Company’s shady-looking ‘RIF’ leads to $145K payout

Firing a disabled employee while he’s out on medical leave is usually a recipe for disaster. But it can be done in limited circumstances. However, the potentially discriminatory nature of this firing was a little too obvious for the EEOC to overlook. 

Meet Doug Johnson. He drove a van and took nursing home patients to medical appointments for his employer Paloma Blanca Health Care Associates, a health and rehabilitation center in Albuquerque, NM.

Almost three years into his tenure, Johnson suffered a heart attack and was diagnosed with a number of other cardiovascular conditions.

He then requested a reasonable accommodation under the ADA in the form of a request for FMLA leave.

Paloma Blanca approved him for 12 weeks of FMLA leave.

So far so good, right?

Fired as part of an ‘RIF’

Five weeks into his medical leave things took a sharp turn.

Johnson was terminated.

Firing a person while on medical leave is enough to perk up the EEOC’s antenna. But Paloma Blanca didn’t stop there.

It notified Johnson that it had eliminated his position and was laying him off due to a “reduction in force.”

Granted, a legitimate RIF is actually one of the ways employers can terminate individuals on medical leave — assuming it could be proven those workers would’ve been let go regardless of their medical condition or leave of absence.

But problem for Paloma Blanca was this looked like anything but a legitimate RIF, at least according to the info contained in the EEOC’s press release on the matter.

No other Paloma Blanca employees were subjected to an RIF at that time, the EEOC said, and there were no department- or facility-wide reductions in force around that time either.

So the EEOC sued Paloma Blanca under the ADA for disability discrimination and for failing to provide reasonable accommodations to a disabled individual.

Perhaps seeing how bad this looked, Paloma Blanca decided to settle the lawsuit by providing Johnson $145,000 in monetary relief.

As part of the settlement, Paloma also agreed to:

  • expunge from Johnson’s personnel file any references to the allegations of discrimination, his participation in the lawsuit or his disabilities
  • review and distribute to employees its policies regarding disability discrimination and retaliation
  • provide its employees with training regarding disability discrimination and procedures for handling requests for reasonable accommodations, and
  • post a notice emphasizing the company’s equal employment opportunity policy and reaffirming its commitment to providing reasonable accommodations for employees and applicants with disabilities.

Don’t let temporary ADA accommodations turn into never-ending perks

When employers grant accommodation requests, those accommodations should always be made on a temporary basis. Unfortunately, many firms unknowingly turn these temporary accommodations into permanent ones.

Act early to prevent confusion

Ms. Galindo stressed the importance of making sure employers act early to prevent any confusion about the nature of the accommodation.

Here’s why that’s so important: Say an employee’s accommodation has been in place for a long period of time. The company decides the arrangement is no longer working out and tells the worker.

The worker then sues under the ADA, and the court sides with the employee. Its reason: The accommodation has been in place for this long without it impacting the company, so there’s no reason why it should all of sudden be an undue hardship.

In any communication about the reasonable accommodation during the interactive process and/or hardship analysis, it should be clearly stated that the accommodation is being made on a temporary basis.

From there, employers should revisit the accommodation regularly to see if the circumstances are still the same or if changes have taken place that could alter the accommodation.

How regularly? A 30-day increment usually works well, so HR pros should shoot for check-ins every 30 days, 60 days, 90 days, etc.

Another area that should be reviewed regularly: Job descriptions. Many job descriptions are poorly written, so “essential job functions” are difficult to pin down, says Galindo.

For example, if a job requires a high stress tolerance that should be listed in the description because it would impact the accommodation process.

Galindo also offered what she called “The Reasonable Test,” which is a very simple test to determine whether or not an accommodation is reasonable. If the accommodation will have a negative impact on the company as a whole, chances are it’s not a reasonable accommodation.

And chances are, the smaller the company, the easier it’ll be to prove the accommodation negatively impacts the entire workforce.

Of course, this test should never be used to make actual employment-based decisions. When the ADA is in play, the interactive process is always the way to go.

6 forms accommodations take

Galindo’s presentation also touched on the six major types of accommodation types employees generally request under the ADA, which include:

  1. Physical (a different chair, a special keyboard, etc.)
  2. Functional (being temporarily relieved of certain job functions, providing “sheltered” work environments for staffers with anxiety issues, ADHD, etc.)
  3. Environmental (Moving the employee to a different work environment, limiting his or her exposure to hot or cold)
  4. Work Hours (modified or reduced hours, alternate shift assignments, etc.)
  5. Time Off (intermittent absences, continuous leave), and
  6. Other (work aides, coaching, respite from attendance or discipline or attendance, service dogs).

Do your people have to be paid for ‘snow days’?

With a good portion of the country digging out from recent staggering snowfalls, it seems like a good time to review what rights and responsibilities employers have to employees who miss work because of inclement weather.

Rebecca Goldberg, writing on the Connecticut Labor and Employment Law blog, offers a pretty comprehensive look at snow day absences. Here’s a rundown of what she had to say:

Exempt employees

Since they’re paid on a salary basis, except in rare circumstances, a reduction in hours doesn’t change exempts’ pay.

If a business is closed for less than a week, the law requires that exempt workers be paid their full salaries. But the feds also say it’s permissible to require the employee to use vacation days or other PTO to cover their absence — but if the employee has no PTO time available, his or her salary can’t be reduced.

Caveat: State laws may vary on these issues, so it’ll pay to check with your company attorney.

So, OK. You can make exempts use up vacation time for snow days. But Goldberg cautions that “if an exempt employee performs any work during the day (whether onsite or from home), the employee must be paid for the whole day.”

Partial-day deductions from a paid time off bank are allowed, even for exempt employees.  So, if an exempt employee chooses to come in late due to road conditions, a portion of a day may be deducted from the employee’s paid time off bank — again, if the employee has PTO available. Partial-day deductions in pay aren’t allowed.

Non-exempt employees

As you well know, non-exempts are paid only for hours worked, so generally speaking, if the snowdrifts prevent them from getting to the workplace, they don’t get paid. Again, though, Goldberg offers a word of caution: “Some passive time, such as on-call time, is considered ‘hours worked,’ so it is possible some non-exempt employees will need to be compensated, even if they do not perform any actual work.”

Some state laws require some form of payment for non-exempt employees who report to work and are then sent home early.

In addition, employers should count these hours as “hours of service” for purposes of the Affordable Care Act.

Tips for employers

Here’s Goldberg’s general advice on handling employee pay issues that come with absences caused by the weather:

Many employers choose to pay all employees for the full day, without deducting from a paid time off bank, for administrative simplicity, employee morale, or other reasons.  (Of course, a collective bargaining agreement may limit these choices.)

Whether or not to close the worksite can be a difficult decision and may be influenced by road conditions, the length of employees’ commutes, the nature of the job, whether schools are closed, production requirements, whether telework is possible, employee morale, and the amount of pay at issue.

Unless the employee’s job is of a critical nature (think hospital employees), employers should avoid subjecting an employee to discipline or termination for failing to report to work if the employee feels the road conditions are unsafe.

Employers should communicate to employees beforehand how the employees will be notified of a worksite closure.  Small employers typically will call each employee at home or send an email, while larger employers may announce a closure through a radio station or company website.

Whatever you choose, make sure employees know whether they are expected to report to work.

Discrimination claims cost company $15M

What’s scarier, these discrimination claims or the number of zeros in the award? 

California-based trucking outfit Matheson Trucking and Matheson Flight Extenders Inc. is paying dearly for racial discrimination claims levied against the company by seven former employees.

A lawsuit filed by the men — six of whom are black — claims Matheson let some pretty horrific stuff go on in its warehouse, according to a report by The Denver Post.

Some of the lawsuit’s claims, according to The Post:

  • White workers called black workers “lazy stupid Africans.”
  • White employees and black employees worked on separate sides of the warehouse.
  • White supervisors and workers often used the N-word around black workers.
  • In one instance, a white worker yelled that all blacks should be shot (and that worker was later promoted).
  • Calling a white worker, the seventh plaintiff, who stood up for his black co-workers, “the tribe’s assistant.”
  • That same white worker was fired after he challenged the company’s racist practices.
  • Black workers were passed over for desirable, double-pay holiday shifts, which were given to white workers with less seniority.

The lawsuit went on to say that the plaintiffs were discriminated against in all phases of employment — including hiring, promotion, vacation pay, discipline, wages, benefits and much more.

A federal jury awarded them nearly $15 million, and here’s how that broke down, according to The Post:

  • $14 million in punitive damages
  • $650,000 in emotional distress, and
  • $318,000 in back pay.

And as if that wasn’t bad enough for the employer, it’s likely on the hook for the plaintiff’s attorney fees, too.

Can your business survive an IC audit?

Remember how the DOL earmarked a ton of money to  help states root out businesses that misclassify their employees to avoid paying fringe benefits and payroll taxes?  
Well, at least one of these states has made good use of those funds – and you can bet the rest will soon follow.

New York’s Joint Enforcement Task Force on Employee Misclassification  discovered 133,000 workers who were misclassified as independent contractors or “off-the-books” workers in 2014.

Regulators conducted over 12,000 audits uncovering $316 million in unreported wages and over $40 million in unpaid unemployment insurance contributions.

New York is not alone in its efforts.

Eighteen other states have partnered with the DOL in its misclassification initiative.

What does all this mean?

For one thing, businesses can no longer afford to casually issue 1099s and hope an investigator does not come knocking.

Here are some tips to avoid misclassifying workers:
•    Employers should audit their labor pool. It’s important to remember that independent contractors will generally be free from supervision, direction and control.
•    Other indications of an
employee-employer relationship include setting the rate of pay and hours of work, requiring attendance at meetings and evaluating job performance.
•    If you want to make sure your company is on the same page with the IRS, ask the agency to determine whether your worker is an employee or independent contractor.
•    Excuses like, “He works only a few days a week,” “I have him use his own tools” or “He’s been doing this work so long he doesn’t need my supervision,” won’t fly with investigators.