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3 Employment Issues That Will Put Your Firm on the Feds Radar

Legal_Pad.pngAre you up to date on your employment and labor laws? Since the early twentieth century, our federal and state governments have enacted extensive laws and regulations to protect employees. We see a number of employment practices that, I bet, you did not even realize violate the law. Let’s talk about three common labor issues that will put your staffing firm on the feds radar.

1.  Keeping employees from discussing pay.

It’s not uncommon to see a policy in an employee handbook or agreement that restricts employees from discussing their pay with other employees. Believe me, I understand the challenges this presents in the staffing industry, and all companies for that matter. Employees talk and become angry when they discover differences, albeit many times legitimate differences. Clients talk to employees and “do the math” to uncover the markup percentage of your firm and use that information as a negotiating tactic. But, preventing employees from discussing pay rates can land you in a Department of Labor (DOL) audit and paying hefty fines. 

Section 7 of the National Labor Relations Act (NLRA) gives all employees the right to engage in concerted activities, including the right to discuss the terms and conditions of employment, which includes among other things pay, benefits, and working conditions. Generally the NLRA is viewed as a law for union covered employees, but this particular section protects employee’s rights to discuss employment conditions in anticipation of forming a union, therefore this law actually covers non-union employees too. Long story short, do not have a policy or a practice preventing employees from discussing pay. We suggest a transparent process for assigning employee pay rates that is easily communicated to inquiring employees.

2.  Taking efforts to avoid paying overtime.

We also regularly see policies that say unapproved overtime will not be paid. When overtime occurs in a staffing situation, it’s not unusual for the client to refuse to pay the additional cost, because the client may not have approved the time. I don’t blame the staffing firm to want to avoid this situation. However, not paying the employee the overtime is not a choice.

The Fair Labor Standards Act (FLSA) governs the federal overtime provisions. Unless an employee is (correctly) classified as exempt from overtime, then an employee must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. This regulation does not care if the time was approved or not, or if your client is paying their bill. If the time is worked, it must be paid to the employee.

3.  Having a blanket policy to not hire felons. 

It’s our experience that many staffing firms communicate a policy to applicants that they will not hire those individuals with a felony record. Many times the client will say that is their policy and therefore, the staffing firm must be compliant in order to maintain the staffing relationship. Or, the staffing firm sees it as easier to simply have a blanket policy to avoid complications when placing an employee. There are certainly risks that need to be considered when hiring employees with a conviction record or felony. The employer is at risk of negligent hiring should something occur on the worksite that could have been prevented by investigating an employees’ background. On the other hand, employers can be at risk of discrimination by excluding applicants.

The Equal Employment Opportunity Commission (EEOC) guidance suggests that excluding applicants who have criminal records may constitute discrimination under Title VII of the Civil Rights Act of 1964. The guidance specifically says, “An employer's neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) may disproportionately impact some individuals protected under Title VII, and may violate the law if not job related and consistent with business necessity (disparate impact liability). National data supports a finding that criminal record exclusions have a disparate impact based on race and national origin.” There are two instances in which an employer can exclude applicants with a criminal record:

  1. 1. The employer validates the criminal conduct exclusion for a specific position by performing a data analysis to show the criminal conduct is directly related to work performance and behaviors.
  2. 2. The employer develops a targeted screen considering at least the nature of the crime, the time elapsed, and the nature of the job. The employer’s policy should then provide for an individualized assessment to ensure the screen is job related and consistent with business necessity.

Obviously, staffing firms must work closely with clients to verify the job and business in order to define the individualized assessment of each applicant.   We suggest including questions about the criminal screening process when developing the candidate profile for each position with a client. And, don’t take “that’s just our policy (not to hire felons)” as an answer from a client.

So, now you know. Avoid a policy or practice to keep employees from discussing their pay and other conditions of employment. Pay your employees for all time worked, including overtime. Develop a compliant policy to screen and assess candidates with criminal records for the specific job for which they will be placed. Stay on top of employment laws and stay off the feds radar.



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