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You may have read about the recent Supreme Court case saying pharmaceutical representatives aren’t entitled to overtime because they are outside salespeople. That’s because they fit within one of the narrow exemptions to the Fair Labor Standards Act, which is the law requiring employers to pay overtime to most employees who work over 40 hours per week.
The truth is, most employees are not exempt. That means you are probably entitled to be paid overtime if you work over 40 hours/week. Just because you’re paid a salary doesn’t mean you aren’t entitled to overtime. Your company can’t offer compensatory time (or “comp time”) instead of paying you. And they can’t average your hours over two or more weeks either.
If you aren’t exempt from overtime, you are entitled to be paid at time and a half for any week you work over 40 hours.
Here are some of the types of employees who are exempt from overtime if they are white collar workers (blue collar workers and first responders are not exempt):
Executives: If you’re paid a flat salary of at least $455/week, and your primary job duty is managing either the company or a department/subdivision, you may be an exempt executive. You must supervise at least two full-time employees, and have the authority to hire and fire them, or at least make recommendations on hiring and firing that are seriously considered. If you’re the Vice President of Operations supervising 100 employees, you’re probably exempt, but they can call you the Grand Poobah of the Shipping Department and it won’t make you exempt if you don’t actually supervise anyone.
Administrators: If you’re paid a flat salary of at least $455/week, and your primary job duty is office or non-manual work directly related to management or business operations of your company or your company’s customers, you may be an exempt administrator. Your job must involve using discretion and independent judgment regarding matters of significance. For example, a store manager may be exempt, but the cashier is almost certainly not.
Learned Professional: If you’re paid a flat salary of at least $455/week, and your primary job duty is performing work requiring advanced knowledge, predominantly intellectual, and the consistent exercise of discretion and judgment, you might be an exempt learned professional. Your advanced knowledge must be in a field of science or learning and be obtained through a prolonged course of instruction. As an example, lawyers are exempt, but paralegals are not; RNs are exempt but LPNs are not.
Creative Professional: If you’re paid a flat salary of at least $455/week, and your primary job duty is the performance of work requiring invention, imagination, originality or talent in a recognized art or creative field, then you might be an exempt creative professional. As an example, investigative reporters are exempt but reporters who rewrite press releases or who write standard recounts of public information by gathering facts on routine community events are not.
Computer Employee: If you’re paid a flat salary of at least $455/week, if you are paid on an hourly basis, you’re paid at least $27.63 an hour and you’re a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field, you might be an exempt computer employee. Your primary job duty must be applying systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; or design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; or design, documentation, testing, creation or modification of computer programs related to machine operating systems; or a combination of these.
Outside Sales: If your primary job duty is making sales, obtaining orders or contracts for services or use of facilities and you regularly work away from the company’s place of business, you might be an exempt outside salesperson.
Highly-compensated Employee: If you make $100,000 or more, at least $455/week of which is on a salary basis, and you regularly perform at least one of the duties of an exempt executive, administrative or professional employee, you may be an exempt highly-compensated employee.
Motor Carrier: If you are a driver, driver’s helper, mechanic, or are involved in vehicle safety or a motor vehicle used as transportation for compensation on public highways in interstate or foreign commerce then you may be exempt as a motor carrier and are instead governed under the Motor Carrier Act of 1935 instead.
Seasonal Amusement or Recreational Workers: If you work in an amusement or recreational establishment that doesn’t operate for more than seven months in any calendar year, or if its average receipts for any six months of the year weren’t more than 33 1/3% of its average receipts for the other 6 months of the year, you may be an exempt seasonal amusement or recreational worker.
These are some of the main exemptions. There are lots more, such as live-in domestic workers, car and boat salespeople, and movie theater employees.
Confused? So are most employers, which is why many get it wrong. Fortunately, the Department of Labor has online resources to help. You can start with the handy-dandy Overtime Security Advisor that can guide you through the exemptions and requirements. The Occupational Index is an alphabetic listing of many occupations and whether they are exempt or not.
You can’t legally waive any part of the Fair Labor Standards Act, so if your company policies or your employment contract say otherwise, you still may have the right to overtime. And you almost always have to be paid minimum wage, so if you’re working 100 hours a week and making $455/week, your employer is probably breaking the law.
The consequences of violating the overtime requirements are that your employer might have to pay double the amount owed you, plus attorney’s fees and costs. When in doubt, contact an employee-side employment attorney in your state to find out your rights.
30 Eylül 2012 Pazar
How Do I Prove I'm Paid Less Than My Male Co-Workers?
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A recent article in Newsweek discussed the continuing pay gap between men and women, and suggested some reasons why women still make less than their male colleagues. Another recent story discussed how female doctors are paid less than male doctors. I'm not going to argue here whether or not the pay gap is real. Instead, I want to discuss that, at least in some workplaces, women are paid less than men for the same work. The Newsweek article contained a disturbing statement: "But in many workplaces, discussing pay is frowned upon; in some, it's a dismissible offense. So, like Ledbetter, women often don't know when they're getting paid less than men." Lilly Ledbetter, the pay discrimination victim who lost her case and inspired a law, found out about how much less she made than her male colleagues when she got an anonymous note.
If you aren't lucky enough to get a note from someone brave enough to tell you that you're a victim of discrimination, how do you go about proving pay discrimination? Here are eight ways you can find out if your male colleagues make more than you for the same work:
To read more, see the rest of my article in AOL Jobs.
If you aren't lucky enough to get a note from someone brave enough to tell you that you're a victim of discrimination, how do you go about proving pay discrimination? Here are eight ways you can find out if your male colleagues make more than you for the same work:
To read more, see the rest of my article in AOL Jobs.
Top 13 Things Not To Say To An Employment Lawyer
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You think you have a great case against your employer. You’ve done your research and have found an attorney you think is just right for you. You reach out to the lawyer and they say they aren’t interested. You try another. No go. What went wrong?
It may just be that you don’t have the winning case you think you do. But it might be something you said. There aren’t a lot of employee-side employment lawyers out there. There are fewer with experience. Most experienced employment lawyers are busy. While they certainly want good cases, that doesn’t mean they’re sitting by the phone waiting for you to call.
Here are the top things to say to get an employment lawyer to turn down your case, no matter how good it is:
This case is easy money for you: If it’s so easy, what do you need a lawyer for? Could it be the four years of college, three years of law school, and the years of experience in employment law? There’s no such thing as “easy money” in employment law. In fact, most employment plaintiffs lose their cases. Your lawyer will have to work hard for you. If the case settles early on, it’s probably because the lawyer has a good reputation and because they convinced the other side your case had merit. Don’t insult the lawyer off the bat.
I won’t settle for less than a million dollars: Good luck. Most employment laws have caps on your recovery. Even if there are no caps, few cases bring in the really big bucks. You’ve just told the lawyer you’ll be difficult and unrealistic when it comes time to talk settlement. In fact, most plaintiffs who refuse a settlement offer do worse at trial than if they had accepted the offer. The lawyer wants to know you’ll listen to them if they recommend a settlement.
They’ll settle to avoid the publicity: Yeah, right. Probably not. Many people think this, and it just isn’t true. I find sometimes the more the publicity, the less likely they are to settle. While it’s true that defendants who refuse to settle and lose average about a $1.1 million loss for their error, they also know that employment cases are tough. Your lawyer will have to convince the attorney on the other side that your case has merit. Plus, your lawyer can’t threaten to go to the media (or the police) about your case, because that would be extortion.
I’ve interviewed 10 other lawyers: Okay, why didn’t any of them take your case? Either your case is a turkey or you’re trying to play the lawyers against each other. If you come across as arrogant, you can turn off the lawyer and their staff. It’s fine to talk to other lawyers, but you don’t need to try to pit them against each other. When clients tell me about other lawyers, I usually tell them that the other lawyer would be a fine pick. The employment law community is a small one and we usually know each other.
The other lawyers I talked to quoted a cheaper price: Then hire them. If the lawyer you’re speaking to is expensive, it’s probably due to experience. If you want a less expensive lawyer, hire them. Don’t insult the lawyer’s rates by trying to beg for a discount.
My last lawyer tried to sell me out: Doubtful. If your lawyer worked on a contingency or partial contingency, it was in their best interest to get you the best deal possible. It’s more likely you were unrealistic about the merits of your case and the settlement amount your lawyer suggested. If you were difficult to deal with for one lawyer, why would another lawyer want to take over? If you’ve been through multiple lawyers, it might be you, not them.
Your staff told me _____: I sit right next to my office manager, who handles incoming calls, and it’s funny what potential clients try to tell me she said to them when I’ve heard her side of the conversation. Whether they claim she told them the wrong fee, something incorrect about their case, or anything else I know she didn’t say, that person now has zero credibility with me. Don’t try to convince the lawyer you were told there was no fee when there was, a lower fee than was quoted, or anything you know isn’t true. Your lawyer needs to trust you. If you prove you’re a liar before you walk in the door, odds are they won’t be interested in your case.
I want a pro se lawyer: What you’re asking for is free work. You should probably talk to Legal Services or Legal Aid. Being a lawyer isn’t a hobby. Most of us would rather spend time with our families than be in the office. We practice law to pay our mortgages and other bills. You wouldn’t ask a doctor to work for free. Why do you expect a lawyer to? While some lawyers offer free consultations, most don’t. Many legal services are done on a flat fee or hourly rate. Contingency work is where the lawyer takes a percentage of the recovery. Even on a contingency, you’ll probably be responsible for any court costs (filing fees, court reporter fees, mediator fees, etc.) If you want a lawyer who works on contingency, ask if they do. Just don’t ask them to work for free.
I know you told me the fee on the phone, but I just wanted to talk to you first: Try that one with your doctor. If you were quoted a fee, don’t show up and waste the lawyer’s time by trying to talk them down or into working for free.
I forgot about my appointment (or my car ran out of gas, my dog threw up, and any other lame excuse for a no-show): If you can’t be bothered to respect the lawyer’s time, then don’t expect them to be interested in you as a client. They will assume you’ll also be AWOL at depositions, hearings or even trial. The lawyer set aside their valuable time to meet with you. Don’t no-show. If you decide to cancel, tell them so they can fit someone else in.
I didn’t fill out the questionnaire: I’ve even had some potential clients refuse to give me the name of their company and, in one notable instance, the client’s name. The lawyer has a questionnaire for a reason. It’s not busy work. Do your best to answer all the questions. You wouldn’t tell a doctor you don’t need to fill out your medical history, would you? (Okay, one potential client who was never an actual client for obvious reasons told me he refused with his doctor too).
I lost all my paperwork (or didn’t bring it, or have it here wadded up in this garbage bag): If you have documents the lawyer asked for or that you know are vital to your case, take care of them. Bring them to your appointment. Organize them so you can find what you need. If you can’t be bothered with your own evidence, why would any lawyer want to spend time on your case?
I’ll do the work for you: You show up with 20 binders, 10 of which are legal research. You tell the lawyer you will do the legwork and the research. You just need someone to sign the pleadings. When did you graduate from law school again? While most lawyers like clients who are involved in their own case, don’t insult the lawyer by telling them you know better or can do just as well as they can. If you’re Mike Ross from Suits (genius fake lawyer on TV), then represent yourself. Otherwise, let your lawyer handle the case.
If you want to hire a lawyer, be respectful. Treat them like a professional. Be nice to their staff too. If the secretary warns the lawyer that a potential client is going to be a PITA (figure it out or Google it), you probably won’t get in the door.
Once you hire a lawyer, you should do your best to maintain a good relationship. It’s amazing how many people think it’s a good idea to be nasty to their own lawyer. This is the person whose advice you want to follow, and you want to alienate them? Would you be nasty to your doctor and your accountant?
If the lawyer asks you to provide documents, write a statement, respond to discovery requests, attend a deposition or hearing, then do it. They can’t help you if you won’t help yourself.
If you find yourself doubting what your lawyer is telling you, get a second opinion. If you stop trusting the lawyer you hired, get another one. Just make sure the problem is them, not you. A recent study says half of all employment law plaintiffs thought their lawyers were incompetent or worked against them. Could it be that some of those plaintiffs were unrealistic from the beginning about the costs, merits, and settlement possibilities in their cases?
With some research and cooperation on your part, I hope you will have a good experience with your employment lawyer. Good luck!
It may just be that you don’t have the winning case you think you do. But it might be something you said. There aren’t a lot of employee-side employment lawyers out there. There are fewer with experience. Most experienced employment lawyers are busy. While they certainly want good cases, that doesn’t mean they’re sitting by the phone waiting for you to call.
Here are the top things to say to get an employment lawyer to turn down your case, no matter how good it is:
This case is easy money for you: If it’s so easy, what do you need a lawyer for? Could it be the four years of college, three years of law school, and the years of experience in employment law? There’s no such thing as “easy money” in employment law. In fact, most employment plaintiffs lose their cases. Your lawyer will have to work hard for you. If the case settles early on, it’s probably because the lawyer has a good reputation and because they convinced the other side your case had merit. Don’t insult the lawyer off the bat.
I won’t settle for less than a million dollars: Good luck. Most employment laws have caps on your recovery. Even if there are no caps, few cases bring in the really big bucks. You’ve just told the lawyer you’ll be difficult and unrealistic when it comes time to talk settlement. In fact, most plaintiffs who refuse a settlement offer do worse at trial than if they had accepted the offer. The lawyer wants to know you’ll listen to them if they recommend a settlement.
They’ll settle to avoid the publicity: Yeah, right. Probably not. Many people think this, and it just isn’t true. I find sometimes the more the publicity, the less likely they are to settle. While it’s true that defendants who refuse to settle and lose average about a $1.1 million loss for their error, they also know that employment cases are tough. Your lawyer will have to convince the attorney on the other side that your case has merit. Plus, your lawyer can’t threaten to go to the media (or the police) about your case, because that would be extortion.
I’ve interviewed 10 other lawyers: Okay, why didn’t any of them take your case? Either your case is a turkey or you’re trying to play the lawyers against each other. If you come across as arrogant, you can turn off the lawyer and their staff. It’s fine to talk to other lawyers, but you don’t need to try to pit them against each other. When clients tell me about other lawyers, I usually tell them that the other lawyer would be a fine pick. The employment law community is a small one and we usually know each other.
The other lawyers I talked to quoted a cheaper price: Then hire them. If the lawyer you’re speaking to is expensive, it’s probably due to experience. If you want a less expensive lawyer, hire them. Don’t insult the lawyer’s rates by trying to beg for a discount.
My last lawyer tried to sell me out: Doubtful. If your lawyer worked on a contingency or partial contingency, it was in their best interest to get you the best deal possible. It’s more likely you were unrealistic about the merits of your case and the settlement amount your lawyer suggested. If you were difficult to deal with for one lawyer, why would another lawyer want to take over? If you’ve been through multiple lawyers, it might be you, not them.
Your staff told me _____: I sit right next to my office manager, who handles incoming calls, and it’s funny what potential clients try to tell me she said to them when I’ve heard her side of the conversation. Whether they claim she told them the wrong fee, something incorrect about their case, or anything else I know she didn’t say, that person now has zero credibility with me. Don’t try to convince the lawyer you were told there was no fee when there was, a lower fee than was quoted, or anything you know isn’t true. Your lawyer needs to trust you. If you prove you’re a liar before you walk in the door, odds are they won’t be interested in your case.
I want a pro se lawyer: What you’re asking for is free work. You should probably talk to Legal Services or Legal Aid. Being a lawyer isn’t a hobby. Most of us would rather spend time with our families than be in the office. We practice law to pay our mortgages and other bills. You wouldn’t ask a doctor to work for free. Why do you expect a lawyer to? While some lawyers offer free consultations, most don’t. Many legal services are done on a flat fee or hourly rate. Contingency work is where the lawyer takes a percentage of the recovery. Even on a contingency, you’ll probably be responsible for any court costs (filing fees, court reporter fees, mediator fees, etc.) If you want a lawyer who works on contingency, ask if they do. Just don’t ask them to work for free.
I know you told me the fee on the phone, but I just wanted to talk to you first: Try that one with your doctor. If you were quoted a fee, don’t show up and waste the lawyer’s time by trying to talk them down or into working for free.
I forgot about my appointment (or my car ran out of gas, my dog threw up, and any other lame excuse for a no-show): If you can’t be bothered to respect the lawyer’s time, then don’t expect them to be interested in you as a client. They will assume you’ll also be AWOL at depositions, hearings or even trial. The lawyer set aside their valuable time to meet with you. Don’t no-show. If you decide to cancel, tell them so they can fit someone else in.
I didn’t fill out the questionnaire: I’ve even had some potential clients refuse to give me the name of their company and, in one notable instance, the client’s name. The lawyer has a questionnaire for a reason. It’s not busy work. Do your best to answer all the questions. You wouldn’t tell a doctor you don’t need to fill out your medical history, would you? (Okay, one potential client who was never an actual client for obvious reasons told me he refused with his doctor too).
I lost all my paperwork (or didn’t bring it, or have it here wadded up in this garbage bag): If you have documents the lawyer asked for or that you know are vital to your case, take care of them. Bring them to your appointment. Organize them so you can find what you need. If you can’t be bothered with your own evidence, why would any lawyer want to spend time on your case?
I’ll do the work for you: You show up with 20 binders, 10 of which are legal research. You tell the lawyer you will do the legwork and the research. You just need someone to sign the pleadings. When did you graduate from law school again? While most lawyers like clients who are involved in their own case, don’t insult the lawyer by telling them you know better or can do just as well as they can. If you’re Mike Ross from Suits (genius fake lawyer on TV), then represent yourself. Otherwise, let your lawyer handle the case.
If you want to hire a lawyer, be respectful. Treat them like a professional. Be nice to their staff too. If the secretary warns the lawyer that a potential client is going to be a PITA (figure it out or Google it), you probably won’t get in the door.
Once you hire a lawyer, you should do your best to maintain a good relationship. It’s amazing how many people think it’s a good idea to be nasty to their own lawyer. This is the person whose advice you want to follow, and you want to alienate them? Would you be nasty to your doctor and your accountant?
If the lawyer asks you to provide documents, write a statement, respond to discovery requests, attend a deposition or hearing, then do it. They can’t help you if you won’t help yourself.
If you find yourself doubting what your lawyer is telling you, get a second opinion. If you stop trusting the lawyer you hired, get another one. Just make sure the problem is them, not you. A recent study says half of all employment law plaintiffs thought their lawyers were incompetent or worked against them. Could it be that some of those plaintiffs were unrealistic from the beginning about the costs, merits, and settlement possibilities in their cases?
With some research and cooperation on your part, I hope you will have a good experience with your employment lawyer. Good luck!
What You Don't Know About the Minimum Wage Will Hurt America
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I bet you don't think about the minimum wage very much, unless you're one of the folks trying to live on it. There's a move afoot to raise the minimum wage, and you should support it. It's in everyone's best interest to make sure working Americans make a living wage.
Senator Tom Harkin has proposed the Rebuild America Act, which would, among other provisions, raise the minimum wage. It's about time we revisit the minimum wage. Here are some important facts you should know about the minimum wage:
Way below inflation: If the minimum wage had been raised to keep pace with inflation since it was $1.60/hour in 1966, it would now be $10.55.
Annual income: If you work full time on minimum wage, your annual income is $15,080. Go ahead. Try living on that for a year. Morgan Spurlock tried it for 30 days in his old TV show. If you never saw it, you missed an eye-opener.
Tipped employees: Tipped employees have a minimum wage of $2.13/hour. Tip well!
Affording an apartment: In no state in the U.S., even those with higher minimum wages, can a minimum wage worker afford a two-bedroom apartment at fair market value working only 40 hours/week.
Disproportionately women: 64% of minimum wage workers are women. Compare that to the percentage of women who are CEOs, at 4%. Something is wrong here.
Good for the economy: Minimum wage workers tend to spend their pay increases, mainly because they have to. Increases in the minimum wage are good for the economy.
Majority big corporations: Most minimum wage workers are working for big corporations, who have reported record profit increases. The old canard that it would put mom and pop shops out of business is malarkey.
More college educated: More college-educated folks make minimum wage than those who never graduated high school. If you think minimum wage workers brought their troubles on themselves by dropping out, you are wrong.
Now that you have the facts, I hope you'll tell your Congressional representatives and Senators that you support raising the minimum wage to something Americans can actually live on.
Senator Tom Harkin has proposed the Rebuild America Act, which would, among other provisions, raise the minimum wage. It's about time we revisit the minimum wage. Here are some important facts you should know about the minimum wage:
Way below inflation: If the minimum wage had been raised to keep pace with inflation since it was $1.60/hour in 1966, it would now be $10.55.
Annual income: If you work full time on minimum wage, your annual income is $15,080. Go ahead. Try living on that for a year. Morgan Spurlock tried it for 30 days in his old TV show. If you never saw it, you missed an eye-opener.
Tipped employees: Tipped employees have a minimum wage of $2.13/hour. Tip well!
Affording an apartment: In no state in the U.S., even those with higher minimum wages, can a minimum wage worker afford a two-bedroom apartment at fair market value working only 40 hours/week.
Disproportionately women: 64% of minimum wage workers are women. Compare that to the percentage of women who are CEOs, at 4%. Something is wrong here.
Good for the economy: Minimum wage workers tend to spend their pay increases, mainly because they have to. Increases in the minimum wage are good for the economy.
Majority big corporations: Most minimum wage workers are working for big corporations, who have reported record profit increases. The old canard that it would put mom and pop shops out of business is malarkey.
More college educated: More college-educated folks make minimum wage than those who never graduated high school. If you think minimum wage workers brought their troubles on themselves by dropping out, you are wrong.
Now that you have the facts, I hope you'll tell your Congressional representatives and Senators that you support raising the minimum wage to something Americans can actually live on.
An Employment Lawyer's Debate Questions for President Obama
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This is the first in a series that I am doing along with a group of employment attorneys around the country. Management and employee side attorneys will be providing their own debate questions for the Presidential and Vice Presidential candidates this week. The first candidate is President Barack Obama.
Here are some questions I’d ask the President at the debates if I had a chance:
Then I’d probably ask:
I’d follow up with:
Then I’d ask:
I’d end with:
There are, of course, lots more questions I could ask. I think the choice between the candidates as far as workplace issues is crystal clear.
Here's another perspective, from Robin Shea, a management-side employment lawyer.
Here are some questions I’d ask the President at the debates if I had a chance:
The very first piece of legislation you signed into law was the Lilly Ledbetter Fair Pay Restoration Act, empowering women to recover wages lost to discrimination by extending the time period in which employees can file claims. You’ve also advocated for passage of the Paycheck Fairness Act, which would have required employers to demonstrate that any salary differences between men and women doing the same work are not gender-related. Plus, you convened a National Equal Pay Task Force to ensure that existing equal pay laws are fully enforced. Why do you feel so strongly about the need for pay equity in America and what do you think about the Republican party’s strong opposition to your efforts toward pay equity?
Then I’d probably ask:
Your opponent wrote an editorial saying we should let the automobile industry go bankrupt rather than bail them out during the worst part of the recession. Do you think the bailout was worth it, and are you glad you saved over a million jobs and supported an industry that has added hundreds of thousands of new jobs when most industries are cutting workers?
I’d follow up with:
You’ve said that you believe people who work full time should not live in poverty. Before the Democrats took back Congress, the minimum wage had not changed in 10 years. Although Congress did raise the minimum wage during your administration, the minimum wage’s real purchasing power is still below what it was in 1968, and full time minimum wage workers are mostly below the poverty line. You’ve said you want to further raise the minimum wage, index it to inflation and increase the Earned Income Tax Credit. Why do you think it’s important to make sure that full-time workers can earn a living wage that allows them to raise their families and pay for basic needs such as food, transportation, and housing?
Then I’d ask:
You repealed Don’t Ask Don’t Tell, which limited gay and lesbian Americans’ right to serve in the military and be honest about their sexual orientation. You’ve also instructed the Justice Department to stop enforcing the Defense of Marriage Act, and you are in favor of the Respect for Marriage Act, which would uphold the principle that the federal government should not deny gay and lesbian couples the same rights and legal protections as other couples. Why do you think it’s important to treat gays and lesbians with respect and to end discrimination against them, and what more will you do to ensure equality for all Americans?
I’d end with:
Most Americans probably think they’re entitled to some sick time off of work, yet three out of four low-wage workers have no paid sick leave. You’ve said you support efforts to guarantee workers seven days of paid sick leave per year. Why do you think it’s unfair that a single mom playing by the rules can get fired or lose wages because her child or she gets sick, and what do you plan to do to ensure paid sick leave for all American workers?
There are, of course, lots more questions I could ask. I think the choice between the candidates as far as workplace issues is crystal clear.
Here's another perspective, from Robin Shea, a management-side employment lawyer.
29 Eylül 2012 Cumartesi
My Employer Says I Have To Resign. What Should I Do?
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Suzanne Lucas, the not-at-all-evil Evil HR Lady at CBS Money Watch, wrote an interesting piece about being forced to resign, and I wanted to talk some more about this important issue here. I get this issue all the time. People come to me and say, “I was forced to resign.” Huh? How did the employer do that? Gun to head? Torture devices? Kidnapped loved one? Because your employer can’t make you quit. Quitting is entirely, 100%, up to you.
Just because your boss or HR comes to you and says you have to resign, doesn’t mean you should. My usual advice is never, ever resign unless you have another job lined up or the company offers you an incentive to resign that makes it worth your while.
Suzanne Lucas says you should ask these questions/say the following before resigning:
Why You Shouldn’t Quit
You haven’t complained about illegal harassment or discrimination that occurred: It may be a bit late in the game, but if you didn’t follow the company’s written policy on reporting harassment based on race, age, sex, religion, national origin, disability, etc. then you may lose potential claims against the employer. Now is the time to put together your formal, written complaint of discrimination and harassment. Submit it to HR as soon after the meeting where they asked you to resign as you can. If you think the resignation request is being pushed by your harasser, say so. Tell them how others of a different race, age, sex, religion, or whatever your protected category is were treated differently. Tell them that those others are not being asked to resign. Ask them to do a prompt investigation. Sometimes, they really don’t know about the discrimination and reporting it might stop the termination process in its tracks.
They aren’t offering anything: If they don’t offer severance or some other monetary incentive, why would you quit? Don’t make it easy on them. If they want you out of there, they should offer something, in writing.
You might lose your right to unemployment benefits: Some unscrupulous employers use the resignation as an excuse to claim you aren’t entitled to unemployment. It could be your word against theirs if you don’t properly document that you were forced to resign.
They want you to sign something right away: If the employer is shoving something in front of you and demanding you sign it, consider that a red flag. They’re trying to trick you. Don’t sign anything you don’t understand or are too distraught to think about clearly. Tell them you need time to think about it. Take it to an employee-side employment lawyer if there’s anything in it you don’t fully understand.
You have claims against the company: If you think you have a discrimination, whistleblower, worker’s compensation retaliation, breach of contract or other claim against the employer, you may have leverage to negotiate a better exit package. Don’t sign a release of claims without fully exploring your options.
You aren’t fooling anyone: Some people think a resignation looks better on a resume. Maybe. But if you resign and are then unemployed for months or years, who do you think you’re fooling. Nobody in their right mind quits without having another job in this economy. HR people aren’t (mostly) dumb, so they will know something happened that prompted your resignation.
Why You Should Quit
Great severance package: If you are offered a severance package that will tide you over sufficiently when you’re looking for another job, then you might want to take the deal. Make sure you aren’t also signing away your right to work for a competitor, your pension, or something else of value. Take it to a lawyer to be sure.
Won’t challenge unemployment: In most states, the mere promise that you’ll get unemployment without a hassle isn’t much incentive. Unemployment is usually a fraction of what you were making. However, if you think they might have a basis to successfully challenge your unemployment, then you might consider the resignation as long as they make the promise about unemployment in writing.
You have an alternative: If you have a job offer you’ve been considering, have a startup company you want to spend more time on, or think it might be time to retire, then a forced resignation might help you make a smooth transition. Make sure they agree they won’t tell potential employers or customers anything other than that you left to pursue other options.
If your employer is asking you to resign, you have some power, as Suzanne Lucas points out in her excellent article. Now is the time to explore your options, talk to a lawyer, call your union rep, and read everything carefully. You may have more leverage to negotiate in this situation than you think. Good luck!
Just because your boss or HR comes to you and says you have to resign, doesn’t mean you should. My usual advice is never, ever resign unless you have another job lined up or the company offers you an incentive to resign that makes it worth your while.
Suzanne Lucas says you should ask these questions/say the following before resigning:
• How much severance will you give me in exchange for my resignation?I agree 100%. You need to weigh your options carefully before agreeing to resign. Now is the time to negotiate. If they want you gone, let them pay you to go away. Otherwise, make them fire you. You need to consider the upsides and downsides to resigning versus being fired. Here are some things to consider.
• If I resign, will you oppose unemployment?
• Why do you want me to resign?
• What will you say when you are called for a reference?
• I will take this and have it reviewed by my attorney before signing.
• I need this in writing.
• What will be my official "reason for termination" be in your HR system as well as my paper file?
Why You Shouldn’t Quit
You haven’t complained about illegal harassment or discrimination that occurred: It may be a bit late in the game, but if you didn’t follow the company’s written policy on reporting harassment based on race, age, sex, religion, national origin, disability, etc. then you may lose potential claims against the employer. Now is the time to put together your formal, written complaint of discrimination and harassment. Submit it to HR as soon after the meeting where they asked you to resign as you can. If you think the resignation request is being pushed by your harasser, say so. Tell them how others of a different race, age, sex, religion, or whatever your protected category is were treated differently. Tell them that those others are not being asked to resign. Ask them to do a prompt investigation. Sometimes, they really don’t know about the discrimination and reporting it might stop the termination process in its tracks.
They aren’t offering anything: If they don’t offer severance or some other monetary incentive, why would you quit? Don’t make it easy on them. If they want you out of there, they should offer something, in writing.
You might lose your right to unemployment benefits: Some unscrupulous employers use the resignation as an excuse to claim you aren’t entitled to unemployment. It could be your word against theirs if you don’t properly document that you were forced to resign.
They want you to sign something right away: If the employer is shoving something in front of you and demanding you sign it, consider that a red flag. They’re trying to trick you. Don’t sign anything you don’t understand or are too distraught to think about clearly. Tell them you need time to think about it. Take it to an employee-side employment lawyer if there’s anything in it you don’t fully understand.
You have claims against the company: If you think you have a discrimination, whistleblower, worker’s compensation retaliation, breach of contract or other claim against the employer, you may have leverage to negotiate a better exit package. Don’t sign a release of claims without fully exploring your options.
You aren’t fooling anyone: Some people think a resignation looks better on a resume. Maybe. But if you resign and are then unemployed for months or years, who do you think you’re fooling. Nobody in their right mind quits without having another job in this economy. HR people aren’t (mostly) dumb, so they will know something happened that prompted your resignation.
Why You Should Quit
Great severance package: If you are offered a severance package that will tide you over sufficiently when you’re looking for another job, then you might want to take the deal. Make sure you aren’t also signing away your right to work for a competitor, your pension, or something else of value. Take it to a lawyer to be sure.
Won’t challenge unemployment: In most states, the mere promise that you’ll get unemployment without a hassle isn’t much incentive. Unemployment is usually a fraction of what you were making. However, if you think they might have a basis to successfully challenge your unemployment, then you might consider the resignation as long as they make the promise about unemployment in writing.
You have an alternative: If you have a job offer you’ve been considering, have a startup company you want to spend more time on, or think it might be time to retire, then a forced resignation might help you make a smooth transition. Make sure they agree they won’t tell potential employers or customers anything other than that you left to pursue other options.
If your employer is asking you to resign, you have some power, as Suzanne Lucas points out in her excellent article. Now is the time to explore your options, talk to a lawyer, call your union rep, and read everything carefully. You may have more leverage to negotiate in this situation than you think. Good luck!
Is Your Employer’s Investigation Gag Order Illegal? Why Investigations Might Not Be Confidential Anymore
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You may have heard management-side folks yelling, “The sky is falling! The sky is falling!” recently. They’re totally freaked out about the NLRB’s recent ruling in Banner Health System d/b/a Banner Estrella Medical Center and James A. Navarro. Now, anytime the dark side is upset, that usually excites me to no end. This time, I’m smiling but not ecstatic. I think all the wailing and teeth gnashing over this decision is much ado over nothing much new. Still, good news is rare for employees, so I thought I’d share.
In Banner, the company’s HR consultant routinely told anyone making any complaint not to discuss the complaint with coworkers while the company investigation was ongoing. In this case, it was a complaint about safety issues. The Board found that the blanket instruction given to employees violates Section 7 of the National Labor Relations Act, which says employees are allowed to discuss working conditions, and Section 8 of the Act, which says employers aren’t allowed to prevent employees from doing so.
Oh, woe is me! says every management-side lawyer in the country. What will we do now? We can’t ever tell anyone ever again to keep any investigation confidential. Calamity will ensue.
Bollocks.
It’s been the law for a long time that employers had to show a legitimate reason to issue a confidentiality order on employees for investigations. The Board clarified, saying, “it was the Respondent’s burden ‘to first determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover up.’ [citing an older case saying the exact same thing]. The Respondent’s blanket approach clearly failed to meet those requirements.”
Nothing new to see here folks.
So yes, employers need to minimize the impact on employees’ right to discuss working conditions by only using gag orders for a legitimate purpose, and only for the time they actually need to accomplish that purpose. If they’re investigating embezzlement and the employee they’ve just interviewed tells them that Joe Schmo in Accounts Receivable has a second set of books he keeps in a locked file cabinet, then they can tell their witness not to discuss what he said with Joe Schmo until they can secure the file cabinet and interview Joe Schmo.
What they can’t do is tell employees that they aren’t allowed to warn coworkers that they’re working with asbestos; that the super-heated superglue their supervisor tells them to use to repair cabinets releases cyanide as a byproduct of the heating (true fact – never heat superglue unless you’re a forensics expert in a police department); or that the supervisor in Receiving is a grabber.
I’ve seen these kind of confidentiality rules and even contractual provisions used as a weapon against employees. They complain about, say, sexual harassment and suddenly are banned from discussing with female coworkers that their boss is a harasser. They can, and frequently are, fired if the employer claims they think the employee violated confidentiality.
The National Labor Relations Act says employees are allowed to discuss working conditions, which darned well should include being able to compare notes on the office letch, dangerous working conditions, and illegal practices. It’s about time the practice of putting a gag order on employees was shut down for good.
The ban isn’t across the board. First of all, supervisors can still be required to keep investigations confidential without consequences. The NLRA doesn’t apply to supervisors. Second, because the employer can show a legitimate reason to keep things confidential, such as protecting a witness, the danger of evidence being destroyed before the employer can secure it, preventing a cover-up, or the danger of fabricated testimony, nothing much will change. I suspect many employers will claim the last reason as their justification for demanding most employees remain gagged in investigations, so I’m willing to bet we’ll continue to see cases where employees challenge their employer’s right to shut them up about dangerous, discriminatory, or illegal practices.
Let’s give three cheers to NLRB for saying no to this coercive and retaliatory practice.
In Banner, the company’s HR consultant routinely told anyone making any complaint not to discuss the complaint with coworkers while the company investigation was ongoing. In this case, it was a complaint about safety issues. The Board found that the blanket instruction given to employees violates Section 7 of the National Labor Relations Act, which says employees are allowed to discuss working conditions, and Section 8 of the Act, which says employers aren’t allowed to prevent employees from doing so.
Oh, woe is me! says every management-side lawyer in the country. What will we do now? We can’t ever tell anyone ever again to keep any investigation confidential. Calamity will ensue.
Bollocks.
It’s been the law for a long time that employers had to show a legitimate reason to issue a confidentiality order on employees for investigations. The Board clarified, saying, “it was the Respondent’s burden ‘to first determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover up.’ [citing an older case saying the exact same thing]. The Respondent’s blanket approach clearly failed to meet those requirements.”
Nothing new to see here folks.
So yes, employers need to minimize the impact on employees’ right to discuss working conditions by only using gag orders for a legitimate purpose, and only for the time they actually need to accomplish that purpose. If they’re investigating embezzlement and the employee they’ve just interviewed tells them that Joe Schmo in Accounts Receivable has a second set of books he keeps in a locked file cabinet, then they can tell their witness not to discuss what he said with Joe Schmo until they can secure the file cabinet and interview Joe Schmo.
What they can’t do is tell employees that they aren’t allowed to warn coworkers that they’re working with asbestos; that the super-heated superglue their supervisor tells them to use to repair cabinets releases cyanide as a byproduct of the heating (true fact – never heat superglue unless you’re a forensics expert in a police department); or that the supervisor in Receiving is a grabber.
I’ve seen these kind of confidentiality rules and even contractual provisions used as a weapon against employees. They complain about, say, sexual harassment and suddenly are banned from discussing with female coworkers that their boss is a harasser. They can, and frequently are, fired if the employer claims they think the employee violated confidentiality.
The National Labor Relations Act says employees are allowed to discuss working conditions, which darned well should include being able to compare notes on the office letch, dangerous working conditions, and illegal practices. It’s about time the practice of putting a gag order on employees was shut down for good.
The ban isn’t across the board. First of all, supervisors can still be required to keep investigations confidential without consequences. The NLRA doesn’t apply to supervisors. Second, because the employer can show a legitimate reason to keep things confidential, such as protecting a witness, the danger of evidence being destroyed before the employer can secure it, preventing a cover-up, or the danger of fabricated testimony, nothing much will change. I suspect many employers will claim the last reason as their justification for demanding most employees remain gagged in investigations, so I’m willing to bet we’ll continue to see cases where employees challenge their employer’s right to shut them up about dangerous, discriminatory, or illegal practices.
Let’s give three cheers to NLRB for saying no to this coercive and retaliatory practice.
An Employment Lawyer's Debate Questions for President Obama
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This is the first in a series that I am doing along with a group of employment attorneys around the country. Management and employee side attorneys will be providing their own debate questions for the Presidential and Vice Presidential candidates this week. The first candidate is President Barack Obama.
Here are some questions I’d ask the President at the debates if I had a chance:
Then I’d probably ask:
I’d follow up with:
Then I’d ask:
I’d end with:
There are, of course, lots more questions I could ask. I think the choice between the candidates as far as workplace issues is crystal clear.
Here's another perspective, from Robin Shea, a management-side employment lawyer.
Here are some questions I’d ask the President at the debates if I had a chance:
The very first piece of legislation you signed into law was the Lilly Ledbetter Fair Pay Restoration Act, empowering women to recover wages lost to discrimination by extending the time period in which employees can file claims. You’ve also advocated for passage of the Paycheck Fairness Act, which would have required employers to demonstrate that any salary differences between men and women doing the same work are not gender-related. Plus, you convened a National Equal Pay Task Force to ensure that existing equal pay laws are fully enforced. Why do you feel so strongly about the need for pay equity in America and what do you think about the Republican party’s strong opposition to your efforts toward pay equity?
Then I’d probably ask:
Your opponent wrote an editorial saying we should let the automobile industry go bankrupt rather than bail them out during the worst part of the recession. Do you think the bailout was worth it, and are you glad you saved over a million jobs and supported an industry that has added hundreds of thousands of new jobs when most industries are cutting workers?
I’d follow up with:
You’ve said that you believe people who work full time should not live in poverty. Before the Democrats took back Congress, the minimum wage had not changed in 10 years. Although Congress did raise the minimum wage during your administration, the minimum wage’s real purchasing power is still below what it was in 1968, and full time minimum wage workers are mostly below the poverty line. You’ve said you want to further raise the minimum wage, index it to inflation and increase the Earned Income Tax Credit. Why do you think it’s important to make sure that full-time workers can earn a living wage that allows them to raise their families and pay for basic needs such as food, transportation, and housing?
Then I’d ask:
You repealed Don’t Ask Don’t Tell, which limited gay and lesbian Americans’ right to serve in the military and be honest about their sexual orientation. You’ve also instructed the Justice Department to stop enforcing the Defense of Marriage Act, and you are in favor of the Respect for Marriage Act, which would uphold the principle that the federal government should not deny gay and lesbian couples the same rights and legal protections as other couples. Why do you think it’s important to treat gays and lesbians with respect and to end discrimination against them, and what more will you do to ensure equality for all Americans?
I’d end with:
Most Americans probably think they’re entitled to some sick time off of work, yet three out of four low-wage workers have no paid sick leave. You’ve said you support efforts to guarantee workers seven days of paid sick leave per year. Why do you think it’s unfair that a single mom playing by the rules can get fired or lose wages because her child or she gets sick, and what do you plan to do to ensure paid sick leave for all American workers?
There are, of course, lots more questions I could ask. I think the choice between the candidates as far as workplace issues is crystal clear.
Here's another perspective, from Robin Shea, a management-side employment lawyer.
Debate Questions for Paul Ryan From an Employment Lawyer
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This is part of our series on what questions employment law practitioners would ask of the candidates in the debates. Today, I propose some questions I'd ask Paul Ryan.
OK, maybe that question won't be asked in the debate. But seriously, that was egregious. Lawyers know the jury instruction that says if a witness lies about one thing, you don't have to believe anything they say. I think he should have to answer for such a blatantly misleading statement.
How about asking this one:
I know. I'll never be asked to moderate one of the debates with an attitude like that.
At this point, they're probably escorting me forcibly out the auditorium door. Before I leave, I manage to yell out this one:
During your acceptance speech at the Republican National Convention, you talked about an automobile plant in your district. You said this, " Right there at that plant, candidate Obama said: 'I believe that if our government is there to support you … this plant will be here for another hundred years.' That’s what he said in 2008.Well, as it turned out, that plant didn’t last another year. It is locked up and empty to this day. And that’s how it is in so many towns today, where the recovery that was promised is nowhere in sight." The truth is that the plant announced it was closing and actually closed while George Bush was still President. Why on Earth would you try to put the blame for that plant's closing on President Obama, and why should we believe anything else you say if you're willing to mislead us on something so easily proven to be incorrect?
OK, maybe that question won't be asked in the debate. But seriously, that was egregious. Lawyers know the jury instruction that says if a witness lies about one thing, you don't have to believe anything they say. I think he should have to answer for such a blatantly misleading statement.
How about asking this one:
You initially voted against extending unemployment benefits in 2010, saying it would add to the deficit. Then you voted for extending unemployment benefits when they were coupled with an extension of the Bush tax cuts. Is it only bad to help the unemployed when you're not simultaneously helping the very rich?
I know. I'll never be asked to moderate one of the debates with an attitude like that.
Your family's company relies a lot on union labor. In 2009, in stump speech in your district, you said, “A lot of conservatives just think unions are nothing but bad. That's just not true.... They're people who are just trying to make their lives better, people trying to collectively negotiate a better standard of living for themselves. What the heck is wrong with that?" You've been a supporter of pro-labor bills like the Davis-Bacon Act, which keeps federally funded construction projects from undercutting prevailing union wages. On the other hand, you supported Governor Scott Walker in his fight against Wisconsin's public sector unions and supported cuts to education funding that caused teacher layoffs. If you are elected Vice President, will you support labor unions or will you work with people like Governor Walker to destroy unions?
At this point, they're probably escorting me forcibly out the auditorium door. Before I leave, I manage to yell out this one:
You voted for the failed 2007 attempt to pass the Employment Non-Discrimination Act, sometimes called ENDA, to protect employees against discrimination based on sexual orientation. Do you still think it should be illegal to discriminate against gays and lesbians?It's a question that puts him in a no-win situation. His party opposes any legislation expanding gay rights. His support of ENDA was the right thing to do, but it won't win him friends in his party. If he says he's changed his mind, he loses any goodwill he built up with the gay community with his vote.
Employment Lawyers Want to Know: Debate Questions for the Candidates
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I've shared my questions for the Presidential and Vice Presidential candidates this week. Four of my fellow employment lawyers did the same thing, and I thought I'd give you some of the highlights.
Questions for President Obama
Eric Meyer asked:
Jon Hyman wanted to know:
Robin Shea asked:
Daniel Schwartz asked several questions, including:
Questions for Mitt Romney
Daniel Schwartz asked several questions, including:
Eric Meyer asked:
Robin Shea asked:
Jon Hyman wanted to know:
Questions for Vice President Biden
Robin Shea wanted to know:
Daniel Schwartz asked two questions, including:
Eric Meyer asked:
Jon Hyman wanted to know:
Questions for Paul Ryan
Jon Hyman wanted to know this:
Robin Shea asked:
Daniel Schwartz had a couple of questions, including:
Eric Meyer wanted to know:
There you have it: some questions from management and employee-side employment lawyers for the candidates. If you go to the actual blogs, my fellow attorneys have provided some links and/or discussion of their questions. Now, if only we could get the candidates to answer . . .
Questions for President Obama
Eric Meyer asked:
Protection of women's rights in the workplace seems to have been a priority for you since taking office. In 2009, you signed the Lily Ledbetter Fair Pay Act, which effects the statute of limitations for filing an equal-pay lawsuit, into law. The Patient Protection and Affordable Care Act, signed into law in 2010, includes workplace breastfeeding protections.
Should you win reelection, what further changes would you make to workplace laws?
Jon Hyman wanted to know:
Four years ago, you campaigned on a promise to help working families. You promised to expand the FMLA to cover smaller employers, and promised that employers would be required to provide paid sick days to all employees. Yet, four years later, your track record on these issues is spotty at best. The only accomplishment to which you can point in the Lilly Ledbetter Fair Pay Act. What can you say to working families to earn their trust that the next four years will be different?
Robin Shea asked:
We already have Title VII and the Equal Pay Act, both of which give remedies to women if they're discriminated against with respect to compensation, as well as your own Lilly Ledbetter Fair Pay Act. (Title VII and the Ledbetter Act apply to pay discrimination based on race, national origin, etc., as well.) An expansion of the existing law is likely to make employers more vulnerable to lawsuits and class action settlement demands in an already bad economy. Given that, what evidence do you have that any significant part of the current sex-based disparity in pay is caused by discrimination against women, as opposed to voluntary work-life choices made by women and men? In light of studies showing that the so-called "gender pay gap" almost disappears when one controls for voluntary choices, why is this legislation necessary and couldn't it actually have the perverse effect of limiting opportunities for women?
Daniel Schwartz asked several questions, including:
As President, you have barred discrimination in your administration on the basis of sexual orientation and gender identity. Given your actions in your administration, why has there been no progress in Congress on passage of the Employment Non-Discrimination Act, a proposed bill that would bar employment discrimination on the basis of sexual orientation? Moreover, do you support that bill anymore? Your campaign website has no reference to that bill.
Questions for Mitt Romney
Daniel Schwartz asked several questions, including:
On your campaign website,you state that the “first step in improving labor policy will be to ensure that our labor laws create a stable and level playing field on which businesses can operate. As they hire, businesses should not have to worry that a politicized federal agency will rewrite the rules of the employment game without warning and without regard for the law.” Yet, the NLRB is — by its nature — a political agency that shifts its agenda depending on who the President is. Under George W. Bush, it became more pro-business and under Obama, it became more pro-union. Are you suggesting that you would try to de-politicize the NLRB? If so, how? And if not, aren’t the changes you propose simply adding to the political nature of the NLRB?
Eric Meyer asked:
As you know, the Family Medical and Leave Act provides job-security protections for qualifying employees with serious health conditions, loved ones with serious health conditions, or who need time off to care for a newborn. Presently pending in Congress are bills to expand the scope of the FMLA. For example, the Domestic Violence Leave Act would provide leave for workers to address domestic violence, sexual assault, or stalking and their effects. The Family and Medical Leave Inclusion Act would amend the FMLA to permit leave to care for a same-sex spouse, domestic partner, parent-in-law, adult child, sibling, grandchild, or grandparent who has a serious health condition.
These efforts would broaden the law. But what if you had the power to repeal the FMLA altogether. Would you do it? And why?
Robin Shea asked:
Actually, several related questions: Do you see the proposed Paycheck Fairness Act and the Employment Non-Discrimination Act, both endorsed by President Obama and the Democratic Party, as hindrances to your party's goals of reining in government regulation and restoring predictability to employers? In the same vein, do you support repeal or scaling back of any of the employment legislation enacted during the Obama and George W. Bush administrations, such the Americans with Disabilities Act Amendments Act or the Lilly Ledbetter Fair Pay Act? How, if at all, do you intend to stop the encroachment of the federal government into the non-union employment relationship?
Jon Hyman wanted to know:
You are on record opposing the Employment Non-Discrimination Act, a bill that would make it illegal under federal law for employers to discriminate on the basis of sexual orientation or gender identity. Yet, you have also publicly stated that you support anti-discrimination and equal rights for all.
Which is it? Are you in favor of equal rights for all, or you do believe that it permissible for employers to deny rights to individuals based on their sexual orientation or their gender identity? And, if the Employment Non-Discrimination Act came across your desk in the Oval Office, would you sign it or veto it?
Questions for Vice President Biden
Robin Shea wanted to know:
Do you see any inherent conflict between the ENDA (assuming it is interpreted this way) and the rights under Title VII of employees to exercise and express their religious beliefs without discrimination, and to religious accommodation? If not, why not? If so, how do you propose to enforce the ENDA while at the same time protecting employees whose religious beliefs may not be completely aligned with the ENDA?
Daniel Schwartz asked two questions, including:
Why do you support the Paycheck Fairness Act? And why is that bill needed in light of all the other laws already on the books preventing pay discrimination, including the Equal Pay Act?
Eric Meyer asked:
The White House touts the Lilly Ledbetter Fair Pay Restoration Act as the first piece of legislation -- employment-law or otherwise -- signed into law during President Obama's first term. The President touts fair pay and equal rights, but there hasn't been a second significant employment law passed yet.
Jon Hyman wanted to know:
Mr. Vice President, Governor Romney has accused your administration of supporting a partisan, pro union National Labor Relations Board. Historically, you have been outspoken of your support of the Employee Free Choice Act, which would provide employees the right to form a labor union without the benefit of a secret ballot election. At a Labor Day rally in Detroit earlier this month, you publicly stated that organized labor is one of the reasons why American is recovering. The American business community would not-so-respectfully disagree with you, and believe that activist federal agencies and labor unions are dangerously holding us back.
What would you say to business owners of all sizes who believe that your administration’s labor policies have stifled their ability to operate in today’s economic climate?
Why hasn't there been a second?
Questions for Paul Ryan
Jon Hyman wanted to know this:
You cite Ayn Rand as your inspiration for getting involved in politics. You even gave copies of her novel Atlas Shrugged as Christmas gifts to your staff. Among other philosophies, Atlas Shrugged endorses the belief that a society's best hope rests on adopting a system of pure laissez-faire government. Philosophically, you would seem opposed to government economic intrusions, yet you voted in favor of both the TARP bank bailout and the auto industry bailout. How do you reconcile your claim to be a fiscal conservative with your pro-regulatory Congressional votes on these two key federal bailouts?
Robin Shea asked:
Granted that a right to organize is implicit in right-to-work and secret ballot laws, and granted that the current National Labor Relations Board and public-sector unions have gone overboard during the current administration, do you believe generally in the right of private-sector workers to organize and collectively bargain? If not, do think that any alternatives are needed to ensure that private-sector workers are protected from exploitation and abuse? If so, what would those alternatives be?
Daniel Schwartz had a couple of questions, including:
Your record on the Employment Non-discrimination Act is, to be blunt, muddy at best. You appear to have once voted for passage of the Act, only after trying to prevent it from coming to the floor. Then in 2010, you are quoted as saying you would support the bill, but only if it didn’t include protections for transgendered Americans. Do you support this bill or a similar federal bill banning discrimination against employees based on his or her sexual orientation? If not, why?
Eric Meyer wanted to know:
Your campaign website claims (here) that "unions drive up costs and introduce rigidities that harm competitiveness and frustrate innovation." Both you and Mitt Romney have been critical of the Employee Free Choice Act, a bill that would have made it easier for employees to unionize. Indeed, you once received a 7% approval rating with the AFL-CIO.
Do you feel that unions today provide any benefit in America's workplace?
And, if given the opportunity, would you repeal the National Labor Relations Act altogether?
There you have it: some questions from management and employee-side employment lawyers for the candidates. If you go to the actual blogs, my fellow attorneys have provided some links and/or discussion of their questions. Now, if only we could get the candidates to answer . . .
28 Eylül 2012 Cuma
DISTINGUISHING CORPORATE DISTRIBUTIONS FROM LOANS
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The question often comes up whether a distribution to a shareholder is a taxable distribution (e.g., a dividend), or a nontaxable loan. A recent 5th Circuit Court of Appeals decision listed the general considerations courts will consider, and applied those considerations to the facts of the case.
Generally, the test of whether a distribution is a loan is whether there was an intent that the advanced monies be repaid. The following seven objective factors are what courts will focus on:
(1) Whether the promise to repay was evidenced by a note or other instrument. In the case, the note was not signed until six months after the distribution, so even though there was a promissory note its late preparation was an unfavorable fact for finding a loan.
(2) Whether interest was charged. In the case, interest was charged, which was a good thing, but the rate was below the market, which was not a favorable factor for a loan.
(3) Whether a fixed schedule for repayment was established. A schedule was provided, but not until 3 months after the first payment was due.
(4) Whether collateral was given to secure payment. In the case, the note was secured.
(5) Whether repayments were made. In the case, no payments had been made – obviously, not a good fact for finding a valid loan. While there were insurance mechanisms to allow for eventual payment if necessary from a plan death benefit, there were too many contingencies attached to such payment to treat it as an actual payment.
(6) Whether the borrower had a reasonable prospect of repaying the loan and whether the lender had sufficient funds to advance the loan. The borrower was a neurosurgeon who made a good living, so there was a reasonable prospect of repayment.
(7) Whether the parties conducted themselves as if the transaction was a loan. Not here – they did not make payments in accordance with the note, and no collection was attempted.
So how do you think the court ruled? Both the Tax Court and the appellate court found that there was no bona fide loan.
Clearly, taxpayers seeking loan treatment in similar circumstances should attempt to meet as many of the above factors as possible.
Todd, II v. Comm., 110 AFTR 2d ¶ 2012-5205 (CA 5 8/16/2012)
MANDATORY E-SERVICE BEGINS IN FLORIDA ON SEPTEMBER 1, 2012 [FLORIDA]
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By Sean Lebowitz
Mandatory service of court pleadings by e-mail begins on September 1, 2012. The Florida Supreme Court, in opinion SC10-2101, issued a holding requiring e-mail service of pleadings for all attorneys practicing in the civil, probate, small claims and family law divisions of the trial courts as well as in all district court of appeals. Mandatory service by e-mail is Florida’s initial step to a state-wide internet portal, similar to PACER in federal courts, which is currently scheduled to commence on April 1, 2013.
Florida Rule of Judicial Administration 2.516 (Service of Pleadings and Papers) is the principal newly adopted rule. The Rule replaces Florida Rule of Civil Procedure 1.080, which currently governs service of pleadings. The key provisions of Florida Rule of Judicial Administration 2.516 are as follows: 1) Attorneys are required to state their e-mail address on every pleading filed with the Court; 2) All documents required or permitted to be served on another party must be served via e-mail and need not be served via US Mail; 3) Service of a document via e-mail is made by attaching the document in PDF format to the e-mail; 4) The e-mail subject line must begin with the words “SERVICE OF COURT DOCUMENT” followed by the relevant case number; 5) The body of the e-mail must contain the name of the court, case number, name of the initial party on each side, the title of the document being served via e-mail and the sender’s contact information; and 6) The original documents must still be filed with the Court.
In addition, although service by e-mail is instantaneous, the rule still provides an additional five (5) days for transmittal pursuant to Florida Rule of Civil Procedure 1.090(e), unless another means of service is utilized with differing time limits (for instance, facsimile).
The e-mail and attachment may not exceed five (5) megabytes in size, and if the enclosures are larger, the e-mail may be sent in multiple e-mails. The document being served may be electronically signed by the “/s/” format, but the document filed with the Court must be appropriately signed. Permitting a document to be signed by the “/s/” format should alleviate the strict size requirements since the pleading does not need to be scanned (and can be saved as a PDF using Word or Word Perfect).
The mandatory service by e-mail rules have exceptions and contain other nuisances. The author encourages all attorneys to read the new rule and opinion (which can be found here: www.floridasupremecourt.org/decisions/2012/sc10-2101.pdf).
WANDRY NOW ON APPEAL
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In my March 31 posting, I discussed the Wandry decision of the Tax Court. The decision was a very favorable determination that approved of a formula clause to limit the amount of a gift (and thus limit exposure to gift tax) upon an IRS redetermination of value of the gifted property. While formula gifts have withheld scrutiny in other decisions, those cases involved more complex planning involving charitable lids or disclaimers – Wandry greatly simplifies the methodology involved to have an effective clause.
Notice of appeal was filed in the Tax Court on August 28, with the appeal going to the 10th Circuit Court of Appeal. Look for more here as soon as a decision is out.
‘BLAME THE PROFESSIONAL’ DEFENSE DOES WORK SOMETIMES
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Dr. James formed an irrevocable trust in Nevis, West Indies for asset protection purposes. He properly reported the trust to the IRS on a Form 3520-A, but neglected to file a Form 3520. He is at risk for a penalty of the greater of $10,000 or 35% of the gross reportable amount – not an insignificant penalty (more than $578,000 in penalties for Dr. James). Code section 6677(a).
As is the case for many penalties, there is an exception if the failure to file was due to reasonable cause and not due to willful neglect. Dr. James claimed that he reasonably relied on his accountant to advise him on what returns should be filed, and that he had no personal knowledge of the Form 3520 filing requirements.
A taxpayer may reasonably rely on an expert’s advice as to tax filing obligations – this can constitute reasonable cause under the above penalty exception. In many cases, however, the facts do not support the exception. For example, the taxpayer may not have provided adequate information to the professional, or did not engage the professional to advise him on all required tax filings.
In the case of Dr. James, he had enough favorable facts to allow for a further review whether reasonable cause existed for his failure to file. These facts included:
a. Dr. James gave his accountant all the applicable trust documents;
b. Dr. James relied on the accountant to advise him on all required trust filings;
c. The accountant did advise him on some tax matters relating to the trust;
d. The accountant prepared Dr. James’ personal returns. On those returns he checked the box ‘no’ to the question whether Dr. James received a distribution from, or was the grantor of or transferor to, a foreign trust. This could be construed as advice to Dr. James that a Form 3520 was not needed.
e. Dr. James believed he filed all required returns, based on his discussions with his accountant.
Dr. James is not out of the woods yet – the case was simply a denial of the IRS’ motion for summary judgment that the exception to the penalty did not apply. Based on the court’s opinion, it would seem that the IRS has a difficult road ahead in convincing the court to apply the penalty.
The case is also representative of the zealousness with which the IRS is pursuing offshore accounts and trust nonreporting. It would seem that this was not a case of an intentional or egregious nonfiling, especially given the reliance on the taxpayer’s accountant and that other disclosure reporting was undertaken by the taxpayer of the trust to the IRS – instead, it looks more like a zero tolerance policy by the government. The case does not reveal whether Dr. James avoided reporting income from the trust – if he did that might provide additional justification for the IRS to throw the book at him.
James, 110 AFTR 2d ¶2012-5196 (2012, DC FL)
TURBOTAX DEFENSE FAIL
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Russell Long, describing tax reform, once said, "Don't tax you, don't tax me. Tax that fellow behind the tree."
A variation that taxpayers who make mistakes on their tax returns often claim is, “Don’t penalize you, don’t penalize me, it was TurboTax’s fault, so set me free.”
The so-called “TurboTax defense” is raised by taxpayers to avoid penalties – they claim reasonable cause for their tax return errors because they used TurboTax or similar return preparation software to prepare the erroneous tax return. That is what Brenda Bartlett claimed when she was penalized for not reporting all her income on her tax return. Brenda maintained that the failure to report was an honest mistake resulting from her lack of familiarity with the TurboTax program and that she relied on the audit portion of the program to catch any mistakes she made.
The Tax Court rejected her defense, since the problem was that Brenda entered the information incorrectly into the program – not that the program made a mistake. The Court noted:
TurboTax is only as good as the information entered into its software program…Simply put: grabage in, garbage out.
Brenda Frances Bartlett v. Commissioner, T.C. Memo. 2012-254 (Sept. 4, 2012)
27 Eylül 2012 Perşembe
MODIFICATION OF TRUST DID NOT GENERATE ADVERSE TAX CONSEQUENCES
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A recent Private Letter Ruling addressed some interesting issues relating to a modification of an irrevocable trust under state law that is made with the consent of the settlor and all beneficiaries.
A. Section 2036/2038 Inclusion in Settlor. The question was raised whether the settlor was at risk for inclusion of the trust assets in his or her taxable estate by reason of participation in the modification process. That is, was the exercise of his rights under state law sufficient to show that he has a retained interest in the trust under Section 2036 or 2038?
The IRS ruled that the settlor suffered no estate tax exposure. First, the IRS noted that the settlor did not retain the possession or enjoyment of, or the right to the income from, the trust property. Further, the IRS noted that Section 2038 will not apply if a settlor decedent held a power that could be exercised only with the consent of all parties having an interest in the transferred property, and the power adds nothing to the rights of the parties under local law (Treas. Regs. §20.2038-1(a)(2)). Since the beneficiaries were consenting to the modifications, even if the statutory modification power was an issue for the settlor, the regulation would apply to provide further protection against taxable estate inclusion.
B. Gift Tax Exposure to Settlor. The issue was also raised whether the Settlor’s consent to the modification could result in gift tax liability to the settlor. The IRS ruled that there was no gift tax exposure. First, the IRS noted that the settlor’s original gift to the trust was a completed gift since he did not retain any power to change the disposition for his own benefit or for the benefit of another. Further, and similar to the 2038 Regulation discussed above, Treas. Regs. §25.2511-2(e) provides that a donor is considered to have a power if it is exercisable by him in conjunction with any person not having a substantial adverse interest in the disposition of the transferred property or its income. Here, the power that the settlor had under state law to modify the trust could only be exercised with all of the beneficiaries (who thus have a substantial adverse interest), and thus for both of the above reasons the IRS saw no gift tax issues for the settlor.
C. GST Exemption Preserved. The trust at issue was exempt from generation-skipping tax by reason of allocation of the settlor’s GST exemption to it. The issue was raised whether the modification of the trust could jeopardize the exempt status of the trust.
The IRS noted that there is no guidance regarding whether the partial termination or modification of a trust will affect the status of a trust that is exempt from GST tax because sufficient GST exemption was allocated to it. So the IRS instead applied its regulations whether a “grandfathered” generation skipping trust is modified in a manner that the exempt status would be lost – i.e. Treas. Regs. §26.2601-1(b)(4). The IRS found that under the regulations the modifications did not rise to a level that would result in loss of exempt status - the partial termination and modification would not shift a beneficial interest in the trust to any beneficiary who occupies a lower generation than the person or persons who held the beneficial interest prior to the modification and the partial termination and modification does not extend the time for vesting of any beneficial interest in the trust beyond the period provided for in the original trust.
While the exempt trust rules do not directly apply to this question, the IRS noted that “[a]t a minimum, a partial termination or modification that would not affect the GST status of a grandfathered trust should similarly not affect the exempt status of [a trust that is exempt by reason of allocation of GST exemption].” Accordingly, the IRS ruled that the partial termination and modification of the trust did not cause it to lose its exempt GST status.
COMMENT: Modification of irrevocable trusts with the involvement of the settlor are common. Confirmation that such modifications do not adversely impact the settlor when the settlor retained no rights or interest over the trust, and further do not upset the GST exempt status of the trust, is reassuring.
However, there may be circumstances when the modification may involve a shift of a beneficial interest to a lower generation – such a circumstance would not fit within the facts of this ruling on the GST issue. Presumably that should not impact the exemption allocation, but it does remain an open issue.
PLR 201233008
LAST CHANCE PLANNING PRESENTATION NOW AVAILABLE ONLINE
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For the past few weeks I have been making a weekly presentation in our office regarding planning to make use of the $5.12 million unified credit equivalent amount before its scheduled reduction to $1 million in 2013. I have now made an online version of the presentation for all those that are interested but could not intend. You can view it on YouTube through this link.
If you would like a copy of the written materials that accompanied the presentation, send me a quick email at crubin@floridatax.com with a note to send the last chance planning materials.
ANNUAL GIFT TAX EXCLUSION TO RISE TO $14,000 IN 2013
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Taxpayers can make annual exclusion gifts of $13,000 each year per recipient, without incurring a gift tax and without using up a portion of their unified credit. This amount was originally at $10,000, and is now indexed for inflation. After spending a few years at $13,000 it is projected to move to $14,000.
This move up is not yet official. Research Institute of America (RIA), a publishing house that serves tax professionals, has crunched the numbers and has made the determination that the increase will take place next year, based on their inflation computations.
INCOME FROM SURRENDER OF A LIFE INSURANCE POLICY
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The cash value of a surrendered life insurance policy is includable in gross income to the extent it exceeds the taxpayer's investment in the insurance contract. This excess is taxable as ordinary income.
There are two elements to this computation. First, what is the cash value. Second, what is the “investment in the insurance contract.” A recent case (Brown v. Comm.) illustrates some elements that go into these two items.
Cash Value. In the case, the insured did not receive the cash value. Instead, it was applied by the insurance company to pay off a policy loan. The court nonetheless included the cash surrender value applied to the loan as being received by the insured.
Investment in the Insurance Contract. This generally is the total insurance premiums paid by the insured. However, the court recognized two reductions to the investment in the contract. First, the insured had surrendered some of his insurance coverage. This surrender was treated as a reduction in the investment in the contract. Second, during the term of the policy the insurance company had used some of the dividends earned on the policy to purchase additional coverage.
Oftentimes, the quick and dirty computation of the income arising from the surrender of a policy is the cash received by the insured, over the premiums previously paid. This case reminds us that adjustments to both these items may apply that can materially impact this computation.
Brown v. Comm., 110 AFTR 2d 2012-XXXX (CA7 09/11/2012)
STATUTE OF LIMITATIONS QUIZ
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Facts & Law:
A. Income taxes must be assessed within 3 years of the later of the date the return is filed or the due date of the return.
B. However, the assessment period remains open indefinitely “in the case of a false or fraudulent return with the intent to evade tax.”
C. A shareholder in a Subchapter S corporation is taxable on his or her pro rata share of the net income of the corporation.
D. A Subchapter S corporation files a fraudulent return. The taxpayer-shareholder had nothing to do with the preparation or filing of the return, and was not knowledgeable of the fraud.
Question:
Can the IRS assess the taxpayer for a corrected share of the income of the corporation more than 3 years after the filing and due date of the return?
Answer:
No, according to the IRS.
Interestingly, fraud by one spouse in filing a joint tax return keeps the statute open for the other spouse. That was not persuasive here, because spouses are jointly and severally liable for joint return taxes.
In Vincent Allen, 128 TC 37 (2007), the Tax Court held that an income tax return preparer's fraud kept a taxpayer's income tax return open indefinitely. However, that precedent was not applicable here because the intent in that case was to evade the taxpayer’s tax – that was not the case here.
Chief Counsel Advice 201238026
26 Eylül 2012 Çarşamba
Ask A Lawyer: How Can I Get Paid For Overtime?
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How can you get paid for all the hours you worked? Whether it's getting paid vacation days or lunch breaks, lots of AOL Jobs readers have concerns about this issue, so I'm going to answer three readers' questions in this column. Please note: I'm giving general answers based on federal law. Your state may have laws with more stringent requirements for employers, so always check with an employment lawyer in your state about your specific situation.
Q: I work for a government agency and if we get any overtime, say on a Tuesday, we have to flex it in time off that week so that we don't get paid for it. The time we get off is straight time not time-and-a-half. They make us flex our time off if we work more than an eight-hour day. Is this legal?
For answers to this and other questions about wages, overtime and holiday pay, check out my new column in AOL Jobs.
Q: I work for a government agency and if we get any overtime, say on a Tuesday, we have to flex it in time off that week so that we don't get paid for it. The time we get off is straight time not time-and-a-half. They make us flex our time off if we work more than an eight-hour day. Is this legal?
For answers to this and other questions about wages, overtime and holiday pay, check out my new column in AOL Jobs.
My Office Air Conditioning Broke In A Heat Wave. What Are My Rights?
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The agency that regulates workplace safety is OSHA. If your workplace temperature has reached dangerous levels, OSHA might be able to help. In general, though, there’s no law saying how hot is too hot.
OSHA’s general recommendationis that temperatures at work be kept between 68-76° F with humidity control in the range of 20%-60%. However, don’t call OSHA if your boss sets the A/C at 66 or 78. They don’t regulate workplace temperatures unless it becomes so hot it’s dangerous to workers.
If you think your workplace is hot, think about these industries, which OSHA points to as of particular concern for heat-related illnesses:
iron and steel foundries, nonferrous foundries, brick-firing and ceramic plants, glass products facilities, rubber products factories, electrical utilities (particularly boiler rooms), bakeries, confectioneries, commercial kitchens, laundries, food canneries, chemical plants, mining sites, smelters, steam tunnels, farm work, construction, oil and gas well operations, asbestos removal, landscaping, emergency response operations, and hazardous waste site activities.
It’s doubtful your office is reaching temperatures as hot as those super-hot workplaces, but if you live somewhere where temperatures are over 100° F, your office could possibly become dangerously hot.
OSHA has a heatindex it uses to help guide employers on how to take measures to prevent heat-related illnesses. Over 103° F and it’s time to take serious precautions. Over 115° F, and employees will drop like flies.
If your office is suffering a heat-related emergency, OSHA suggests making everyone aware of how to contact emergency rescue services, having clear directions to the worksite readily available so they can be given to rescuers, and having heat-related first aid instructions available for workers to assist while waiting for the ambulance. If your company hasn’t made arrangements, take it upon yourself to become prepared if you are encountering excessive heat at work.
OSHA also offers guidelinesfor monitoring workers in hot workplaces to make sure they aren’t becoming overheated. Techniques include regular measuring of weight (for water loss), temperature and heart rate.
Now that you realize your workplace probably isn’t dangerously hot, you might want to look at bringing in fans, drinking lots of water, putting a cool, wet cloth on your forehead from time to time, and thanking your lucky stars you don’t work in a foundry or bakery.
If your workplace is dangerously hot, you can contact OSHA and ask for an inspection. If you report dangerous working conditions to OSHA, you are a whistleblower, legally protected from retaliation. Don’t wait until a coworker or you suffers heat stroke. It’s better to report dangerous conditions and be wrong than to allow yourself or others to become dangerously ill.
The agency that regulates workplace safety is OSHA. If your workplace temperature has reached dangerous levels, OSHA might be able to help. In general, though, there’s no law saying how hot is too hot.
OSHA’s general recommendationis that temperatures at work be kept between 68-76° F with humidity control in the range of 20%-60%. However, don’t call OSHA if your boss sets the A/C at 66 or 78. They don’t regulate workplace temperatures unless it becomes so hot it’s dangerous to workers.
If you think your workplace is hot, think about these industries, which OSHA points to as of particular concern for heat-related illnesses:
iron and steel foundries, nonferrous foundries, brick-firing and ceramic plants, glass products facilities, rubber products factories, electrical utilities (particularly boiler rooms), bakeries, confectioneries, commercial kitchens, laundries, food canneries, chemical plants, mining sites, smelters, steam tunnels, farm work, construction, oil and gas well operations, asbestos removal, landscaping, emergency response operations, and hazardous waste site activities.
It’s doubtful your office is reaching temperatures as hot as those super-hot workplaces, but if you live somewhere where temperatures are over 100° F, your office could possibly become dangerously hot.
OSHA has a heatindex it uses to help guide employers on how to take measures to prevent heat-related illnesses. Over 103° F and it’s time to take serious precautions. Over 115° F, and employees will drop like flies.
If your office is suffering a heat-related emergency, OSHA suggests making everyone aware of how to contact emergency rescue services, having clear directions to the worksite readily available so they can be given to rescuers, and having heat-related first aid instructions available for workers to assist while waiting for the ambulance. If your company hasn’t made arrangements, take it upon yourself to become prepared if you are encountering excessive heat at work.
OSHA also offers guidelinesfor monitoring workers in hot workplaces to make sure they aren’t becoming overheated. Techniques include regular measuring of weight (for water loss), temperature and heart rate.
Now that you realize your workplace probably isn’t dangerously hot, you might want to look at bringing in fans, drinking lots of water, putting a cool, wet cloth on your forehead from time to time, and thanking your lucky stars you don’t work in a foundry or bakery.
If your workplace is dangerously hot, you can contact OSHA and ask for an inspection. If you report dangerous working conditions to OSHA, you are a whistleblower, legally protected from retaliation. Don’t wait until a coworker or you suffers heat stroke. It’s better to report dangerous conditions and be wrong than to allow yourself or others to become dangerously ill.
Why Did The Lawyer Put This In My Contract?: The Merger Clause
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I negotiate and review a whole lot of contracts. I've been doing it so long that I forget some of this stuff looks like gibberish to normal people. By normal, I mean non-lawyers, of course. I thought I'd pick out some regular legal gobbledy-gook and deconstruct it for you here. Today, I'd like to talk about the merger clause, also called the integration clause. You may see something that looks like this in your employment agreement, severance agreement, noncompete agreement, or other contract your employer hands you to sign.
Looks harmless enough. The language is pretty clear, right? It's the whole agreement between your employer and you. You can't change it and neither can they unless you both sign a new piece of paper modifying the agreement or canceling it.
And yet, it's an incredibly important two sentences.
Here's why your employer's lawyer put the merger clause in the agreement:
Your employer wants the language because they don't want you to claim that they promised you a big bonus two months later, or that they told you not to worry about that noncompete stuff. Their lawyers put it in so they make sure you can't come after them based on a side verbal agreement.The language is there to protect your employer.
But it also protects you.
Here's why you should care about your merger clause:
Let's say you sign an employment agreement that has a noncompete provision, something that says you can't work for a competitor for a year or two. The agreement also sets out your salary, benefits, and job title. It says you can be fired at-will, meaning you can be fired for any reason or no reason at all.
Scenario 1: You work 6 months and then your employer tells you that they can't afford your salary anymore. The new salary is a 10% reduction of what they promised in the agreement. You can take it or leave it. You can't afford to lose your job, so you take it. You never sign anything agreeing to the change. When you get a job offer from the competitor, you take another look at the employment agreement. You realize the employer has breached the agreement on your salary. Their breach may be a complete defense to the enforceability of the noncompete provision. No, it isn't a magic wand that makes it go away. But you have a pretty good defense, and they might owe you money to boot.
Scenario 2: After a year, the employer drops its insurance coverage because it's too expensive. But they never have you sign anything agreeing to modify your contract to agree to this. They're in breach of the contract. You might have another defense, and they might owe you the money you have to pay for insurance.
Scenario 3: You're fired. Your employer hands you a severance agreement offering 2 weeks of salary in exchange for a release. It also has a merger clause saying it's the entire agreement between the parties. The new agreement doesn't mention your noncompete obligations. You decide to accept the 2 weeks and move on. You get an offer from a competitor. Can you take it? You betcha. The old agreement is gone with the wind. Your former employer might have a malpractice claim against the lawyer who forgot to have you reaffirm the noncompete obligations in the new agreement, but they have no claim against you.
Who knew two sentences could mean so much? Now you know why lawyers put merger clauses into your employment agreements, and why every sentence matters.
This document contains the entire agreement between the parties. This Agreement cannot be modified unless an authorized representative of the company and I agree to do so in writing.
Looks harmless enough. The language is pretty clear, right? It's the whole agreement between your employer and you. You can't change it and neither can they unless you both sign a new piece of paper modifying the agreement or canceling it.
And yet, it's an incredibly important two sentences.
Here's why your employer's lawyer put the merger clause in the agreement:
Your employer wants the language because they don't want you to claim that they promised you a big bonus two months later, or that they told you not to worry about that noncompete stuff. Their lawyers put it in so they make sure you can't come after them based on a side verbal agreement.The language is there to protect your employer.
But it also protects you.
Here's why you should care about your merger clause:
Let's say you sign an employment agreement that has a noncompete provision, something that says you can't work for a competitor for a year or two. The agreement also sets out your salary, benefits, and job title. It says you can be fired at-will, meaning you can be fired for any reason or no reason at all.
Scenario 1: You work 6 months and then your employer tells you that they can't afford your salary anymore. The new salary is a 10% reduction of what they promised in the agreement. You can take it or leave it. You can't afford to lose your job, so you take it. You never sign anything agreeing to the change. When you get a job offer from the competitor, you take another look at the employment agreement. You realize the employer has breached the agreement on your salary. Their breach may be a complete defense to the enforceability of the noncompete provision. No, it isn't a magic wand that makes it go away. But you have a pretty good defense, and they might owe you money to boot.
Scenario 2: After a year, the employer drops its insurance coverage because it's too expensive. But they never have you sign anything agreeing to modify your contract to agree to this. They're in breach of the contract. You might have another defense, and they might owe you the money you have to pay for insurance.
Scenario 3: You're fired. Your employer hands you a severance agreement offering 2 weeks of salary in exchange for a release. It also has a merger clause saying it's the entire agreement between the parties. The new agreement doesn't mention your noncompete obligations. You decide to accept the 2 weeks and move on. You get an offer from a competitor. Can you take it? You betcha. The old agreement is gone with the wind. Your former employer might have a malpractice claim against the lawyer who forgot to have you reaffirm the noncompete obligations in the new agreement, but they have no claim against you.
Who knew two sentences could mean so much? Now you know why lawyers put merger clauses into your employment agreements, and why every sentence matters.
An Employment Lawyer's Debate Questions for President Obama
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This is the first in a series that I am doing along with a group of employment attorneys around the country. Management and employee side attorneys will be providing their own debate questions for the Presidential and Vice Presidential candidates this week. The first candidate is President Barack Obama.
Here are some questions I’d ask the President at the debates if I had a chance:
Then I’d probably ask:
I’d follow up with:
Then I’d ask:
I’d end with:
There are, of course, lots more questions I could ask. I think the choice between the candidates as far as workplace issues is crystal clear.
Here's another perspective, from Robin Shea, a management-side employment lawyer.
Here are some questions I’d ask the President at the debates if I had a chance:
The very first piece of legislation you signed into law was the Lilly Ledbetter Fair Pay Restoration Act, empowering women to recover wages lost to discrimination by extending the time period in which employees can file claims. You’ve also advocated for passage of the Paycheck Fairness Act, which would have required employers to demonstrate that any salary differences between men and women doing the same work are not gender-related. Plus, you convened a National Equal Pay Task Force to ensure that existing equal pay laws are fully enforced. Why do you feel so strongly about the need for pay equity in America and what do you think about the Republican party’s strong opposition to your efforts toward pay equity?
Then I’d probably ask:
Your opponent wrote an editorial saying we should let the automobile industry go bankrupt rather than bail them out during the worst part of the recession. Do you think the bailout was worth it, and are you glad you saved over a million jobs and supported an industry that has added hundreds of thousands of new jobs when most industries are cutting workers?
I’d follow up with:
You’ve said that you believe people who work full time should not live in poverty. Before the Democrats took back Congress, the minimum wage had not changed in 10 years. Although Congress did raise the minimum wage during your administration, the minimum wage’s real purchasing power is still below what it was in 1968, and full time minimum wage workers are mostly below the poverty line. You’ve said you want to further raise the minimum wage, index it to inflation and increase the Earned Income Tax Credit. Why do you think it’s important to make sure that full-time workers can earn a living wage that allows them to raise their families and pay for basic needs such as food, transportation, and housing?
Then I’d ask:
You repealed Don’t Ask Don’t Tell, which limited gay and lesbian Americans’ right to serve in the military and be honest about their sexual orientation. You’ve also instructed the Justice Department to stop enforcing the Defense of Marriage Act, and you are in favor of the Respect for Marriage Act, which would uphold the principle that the federal government should not deny gay and lesbian couples the same rights and legal protections as other couples. Why do you think it’s important to treat gays and lesbians with respect and to end discrimination against them, and what more will you do to ensure equality for all Americans?
I’d end with:
Most Americans probably think they’re entitled to some sick time off of work, yet three out of four low-wage workers have no paid sick leave. You’ve said you support efforts to guarantee workers seven days of paid sick leave per year. Why do you think it’s unfair that a single mom playing by the rules can get fired or lose wages because her child or she gets sick, and what do you plan to do to ensure paid sick leave for all American workers?
There are, of course, lots more questions I could ask. I think the choice between the candidates as far as workplace issues is crystal clear.
Here's another perspective, from Robin Shea, a management-side employment lawyer.
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