programs designed to accomplish these objectives. Certain industries are also subject to additional requirements. There are specific record keeping and reporting requirements that must be carefully followed.
While new employers are subject to many of the same pitfalls as more established businesses, there are numerous potential initial opportunities that should be explored. Because of the growing complexities with many of these issues, consulting with an attorney experienced in employment law can also be helpful, Cooper said.