The broadcast is now starting. All attendees are in listen only mode. Hello, this is Alan crone. And welcome to the film of webinar, plaintiff lawyers as, uh, playing for us as employers, how to avoid becoming a defendant. Uh, as I said, my name is Alan crone. I’m with the crone law firm here in Memphis, Tennessee.
And, uh, I’m, uh, I’m essentially a plaintiff’s employment lawyer, although, uh, I always say I represent right thinking, uh, employers as well. Uh, and one thing that I’ve gotten into over the last few years is representing, uh, other lawyers in employment matters, uh, particularly, um, uh, law firms that have anywhere from five to 100,
uh, uh, staff members. And I really have enjoyed that work, enjoy working with lawyers, I’m married to a lawyer. So I, uh, uh, I think I know how lawyers think. And a lot of times we lawyers think that a, because we’re lawyers, we’re immune from, from lawsuits and that’s, as we know, that’s not necessarily the case,
whether it’s malpractice or, uh, employment matters. And so, uh, can’t ask me to do this, this webinar, and I’m really excited about it. As you can tell, I’m a employment lawyer in Memphis, I’m a graduate of the university of Memphis, which is probably going to the cotton bowl, uh, around new year’s Eve. And we’re really excited about that.
Uh, and so if I’m a little distracted, it’s because I’m making my travel plans for Dallas the first time in our history. So we’re excited as you know, we’ve got, uh, the ability for, for folks to ask questions. Uh, I would love for this to be interactive. So if you, if you want to chat a question as we go along,
I’ll try to answer them in real time, if not at the end, uh, please, um, uh, please ask, ask questions. We could do a several day seminar on employment law. Uh, it’s very complicated, uh, very detailed. I’m going to hit a lot of the high points in this presentation, but if you’ve got a specific question that may be the most,
the most beneficial, uh, and, um, uh, I’m also going to kind of stick with, uh, federal law as opposed to state law. There are lots of state laws out there. So your experience might be a little different in, uh, in your jurisdiction. For example, in Tennessee, we have a human rights act, which is a mirror of the federal federal title seven,
which is the discrimination, uh, laws that we’ll talk about in a moment. And, uh, they, it has its own, uh, limits, et cetera, similar to the federal federal law. So, uh, always check your state laws. And if you need some help with that, we can help with specific situations. But for the purposes of this,
of this presentation, I’m going to stick primarily with, with federal law, probably the question I’m asked the most, uh, centers around, uh, terminations and what I’m going to talk about with regard to determinations, uh, applies to discrimination lawsuits as well as unemployment compensation hearings. Uh, I was the, I was the chief counsel for the of employment security here in Tennessee,
back in the nineties, which is the department that administered the unemployment law. So I’ve got a lot of insight into that. And frankly, the things, even though the standards are a little different between the discrimination laws and the employment compensation laws, unemployment compensation has a far wider application than discrimination. So if you’re in compliance with, uh, the, the,
uh, unemployment compensation, uh, laws, then that ought to provide you a good defense against any discrimination lawsuits, because they’re, they’re a little bit tired. So let’s talk about, uh, about wrongful termination. Every state in the country starts out except maybe one or two, start out with the concept of employment at will, and that doctrine States that anybody can be fired at any time for any reason.
And that was, uh, the state of the law at common law. Tennessee used to be a part of North Carolina, North Carolina used to be a part of great Britain. And that’s a legal concept that comes down to us from the common law of, uh, of great Britain and a lot of European countries. And I always say, think, uh,
Lords and serfs, and that’s where the American workers start. So if you have an employee, you, uh, you have the ability to hire or fire them at will, for any reason, whether it’s fair, arbitrary, uh, unfair, et cetera. Now over the course of the last a hundred years or so States and the federal government have,
have enacted either through common law or statute exceptions to the employment at will doctrine. So now the doctrine is you can fire anybody at any time for any reason, except for an illegal reason. The, and so what, what, what that really undercuts is the second part here, which is the importance of setting standards and, uh, training and policies and procedures with written guidelines.
So that, you know, when you’re an employment decision, you’re making it based on, um, a fair articulatable reason rather than being arbitrary, even though you might be able to defend, uh, uh, to, to the fin, that decision, whether it’s in court for discrimination or, uh, before the department of labor for unemployment compensation, you,
you still want it still good business, uh, not to be arbitrary, not to be unfair into and to make those decisions based on policies and procedures and standard in training that you articulate. Uh, I frequently tell human resource professionals and operations people. When I give seminars for private companies that the, um, that the number one way to avoid a lawsuit is not to fire anyone.
And that usually gets a pretty good laugh. Uh, but it, it really kind of goes to the heart of one of my philosophies, which is nobody sets out to, to hire somebody thinking, well, I’m just going to fire this person in two or three months or two or three years. You, you enter into that because you believe you found the right person.
And so all of this, in my opinion, really starts with understanding the role that you want the person to play in your organization, the essential functions of the job that you’re hiring for, and then really understanding how to go about finding that right person. There’s an old adage. You hire slow when you fire fast. In other words, you really want to make sure that you get the right person for that role,
uh, at the outset, so that down the road, you don’t have to fire them. And the only way to really do that is the thoroughly, understand the position and thoroughly understand the answer to the question, what is it that I have to do to be successful in your organization, and then this role, and unless you really study it, uh,
and in a very intentional about that, whether you’re a law firm or a fortune 500 company, that’s where most companies in my opinion really fall down is that they, they go into the relationship not understanding what it takes to be successful and more importantly, not communicating to their employees, what their standards are and, and what the objectives are and so forth.
And so, uh, let’s go, let’s go back to the previous slide. So what you want to do is, and this is where, and I think I’m going to talk about this later, but this is where, um, uh, pill touchstone program, I think can really, really help with your, your standards and training, really writing down what the essential functions of the job are,
and, and then training for those, those jobs, having, having, um, uh, our objective basis for, uh, the feedback that you, that you give people. Uh, another bit of advice, kind of preliminary advice that I would give is sit down and, and different, uh, owners do this in different ways. I mean,
you may want to sit down with your senior leadership team or your partners. If you’re a solo, you may just want to do this as a, as a, uh, individual, uh, uh, exercise, but really identify what are the values of your firm here at our firm, we have five core values that, that guide all of our decisions,
but particularly, uh, guide our employment decisions. And I’ll just share them with you. The first one is excellence. We want to be excellent attorneys. Uh, the second, uh, is service to others, uh, not just in terms of providing our customers good service, our clients, good service, but we want to provide good service to the court.
We want to provide service to our opposing counsel. We want to be of service to people. Uh, we want to be transparent in what we do to all of those constituencies. Uh, we want to be reliable. And then finally at the end, we want to have integrity. And so I tell you that not to, not to, uh,
bang our own drum, but to say that when you got those values and everybody signs on to those values, and then so now you have an issue come up. Uh, let’s say, the person is, is habitually late to work. All right, well, you gotta have a policy that says we get here at eight o’clock, but then you also go back to the,
to the values and say, look, you know, one of our values is, is being excellent and being late is not being excellent. One of our values is being reliable and it’s not real. You’re not being reliable if you’re not here on time. And so you can see how having a policy and then having the why behind the policy, the values when you’re presenting that to a FactFinder,
whether it’s a, a jury or a judge or an EOC investigator, or a, um, uh, or the, the, uh, hearing officer at the unemployment office, all of those different kinds of finders of fact that could come and interact with your law firm. Now you’ve got not just a rule, but you also have the, the, the why behind the rule and the fact that you’ve got that much repetition ingrained in your staff,
but also demonstrate to that fact-finder that this really is something that not just something you pulled out of the air, but something that’s, well-grounded in documentation, and well-grounded in the culture that you’ve built. And, um, that just bolsters your credibility all the way, all the way through. And that may sound like a, uh, you know, to me,
it sounds like a, uh, an obvious thing, but I have I’ve discovered over time that it’s not obvious to a lot of people. And the, the really had to take the time to work on that. And there are lots of big companies that don’t take the time to work on that. And it really shows when they make employment decisions and the employment decision appears to be arbitrary.
Well, that’s what sends people to allow. You’re like me is they, they been fired or they’ve been, um, demoted or disciplined in some way, and they don’t understand the, um, the reason for it. And so they began looking for unfairness and they began looking for a way to Sue somebody most of the time when somebody is fired and they understand why they’ve been fired,
they don’t go looking to Sue. They, they move on. It’s only when they’ve been fired and they really don’t understand why, or they feel like it was unfair because they weren’t given adequate warnings. So they, weren’t getting an adequate training that, uh, that you’re running into problems. And that’s why it’s so important. We’ll talk about training a little bit,
a little bit more down the road. That’s why it’s important to really invest in training, because you want to demonstrate to a FactFinder down the road that, Hey, this, this person was given every opportunity to succeed. We gave them the tools necessary, and they chose to reject that and not perform up to the expectations that we’ve, that we’ve clearly articulate.
So here are the, the exceptions to the employment at will doctrine that exists. And I’m talking now about whether that someone would have a legal claim for, uh, for termination. So it could be based on their age, if they’re over 40. And the decision is making solely because of their age, that can be actionable, their race or their color,
uh, their sex, national origin, religion protected activity. Uh, if they engage in some protected activity in Tennessee, for example, uh, jury duty is a protected activity. You can’t be fired for, uh, in most States are this way. You can’t be fired for, uh, attending jury duty or filing a workers’ comp claim. You can’t be retaliated against for filing an OSHA claim or other workplace safety kinds of claims.
There are any number of federal programs that have whistleblower protection for, uh, reporting fraud and abuse. If you, uh, if you complain about age, race, color, sex, national origin, or religion discrimination, that’s protected activity. So anytime that you have an employee that falls into one of these categories, it’s not a get out of jail free card for them that that’s not a license for them to,
uh, to be bad performers, but you always want to make sure that you’re treating everybody equally the same. And so you can see if you don’t have a good policies and procedures in place, if you don’t communicate expectations, if you don’t document the training that you do, and you don’t document the, um, um, the discipline or, uh,
corrective actions that you take, uh, and the, the, uh, complainant, uh, can prove that then that puts you at risk. If they fall into one of these, one of these categories. Now, the way the, the way the, the law and this works is if an employee falls into a protected category say is a, is a female,
and she suffers a adverse employment action of the word she’s fired or demoted or suspended, uh, then, uh, she meets her prime aphasia case, particularly if you can, she can prove by direct evidence that, uh, there’s some sex discrimination, or there’s a comparitor, a male employee who committed the same offense and was not disciplined in the same way.
Then the burden shifts to you to give a nondiscriminatory reason for, uh, the employment decision. So if, um, uh, if she’s fired, because she’s laid all the time, then you say, well, uh, I fired her because she was like seven times, uh, uh, over the course of a month. And that was unacceptable.
Then the burden shifts back to her to prove that that’s a pretext and there in that for discrimination. And that the real reason is because of her sex. And that’s where that’s the space in which most of these cases are litigated is in that space of, um, uh, proving pretext. And you can do that with direct evidence. In other words,
you could have a situation where there are statements or emails or indications of explicit sex discrimination, but normally the way these things work is you poke holes in the, uh, the offered pretext. Uh, for example, you, they might say that there’s a male worker who’s late eight times or six times and was not disciplined. And that person had the same,
um, uh, had the same supervisor. And that, that could then establish that, uh, uh, that burden shifting. And then a jury would be able to determine whether or not that was a motivating factor, uh, in the discrimination, in, in the, uh, in the, in the decision there also that additional state claims that,
uh, that come into play. As I said in Tennessee, we have a, a state, um, uh, we have a state anti-discrimination statute that, uh, tracks the federal statute, uh, and other States, uh, do as well. And some are more stringent than the federal standards, and some are less stringent. And so you,
you have to, you really have to know, uh, know that, so you can understand that in the issue is not going to be discrimination. The issue is going to be whether or not there’s misconduct connected to the work. And so, uh, that’s a much broader definition than the discrimination. So that’s where having a good job description, having good policies and procedures,
uh, helps, uh, because they’re, you want to show, uh, most unemployment compensation, uh, hearing officers in my experience, uh, are going to look one of the first questions they’re going to ask is, is there a written policy, is there a written, um, job description? Is there a written procedure that this person was on notice of and failed to,
uh, to live up to, and it’s not illegal to have all of that be oral, but it is much better from a defense standpoint to be able to put several pieces of paper down, uh, on the hearing table and say, well, here’s our employment manual that sets out this particular requirement. And here’s the job description, which has a similar provision,
uh, on, uh, punctuality, for example, and here’s our policy and procedures manual, which shows that it’s important. And here are our company values, uh, where it’s shown as important. And you might even have an offer letter that, uh, uh, mentions the particular, uh, or references, uh, the particular policy and procedure.
And again, it was, what’s beneficial about having all of those different components is it shows that this is not just something that you have extracted out of thin air in order to defend this particular claim, but this is a legitimate, uh, policy. This is a legitimate value. This is a legitimate requirement that you have, and more importantly, that you have,
but that been, uh, repeatedly, uh, communicated to the employee. Now that has a couple of benefits. In my opinion, one is, um, the, the most urgent issue in defending the claim and it bolsters your credibility and certainly shows that this person knew, or should have known better than to violate the provision, but it also, uh,
reemphasizes it with your employee base and perhaps, uh, you get compliance across the board. And so you don’t have to worry as much about, um, you don’t have to worry as much about a bad employees because more and more of your expectations are being met, uh, because they’ve actually, you’ve actually written them down and make sure that you’ve systematically communicated them to two people.
And that’s where job descriptions really come, come into play. Um, job descriptions help establish the essential functions of the job, and they link the firm goals and needed functions, uh, to the job. And as I said before, this is where pelvis touched on a tool can come in very handy, because that helps you organize all of this. Now,
I’ll tell you that again, in my experience of litigating these cases for 30 years, there’s almost always a job description. If you’re involved in a case of a, uh, termination where the, the company has any size whatsoever, particularly if you have a human resources department there’s somebody’s job is to generate these job descriptions. And I think the, the,
uh, the difference between good and a great company in this context is really having a good written job description. That’s helpful on a day to day basis, not just for document documenting these things, but helping the, um, helping the employee to actually do a good job in to the job that you want them to be doing. And I don’t care if you’re a law firm of,
you know, 10 or less people, or you’re a fortune 500 company with several hundred employees, jobs change over time, and sometimes a person’s job changes weekly or monthly. Uh, and that, if that happens, then you’ve got kind of, you’ve got an undisciplined company, but over the course of a year or two, it’s not uncommon for job functions to migrate to different people and for a particular function,
particular role to expand or contract. And as you do that, you need to note it in the job description. This is important for job descriptions are key for a lot of reasons. One, many of these federal statutory schemes, a key off the job description in terms of their enforcement, the with disabilities act is a really good example. Uh, if you’re covered by the Americans with disabilities act,
if you’ve got 25 or more employees and you’re covered by it, then, uh, you may be required to accommodate someone before you fire them. If they have a disability and a disability is, is it’s illegal to fire someone. If they have a disability where they can perform the essential functions of the job with, or without a reasonable accommodation. And so you really need to understand whether or not a particular function is an essential function to make that call.
And I’ll give you a good example. I represented a, a fellow who had ms. And he was the kind of worker that all he wanted to do was work. He knew that if he continued to work, that his ms would the development of it would be, uh, reduced, uh, because inaction can, uh, aggravate ms. But he also wanted to feel useful.
And so a lot of people who get a conditional like that, some people look at, look on it as a Dodge, and they’re trying to get out of work and try to get permanent disability. And some people want to work long past where they, where they otherwise could be diagnosed as, um, totally disabled. And he was in that category.
He worked in a tire manufacturing operation, and you’re working on a big machine. And if his condition was aggravated, sometimes he would be carried. His brother worked at the, at the same facility and his brother would literally carrying him, um, part of the way to his machine, uh, because his legs were weak. Well, one of the,
one of the functions of the job that had been identified when the job was, uh, initially, uh, created in the seventies was you had to be able to lift 75 pounds. He could not lift 75 pounds. Well, over the course of years, uh, that requirement was, was essentially eliminated because of the way the machine was fed. It used to be,
you had to be able to lift 75 pounds worth of rubber to a couple of times a day, to be able to feed the machine. Um, but over time that had become automated. And that was what the company was using to say that, uh, he couldn’t perform the essential functions of the job. And once we got in and looked at it,
we were able to point out that that wasn’t an essential function of the job and that they could not, uh, eliminate him, uh, for that reason, he didn’t even need an accommodation because the essential function, uh, was no longer, that’s an extreme example, but, uh, lifting requirements in bending requirements, uh, and that sort of thing that you might have on a particular job in an office may or may not be essential.
And so understanding that is, is key. Also understanding what the essential functions of the job are. I help with the fair labor standards act. We’ll get to that in a minute, whether or not you owe somebody overtime, that’s all going to be based on what the person does. And so you need to make sure you understand exactly what each person is doing,
even within a broad category of jobs. And you can’t do that unless you go in and review that periodically, we recommend some sort of review annually. Um, but definitely every couple of years, you want to go in and look at, uh, your job descriptions and make sure that they are conformed with reality of what’s going on in your workplace. And I would say that the larger your operation,
the more frequently you want to do that, if you’ve got five or six people, you may not even need to do that at all, but if you’ve got 10 or more, and you’ve got, excuse me, large groups of people that, that, uh, that on paper force perform the same function. Sometimes you want to go in and make sure that,
that, that those folks are actually doing the same thing, uh, in the same way. So again, this is where I come down. Emphasis your emphasis is on training, not discipline. In other words, when you’re trying to create correct behavior, you want to do it in a context of training, because sometimes I know that that frequently lawyers like me have given advice to companies when I was first coming up in this business,
uh, companies were told, well, you’ve got to document your discipline. And so that that’s the traditional, um, uh, model for that is you get a verbal warning, which tends to be written, and then you get a written warning, and then you get a second warning and maybe a third warning, and then you get fired. And I have been involved in many trials where I have turned that against the company.
In other words, I have made it look like not that this was discipline, but then they were out to get this person. And that this, this documentation that, that the company thought was, uh, such a great, um, you know, it was such a great thing actually began to look like discrimination because it started to look like, uh,
that the, that the goal of termination was preordained and that the discipline was just aimed at supporting that termination decision that had already been made that may or may not have been the case, but it’s sure to look that way. So, uh, Yeah, When I have a, someone on the other side whose discipline model is a training model, it,
it completely changes the conversation. If, if the discipline really is couched as training for success, then the company can say things like, Hey, we’ve bent over backwards to help this person. Uh, it also helps to reduce turnover because if you’re really trying to train a person to perform the essential functions of the job, you’re trying to train the person to be successful.
Then, um, more often than not, you’re going to be successful in that. If you’ve hired a good employee, you can create the B correct the behavior, uh, and move forward rather than moving relentlessly towards a termination. And then once you terminate the person, then you’ve got to go in and, and rehire someone and retrain them. And that can be costly.
So, um, it’s good business to do it this way. In addition, uh, plus, as I say, when you, when the proof is coming out, whether it’s in front of a hearing officer or a jury, people pick up on that and they pick up on the subtle, uh, language, uh, uh, changes. And they start saying to themselves,
you know, this, this company really did everything they could to make sure this person succeeded, as opposed to, uh, this person did everything they could to get rid of the employee. And I think that’s, that’s very, very helpful. And so you’ve got to spend as much time training the managers on how to train employees and how to talk to employees,
um, to get success, but also to eliminate, uh, imprecise language. One of my favorite examples of that is when you were, um, uh, correcting someone, uh, I love to see on performance evaluations or, uh, other documentation person has a bad attitude. Well, if you can’t articulate the facts upon which you base that conclusion,
the person may very well have a terrible attitude, but if you can’t say these are the reasons why they have a bad attitude and what to do to correct it, then, then you’ve just got a big muddle and a big mashup. And the only way that most supervisors will be successful at that is through training because that’s not a PR, that’s not part of the preparation.
Most people get coming into business, whether they’re coming out of business school, or just being in the business world as Americans, we are terrible at confronting one another with issues. I had a client years ago, African American gentleman, he was 65. He had worked for this company literally for 30 years. And through most of that 30 years, he was late five to 20 minutes every day.
And it drove people crazy, no one ever confronted him. He had a supervisor that worked around it. Um, well that supervisor retired. He got a new person that new person ended up being a young white male. And they had some what I’ll call some personality conflicts. Um, but, uh, the, the new supervisor just said, I’m not going to put up with anybody being late anymore.
And, um, he kind of laid down the law and said, you gotta be here on time. The guy was late three times in a row and he got fired. Well, he comes to see me and he says very early in our conversation, he said, they told me I was fired because I was late. And I said, well,
was that the real reason that they fired you? Do you think? And he says, no, no. I was, I’ve been late every day for 30 years. And no one ever said anything. Now, all of a sudden I get this white guy managing me. It’s gotta be because I’m black. Well, uh, you can see how he got there.
No one ever told him this new supervisor. Didn’t sit him down and say, look, you know, I know you you’ve had this, this behavior in the past, and it’s important that you be here on time and explain to him and really walking through. He just, he just changed the policy, which was his right to do very, you know,
on a dime. Uh, we ultimately resolve that and I’m sure that the company paid more than they thought it was worth. Uh, my client took less than he thought because he was convinced it was racial discrimination. But again, my point here is if that supervisor hadn’t been better trained in how to make this, this change and how to elicit this change in,
in, uh, uh, performance, then the company might have avoided losing a longterm employee, uh, who otherwise was a great employee. Uh, and, um, wouldn’t have had to replace that person, uh, with a new employee, uh, in addition to having to pay the claim that they pay. So that’s why it’s really important to train managers on how to give good feedback to employees and give good objective feedback,
not just say, Hey, do you got to improve your attitude? Um, uh, and also to give good lead time. I’ve had plenty of times where, where people have said, Hey, particularly the sales people, you need to improve your sales numbers. And then they, uh, give a deadline for that. That’s actually shorter than the sales,
uh, cycle, uh, in the industry. And, and so if the, of the, the input that’s being given may look on one hand to be objective, but if it’s not reasonable, then that can cause problems. And so that’s why they, you know, they say culture will be performance all the time. If you’ve got a good culture,
uh, then a lot of this is going to be self policed, but if you’ve got a culture where, you know, anything goes and, and, you know, there, there are sacred cows in the office that, that so-and-so has been here with me for years, and they can get away with things, but these other people, they can’t get away with the same thing.
Uh, that’s gonna come through and that’s going to look unfair. And, and if you’re not willing to, uh, uh, enforce a uniform culture all the way across, then you can really, really end up having some, uh, some bad outcomes. So again, communicating these expectations is, is key. And that’s why it’s important to have a,
an employee handbook. I really don’t care if, if you’ve got five employees having a good detail employee handbook, uh, helps to communicate what your expectations are. I had a fall partner, uh, who is still one of my best friends in the world. And he used to get so upset, uh, because he had a specific way that he wanted his documents statement.
He wanted the staple to be diag, and it just drove him crazy when someone would staple a document horizontal. So he comes into my office one day and he says, um, you know, so, and so Betty Sue can’t do anything. Right. And I said, give me an example. And so he said, well, she doesn’t staple things.
Right. I said, you’re kidding. What do you mean? She didn’t staple things, right? So we went through this with, and I said, well, have you ever told her, well, I think I had, I said, well, you need to write it down. So he wrote down a list of expectations, um, that,
you know, he was also a CPA. So he was very detail oriented. These things mattered to him, and it mattered whether or not you were successful with him. And so he started handing that to people. Now, some people took one, look at it and said, I’m not working for you, because if you care how your papers are stable,
I don’t want to have to put up with that. But he ended up hiring some people that were with him for a long time, because they knew what to expect. They knew what the expectations were. They knew if they met those expectations, that he would be loyal to them and he would, um, reward them. And that’s what happened. And so one way to do that as an employee handbook,
another way to do it is just written policies and procedures, and have good systems. And if you’ve been a Peloma member for any length of time, you know, that Ken talks about systems and those systems not only help you in terms of being more efficient and more productive, but they also help you in my world. Because when you can show some,
when you can show a judge or a jury or hearing officer, look, I have a system for performing this task. We train on it, we communicate it. And here is our efforts to get this particular person, uh, to, uh, uh, appropriately. And they haven’t done it, uh, that is an easy, easy, uh,
argument to make. Whereas if you don’t have the system and your you’re trying to explain in a subjective way, why this person didn’t do a good job, it’s amazing. Sometimes just how hollow all of those explanations, uh, sound in the cold calculated environment of a hearing room or courtroom. Uh, and it’s, sometimes it’s not good enough just to say,
well, you had to be there. You know? Uh, so, uh, that’s why I think written policies and procedures are, are really important. All right. So, so that’s what I’ve, I’ve, I’ve got one on just on discrimination in hiring and firing. Uh, I preach that gospel of, uh, uh, of documentation and expectation.
Uh, and, and so if you’ve got any questions about that, please, uh, please, uh, chat them up or, or, or submitted the questions. But I want to move on to, to compensation. Uh, compensation, uh, is, is so important. It goes up and down your chain of command. And, um,
there here’s some of the things that most people don’t don’t do independent contractors. I believe that most of the people walking around the world right now in the United States who are independent, contractors are not legitimate, independent contractors. Uh, according to the government, a lot of people want to make people, uh, making, uh, workers, independent contractors, uh,
for tax reasons. They don’t want to pay, uh, FICA or Fuda. They will say that seven and a half percent. Maybe you’re trying to save on workers’ compensation. Maybe you don’t want to give them a health insurance. All of those can really come back to bite you. And if you’ve got a significant number of people that are working for you that are independent contractors,
that’s how you’re treating them. You give them a 10 99 instead of a W2. You really ought to make sure you have in a file somewhere, an opinion letter from a lawyer or an accountant that analyzes that position and, uh, certifies that you are justified in paying them as independent contractors. Again, when I first started doing this, uh, 20,
30 years ago, the different agencies, didn’t talk to one another. If you think about a, uh, a police detective show, and, you know, the homicide detective is questioning a suspect and says, what were you doing? He says, well, I want to tell you, look, I’m not a drug. I’m not, uh, I’m not with bikes.
I’m not with narcotics. I don’t care what you were doing. I just want to know about this Merck. Well, that’s the, it used to be the, if the department of labor came in to audit you for, uh, uh, overtime compliance, then, and they found a violation, they weren’t gonna report you to the IRS, or they weren’t going to report you to your workers’ comp carrier.
Now all of those agencies have inner agency cooperation agreements, and they will. And the reason for that is because of the affordable care act. Uh, there are so many businesses trying to avoid the requirements of the affordable care act by reducing the number of employees they have to under 50 that, uh, the government, the federal government particular is looking out for violations of,
uh, independent contractors versus employees. And so there’s much more scrutiny on it now than there used to be. So what that means is, um, you’ve gotta be very careful about it. Uh, there, every one of these statutory schemes has a different definition or criteria of who were independent contractors and who are not the reader’s digest, condensed version is,
um, if the economic reality of the relationship between you and the independent contractor is that the contractor is not dependent on you for their livelihood. Then they may be independent contractors, and they’re such, such, um, uh, factors as whether you supply them with their own tools, whether you direct them, uh, uh, in their operation, whether they have the ability to work for other people,
whether they work for you full time, those kinds of factors, uh, contribute to whether or not, uh, someone is an independent contractor, or should be a w two employee. If, if you guess wrong on that, it can be, uh, extremely, uh, dangerous. Uh, now most of you as lawyers are not going to have this problem worker’s comp problem,
but I see it with a lot with, uh, with, uh, construction companies or roofers, or, uh, that sort of a business where they’ve got, uh, a large workforce of people that they treat as independent contractors, and therefore they don’t have worker’s comp insurance on them and their workers’ comp carrier audits them, or the department of labor audits.
And they’re big fines involved in that if you’ve got large groups of people that, uh, would ordinarily be entitled to workers’ comp, and you’re not providing it to them, and your carrier finds out, that can be very, very costly. Um, the biggest, um, the biggest exposure is on the fair is under the fair labor standards act and or any state,
uh, any, uh, or any state statutory scheme that, that follows it. Uh, right now the, uh, for example, in Tennessee, uh, we do not have, uh, uh, a state provision that is richer than the federal, uh, statutory scheme now in California and New York and other places, uh, their, their state laws are better.
And so you can kind of get a double whammy if you, um, if you, uh, uh, violate that. So, um, the question under the fair labor standards act is whether or not the perks of the person’s position is exempt from the act or non-exempt. And so if you’re exempt, then that means you’re not entitled to overtime. Now.
Uh, I frequently see paralegals investigators, legal assistants who, uh, work in law offices that are paid a salary and are not exempt from overtime. Paralegals are not learned professionals. Uh, they are entitled to overtime, uh, investigators generally then have their license. They might qualify as a professional legal assistance. Certainly aren’t anybody you pay hourly is, is not exempt from overtime.
And so if you have a paralegal and you pay them hourly, um, and they work more than 40 hours in any given work week, then you will most likely gonna owe them time and a half for, uh, the overtime that they perform. Now, uh, let’s say you have a paralegal who works, uh, 40 more hours and she’s paid,
or he’s paid the sour and you, uh, a couple of ways you can handle that. One is you can pay them under the fluctuating work week, which is the best way to do it from an employee standpoint. And so basically you’ve got to, you’ve got to, um, communicate to the parallel to the employee. In this case, let’s say it’s a paralegal that you’re going to pay them a salary,
and that they’re a non exempt from overtime. So they’re entitled to overtime, and you’re going to pay them a half time for every hour over 40 that they work because their salary is intended to compensate them for all hours that they work. And, um, otherwise you might have to pay at a higher rate if, uh, if it’s determined that the salary is,
uh, compensating them for a fixed period of time. Let me give you an example. So you hire someone and you say, okay, uh, typically you’re going to work 37 and a half hours a week, and I’m going to pay you a, uh, $600 a week salary for that 37 and a half hours. Well, if that person ended up working 40 more hours a week,
then you would have to pay them their regular rate, which would be the, uh, the salary that you’ve, uh, promised divided by 37.5 times, the number of hours that, that they were unpaid times, time and a half for every hour, over 40. If on the other hand, you said to that person, okay, I’m going to pay you $600 an hour for every hour.
You work. Then the regular rate is calculated by dividing that 600 by the number of hours they actually work in this case, let’s say it’s 50 hours. So you divide that 600 by 50 and you get their regular rate. And then you multiply the overtime hours to 10 hours by 0.5, rather than by 1.5. So it’s a much less, um,
the overtime pays much less if you do it that way. Uh, the folks in your office that are most likely exempt, or your legal administrator, your attorney, maybe you have a bookkeeper, uh, anyone who is, uh, in the office, uh, doing work in hand and exercises, a lot of independent judgment and discretion. Now attorneys are learned professionals in it.
You pay them a salary of $425 a week, or more than, uh, uh, they’re exempt from overtime. Uh, but you may have some other folks in the office who, uh, who operate in an office environment and, uh, are administrators and provide services that they’re not providing an aligner level. In other words, if you were an accounting firm and you had a bookkeeper that was working just on your books,
um, and they, they, uh, they do supervise people, or they exercise a lot of independent discretion and judgment. Then they may be exempt from overtime. This is an area where again, I always recommend that people do a, um, uh, an audit of your positions, both in terms of what these people are doing, uh, because you may have a,
sometimes if you hire someone, uh, in a new position, they don’t, even though their job description might say, okay, they’re going to exercise a lot of discretion because they’re new. Maybe they’re supervised by someone else more closely, and that can affect whether or not, if they’re not actually exercising that judgment that can affect whether or not the person is entitled to overtime.
So I really recommend going in and looking at what’s actually going on in your, your, in your, uh, operation, uh, to, uh, make sure that you’re compliant now, there’s, I’ll be honest with you. Uh, this is one of those things that if everybody’s happy with what’s going on, then they’re not gonna, they’re probably not going to file a claim,
but when, when somebody leaves or is fired or feels aggrieved and they go to a lawyer and they realize, Hey, you’ve worked 20 hours a week for the last three years, and you weren’t paid overtime, um, you know, 20 hours of overtime a week, uh, you don’t have discrimination claim, but we can go back and get you a bunch of overtime and then multiply that by two and get my legal fees.
Um, it can be a big, it can be a big blow financially for you, um, and that you don’t have a defense of, well, they agreed to it. Workers cannot waive their rights under the fair labor standards act. In fact, you can’t even settle one of these cases without court approval. So, uh, it’s, it’s one of the few acts that is,
uh, extremely remedial in its nature, uh, and slanted towards the employee rather than making slams and towards the employer. So the, and, and if you’ve got several people in a particular category, um, let’s say you’ve got a call center where you’ve got 20 people all doing the same thing, and you make a mistake in how you compensate them under the fair labor standards act that can really add up.
All right, I’m sorry. We’re having a little trouble advancing the advancing the slide. There we go. Alright. So the, the last thing that we, we said we were talking about is, uh, how to mitigate losses when a professional leaves. And if you live in a state like Tennessee, um, most States, it’s unethical for you to have a noncompete agreement with,
uh, with lawyers and that does, uh, that or non-solicitation agreement of, of clients. And so that does somewhat retard your ability to, um, to prevent people from, from leaving. But you can, you can craft some employment agreements that, that mitigate against it in a, I think can be very helpful. The first thing is to have a provision in your offer letter that,
uh, prohibits the person from soliciting other employees to, to, uh, to leave you and go work for them. Uh, so a great example. I had a client who had a family law practice, and one of his associates left and took their whole team. Uh, they had an associate, they had a junior associate, two legal assistants and a paralegal.
And not only did they leave with a bunch of work, but this associate took all of her support staff with her. And it, it really, uh, hobbled, uh, uh, this lawyer’s operation. So if they’ve been a non-solicitation agreement, then, uh, the, the, the lawyer could have left, but she could, uh, uh,
ask the other employees to go with her. And for a period of one or two years after that, she couldn’t employ, uh, any of those people. And so it, it kind of, that really is a, uh, firewall against, uh, having a bunch of people kind of gang up and leave at the same time. The other thing is to go ahead and agree on the front end,
what the fee splits are going to be if, uh, if the person leaves, uh, one example that I saw, which I think is, uh, is very smart. Uh, this was a personal injury lawyer who had associates and he paid the, the, the associates on a commission basis. And so basically he said, if you leave,
you get the same, you agree to accept the same commission as if you were still here. So, in other words, if your commission is 20% and the person takes the file with them, they agree that they’re going to, to remit 80% back to you. What that does is it makes the math of leaving more difficult for the, uh, for the associate,
because they can’t count on all of that revenue, even if it’s a brand new case. So, uh, that can be very helpful. Another provision, uh, that I recommend is having intellectual property protection, protect your forms and your research, uh, and so forth. Um, uh, get an agreement that, that, uh, they understand that everything they create for you as a work for hire,
and it belongs to you, whether it’s a research project or, uh, marketing materials, et cetera, there are ways to make sure that that can’t be, be taken and used. Now, I, again, I have a client who has spent a lot of time and money developing forms and other, uh, marketing materials. And most of the time,
he’s very happy to share that with an associate who leaves particularly legal and good on good terms. He just wants to know where that, where those materials are going and wants to exercise control over them. That’s something you can have in your employment agreement upfront. You can have arbitration or mediation provisions that, um, uh, I’m not a big fan of arbitration,
but I am a big fan in, in having a provision that says, if there’s a violation before anybody files a lawsuit, we’re going to go the non-binding mediation. Um, and that, uh, that can be very, very helpful because it can, uh, it can quash a, uh, a really before it happens, but there are ways to,
to treat these employment agreements and these provisions, uh, that will, uh, keep good employees, uh, longer. And then when somebody does leave, whether it’s voluntary or involuntary, you’ve got this exit kind of planned out. And so figure out what’s the best case scenario. Cause you know, they’re going to be these folks that leave. Um,
you can also have non-compete agreements with paralegals and office staff, um, and, and non-solicitation agreements. And I think those are very, very helpful because when you get right down to it, uh, those can be the more valuable employees that you want to retain. Um, you know, a good paralegal is, is hard to find, and you definitely don’t want somebody,
maybe who’s a marketing director or a legal administrator coming in and learning how you, um, operate and then go to your competition across the street. And maybe you don’t prevent them from working for any lawyer, but you may want to say if I’m a personal injury lawyer, you know, you can’t go work for another personal injury lawyer in this County or a bankruptcy lawyer or whatnot,
but you’re free to go work for some other kind of practice area, go back. All right. So how can, how can we help? Um, one thing we can do is we can certainly, uh, help, uh, help you with any of these employment issues. Um, we have different packages available to, to bundle some of these things to fit whatever needs you may have,
but we can help you with employment, handbooks and policies, employment agreements, and forms and evaluation program. And then, uh, also, uh, either on an ongoing basis or, uh, for a, for a small monthly fee, we can be available to help with discipline and termination. One thing we really haven’t talked about is medical leave. That’s a whole subject in and of itself.
If you’ve got 25 or more employees and have family medical leave act issues that can, that can help. Um, and then, uh, we can, uh, put a package together, uh, for a, a monthly payment. And then, uh, if you have issues arise, then, uh, help you wanna reduce fee. That’s my contact information I’ve really enjoyed.
Uh, I really have enjoyed the, this, uh, process I’ll, I’ll confess to you. This is the first, um, uh, type of a webinar I’ve done in a long time where I’ve done it. Usually I’m on a panel. So this is the first one I’ve had to carry all by myself. And it is a little, uh,
intimidating talking without getting any, uh, uh, facial cues or anything like that. But I hope it’s been helpful. And, um, if anyone has any questions, please chat them up, uh, uh, in the chat box and I’ll be glad respond, or, uh, that’s my phone number and email a call or email, and I’d be glad to talk to any of y’all offline about it is as well,
But as they say, I think that’s my time, Alan. Thank you very much. This is Eric. Finally able to connect the audio. Does anyone have any questions? Oh, we have a question there. Um, I don’t know if you can see that, Alan, but the question is, what is your opinion on having terminate employees? Right.
The SU I would imagine, um, is asking about whether or not you can, um, get a release at the end of a employment situation. And we definitely do recommend that, uh, you need to give consideration for it. I find that that again, if people understand why they’re there, they’re being fired, uh, and you give them some fair compensation,
uh, whether it’s a couple of weeks, I had a client just recently who ended up firing someone right before Thanksgiving. And, um, it was a, it was a lower level employee and they just said, look, if you give us a release, uh, we will continue to pay you through the end of the year. And, um,
uh, the, I was, I said, well, you know, you really don’t have to do that. And the guy said, you know, if, uh, if I don’t have to worry about her Sue and me through the holidays, uh, uh, that that’s worth it to me. And I think, again, one of the best advice pieces of advice I can give is,
uh, if you don’t put somebody in a tight spot where they feel like they’ve got to go and Sue you a lot of times, people, particularly if they go there, that they deserve to be fired, uh, we’ll sign the, uh, the release and, and, uh, go on about their life.<inaudible> All right. Interesting question,
Alan. Thank you once again, very, very interesting For, uh, three more minutes. If there’s any more questions, please pop in. We’ll wait, we’ll hang out for a little while Anyone got any questions, folks?<inaudible><inaudible> All right. I’ll share with you that while we’re waiting for more questions to come in, that if you would like a replay of Alan’s webinar,
it won’t be available for replay on the website. It’ll be posted within 24 hours within the members toolkit. Any other questions?<inaudible> I guess not, Alan, thank you very much. Thanks once again, for joining us last call for questions, folks. All right. Well, thank you very much. That’s a great question. If you’ve got an hourly employee,
you need to have him clock in. You need to, you need them to keep some sort of record of their, of their work, because if you were to have a problem down the road, uh, and you don’t keep the law requires the, it puts the burden on the employer to maintain an accurate record of the hours worked. And so if you get into a dispute about it later on,
uh, the employee’s reasonable recollection of how much they work is going to be presumptive. So it, any hourly employee needs to keep a record. Now you can do that from an automated standpoint, or you can just simply have a time sheet, but that to me would be nonnegotiable with hourly rate employee<inaudible> All right, folks. I’ve un-muted everyone. If you have a question,
you can go ahead and just shout it out. Anyone have a question, Alan. Great presentation. Thank you very much. I will give this up until one 10, then we’ll be closing it up more questions for Allen. Um, the question is if they’re exempt, should I not have them clock in or out, uh, that they’re truly exempt and there’s no requirement that they do.
Uh, but it’s not a bad, it’s not a bad, uh, it’s not a bad practice because again, if you’re wrong and they ended up being non-exempt and you’ve got a record of how much they work, then that, that eliminates what a colleague of mine calls the, the Liar’s poker, uh, process, where all of a sudden they,
their recollection is, is that they worked, uh, you know, 60 hours a week every week when the reality may be that they worked 45 hours a week, every, every so often. Now what’s interesting is that in our profession, uh, if you’re the kind of, if you, if you bill by the hour and you may end up having a record of how many hours they work,
or at least when they’re at the office. And so a lot of times what’s going to happen is if you don’t have a list of, or a record of how much they work, then, uh, the plaintiff’s lawyer may say, all right, well, give me all of your, in information from your computer. And so it may open up a whole bunch of discovery that would be expensive,
and that you just soon not get involved in. Uh, the other thing I’ll say about, about overtime cases in general is that they, a lot of them get settled because they, they really don’t justify the amount of work to figure out how much is involved. In other words, if, if, um, if, if the worker is entitled to $5,000,
which is, which can be a large, uh, claim, um, you know, you probably spend 15, a thousand dollars, a $1,000 or zero. And so that’s another reason why these things are settled. So you want to do everything you can to try to avoid, try to avoid, uh, an overtime claim. If you can. We have any more questions for Allen?
We’ve got time for one last question. Thank you very much for joining us. This webinar will be available for replay on<inaudible> dot org within the members toolkit. Uh, thank you very much for joining us and all have a great day.