RM's Job Never Ends With EPL Risks

Orlando

Minimizing exposure to employment-related claims is an ongoing, complex proposition, legal experts here warned.

Having a formal employment practices compliance program is the crucial first step to risk management and loss control, noted Frank H. Henry, a partner in the Miami office of Baker & McKenzie, one of four sponsoring law firms at a seminar here on “Employment Liability in the Workplace.”

The seminar was one of a series on employment practices risks sponsored by The National Underwriter Company (parent of this magazine), the Risk and Insurance Management Society, and the Florida Workers Compensation Institute.

An EPL compliance program must specify the companys zero tolerance of discrimination and harassment, describe a system for filing complaints, and provide for prompt and objective investigation of claims, Mr. Henry added. But he also stressed that a risk manager must continually and consistently apply the policy, update it and disseminate it to every employee.

Taking these steps helps provide a defense and a shield against punitive damages in employment discrimination lawsuits under federal law, he explained.

He also considers good hiring protocols “extremely important.” Companies should give the managers responsible for interviewing and hiring written instructions or even training on what they can and cannot ask during interviews.

The interview process also helps companies determine whether applicants represent potential workers comp or other medical exposures, noted James N. McConnaughhay, managing partner in the Tallahassee office of McConnaughhay, Duff, Coonrad, Pope & Weaver, who also heads up FWCI.

The importance of finding out all that is legally permissible about an applicant stems from the merger doctrine in workers comp law. This doctrine states that because an employer takes employees “as it finds them,” a pre-existing physical or medical condition merges with a physical or medical condition caused on the job, he explained.

One example, Mr. McConnaughhay said, was of a one-handed carpenter hired by a construction firm. The carpenter loaded staple guns by pressing them against his chest with one arm. When he accidentally shot a staple through his heart, a court rejected the employers argument that it was not responsible for the death because it was only the carpenters pre-existing condition of having one hand that had contributed to the death.

The initial interview should focus only on the applicants ability to perform the job, Mr. McConnaughhay cautioned. But after receiving a conditional job offer, a prospect may be asked to complete a medical history questionnaire to determine his or her physical or mental qualifications to perform the job, and whether any accommodations by the company would be necessary.

Mr. McConnaughhay advised the inclusion of a signed acknowledgement that the applicant understands that any misstatement or omission on the questionnaire can serve as grounds not to hire or to later terminate the employment.

Addressing the issue of sexual harassment claims against high-level executives, Stephanie A. Yelenosky, an associate in the Orlando office of the Jackson Lewis Schnitzler & Krupman law firm, pointed out that the decision of whether and how to discipline someone for sexual harassment can be complicated when the executive is a rainmaker for the company.

Ms. Yelenosky added that the courts tend to hold the companies of such executives more accountable than they do when the allegations are against a peer employee, because of the perception that a high-level person exerts significant power over other employees, she explained.

Among the tips Ms. Yelenosky recommended for reducing liability for sexual harassment:

A companys compliance program should state that sexual harassment by anyone in the workplace will not be tolerated.

A company should ensure confidentiality by sharing information about a sexual harassment allegation only with those who need to know for proper investigation of the complaint.

A company should investigate immediately allegations against high-level executives.

To avoid the appearance of a conflict of interest, an employer should use an outside investigator.

Even companies that outsource to independent contractors, or use temporary or leased employees to keep down costs might find themselves subject to various employment laws and regulations if not careful, warned Donald W. Benson, a member of the Atlanta-based law firm Constangy, Brooks & Smith L.L.C.

In determining whether a worker is truly not an employee for tax purposes, he stated, the Internal Revenue Service applies a 20-factor test, he said. Among other points, if a company provides a significant amount of training or detailed instructions to prepare a worker to perform job functions, the IRS might conclude that the worker is an employee, Mr. Benson stated.

“You have a better chance of calling someone an independent contractor if he or she provides you peer support on contracts” rather than routine services performed by employees, he said.

He also noted that the most fertile grounds for lawsuits by outsource workers are discrimination claims. In fact, it is becoming increasingly common for minority temporary employees to file discrimination charges with the Equal Employment Opportunity Commission due to perceived inequities in the areas of discipline, hiring and discharge, he said.

Part of the problem, Mr. Benson noted, is that an employment agency eager to please a user company might be too quick to pull out, reassign or even fire a worker whom the company reports, for instance, as having made a sexual harassment complaint.

Mr. Benson admitted that it is probably impossible to completely avoid liability risks involving non-employees. However, he suggested strategies that “can go a long way” toward establishing that a worker is not an employee:

Structuring the payment arrangement to give the non-employee incentive pay for doing the job more efficiently or quickly.

Specifying in contracts that the employment agency or employee-leasing company is responsible for workers comp, general liability, employment practices liability, and other insurance.

Specifying the training the worker must have before performing services for the company.

(Additional EPLI seminars will be held June 10-11 in Atlanta, and in Dallas on July 8-9. For more information, and to register, go to www.employment-liability.com, or call 850-425-8156.)

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 3, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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RM's Job Never Ends With EPL Risks

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