The Basics of Efficiently Running Your Business
The Goldstein Law Firm
February 2009 Newsletter
The Basics of Efficiently Running Your Business
By: Charles H. Goldstein, Esq.
The Goldstein Law Firm
1. HOW TO DOWNSIZE AND MAINTAIN EFFICIENCY
You can legally lay off employees who are not productive, even though these employees may have been with you longer than employees who you want to keep. However, in order to avoid costly legal challenges to your layoff decisions, you have to be able to support your decision with proof that the decision was based on performance or other relevant layoff criteria, and that you applied the relevant layoff criteria to all laid off employees.
Decisions regarding layoffs, even in non-union work environments, can be complex even though all employees in California are presumed to be at-will employees. For instance, a layoff that disparately impacts employees who are 40 and over can create potential legal liabilities for Age Discrimination. That is why a careful legal review of your layoff decisions should be done before a lay-off occurs since this legal review can pay big dividends later on by avoiding or minimizing the potential for costly lawsuits.
While you can determine who to lay-off and who to retain by strict application of seniority, length of service, and job functionality – making lay-off and retention decisions on this basis may protect you from lawsuits; but still leave you with a workforce that is the least productive during a time when you need your best, most productive players in the game.
Therefore, what criteria can you use in a non-union environment to ensure that you maintain the most productive and efficient workforce while maintaining the faith of your senior employees in your company’s future? Without knowing the specifics of the particular business, the business’ ability to track the performance of its employees, and the job history of each employee that a particular company wishes to layoff/retain; the following is a general lay-off criteria:
A. Length of service, if not the dominant factor, should always be considered in the mix of factors for determining which employees will be the subject of lay-off;
B. The job classification and function of the employee within your organization and whether they could perform in a lower position.
C. The job performance of the employee to be laid off and the job performance of the employee to be retained.
D. The work record, including past performance evaluations and disciplinary issues.
E. Never consider factors such as the amount of time the employee has been off work for illnesses and/or injuries; the amount of time the employee has been off work for Family Medical Leave and California Family Rights Leave, Pregnancy Disability Leave, or workers compensation; and the fact that the employee has filed a workers’ compensation claim and/or any other Complaint against you with any federal and/or state agency or the Court.
F. Decisions to lay off employees should be documented and reviewed by counsel.
2. THE LILLY LEDBETTER FAIR PAY ACT OF 2009
President Obama signed the Lilly Ledbetter Fair Pay Act of 2009, a new federal law named after the female Plaintiff in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007). In the Ledbetter case, the U.S. Supreme Court ruled that Ledbetter was not entitled to file a lawsuit for wage discrimination based on her sex because she failed to file her lawsuit within 180 days after her employer began discriminating against her, in her compensation, because of her sex. The wage discrimination in the Ledbetter case had continued for many years before Ledbetter filed her charge of wage discrimination and her lawsuit.
The new federal law states that Section 706(e) of the Civil Rights Act of 1964 (42 USC 2000e-5(e)) has been amended by adding (3)(A) which states: “For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.”
The law further states that “(B) In addition to any relief authorized by section 1977 A of the Revised Statutes (42 U.S.C. 1981 a), liability may accrue and an aggrieved person may obtain relief as provided in subsection (g)(1), including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside of the time for filing a charge.”
WHAT THIS NEW LAW MEANS FOR EMPLOYERS
Employees can now file a charge of pay and/or benefit discrimination with the EEOC within 180 days of the date that they received pay or benefits that were adversely affected by past discriminatory practice. In the event that employees are successful in proving pay and/or benefit discrimination, they can secure back pay for up to two years prior to the filing of the charge of discrimination. Employees can use evidence of unlawful compensation and benefit practices that goes back years in an attempt to prove that the pay or benefits they received were the product of discrimination.
v Employers should keep payroll records indefinitely to prove that their compensation and benefit policies were not applied in a discriminatory manner or disparately affected females and other individuals in protected classes.
v You should review your compensation and benefit packages to determine whether they discriminate against female employees and other employees in protected classes and if discrimination exists, take immediate steps to redress the current effects of past compensation and/or benefits discrimination.
v Remember both federal and state law requires equal pay for the same work and bars discrimination in compensation based on sex.
3. UPDATE: The Employee Free Choice Act
Although there has not been a U.S. House or Senate vote on the Employee Free Choice Act (“EFCA”), once an Economic Stimulus Plan is signed into law, passage and enactment of the EFCA will probably not be far behind.
As a recap, if enacted into law, the EFCA would be a radical and extreme departure from current federal law since it would forbid the NLRB from holding secret-ballot elections where a majority of employees in a proposed collective bargaining unit sign union authorization cards. Without secret-ballot elections, Employers would have no way of knowing whether their employees in fact wanted to be represented by the Union and could be coerced into recognizing a union without the true consent of the employees.
The EFCA would amend the law by forbidding the NLRB from holding a secret-ballot election where more than 50% of employees in a unit sign union authorization cards. The bill states that if a majority of workers sign union recognition cards, the NLRB “shall not direct an election” but shall certify the union as the exclusive bargaining representative for the appropriate unit of employees.
In addition, under EFCA the Union could demand that the employer begin bargaining within 10 days after the Union is certified via the card check by the NLRB. Then, if the Union and the Employer cannot agree to the terms of the first contract, within 90 days, either party can request the intervention of the Federal Mediation Conciliation Service. If no contract is reached within 30 days, then an Arbitrator will determine the terms of the Agreement for the next 2 year period. Finally, the EFCA would provide liquidated damages of 3 times back pay if the employer was found guilty of unlawfully terminating pro-union employees and would impose a $20,000.00 penalty on Employers for each violation of the EFCA, if a court deems the violation willful or repetitive.
Employees seek union representation only when they are being treated unfairly and are not shown recognition for their worth by their employer. Unionization is a way for employees to force management to recognize their rights and aspirations. Therefore, to avoid forced unionization, I would recommend that you:
1. Make your company a place where employees believe that they are being treated fairly and don’t need a Union.
2. Make you company a place where employees feel that that they are recognized.
3. Make your company a place where the employees have a clear understanding of your policies.
4. Make your company a place where employees believe that they have job security to the extent possible in the current economic crisis.
5. Make your company a place where employees would look at a Union or any third party attempting to stand between the employees and management as an “interloper”.
6. Make your company a place where the employees indentify with the company and its goals and achievements.
The Goldstein Law Firm
8912 Burton Way
Beverly Hills, California 90211
Telephone: (310) 553-4746
Facsimile: (310) 282-8070