Employment law

11 April 2008

How should an employer implement new or revised handbook policies? Once an employer and labour counsel have created policies that comply with applicable laws, the employer should follow a defined procedure for implementation of the policies. The steps involved in implementing a new or revised handbook will vary depending on the magnitude of the differences between existing policies and new policies.

An employer should publish and distribute the document before the effective date of the policies, which will allow employees and supervisors sufficient time to digest the new information and raise any concerns requiring clarification. Advance distribution also avoids any implication of a forfeiture of benefits or compensation earned before the effective date of new policies.

The employer should also provide notice to employees of revisions to existing policies. Courts have held that the revisions contained in a handbook that was merely placed in a location accessible by employees were ineffective.

Next, management should schedule meetings with supervisors to review new and revised policies. Consistent application of policies is fundamental, and training managers prior to implementation is an important part of establishing consistency.

Distribution of new or revised handbooks should be carefully documented. The employer should collect and retain receipt forms from all employees. Receipt forms should be checked against employee lists to ensure that all employees received the materials and acknowledged receipt.

Once the policies have been implemented, the employer should be sure to periodically review them for consistency with legal and business requirements.

How should an employer regulate the use of camera phones and other similar devices in the workplace? Employers should consider enacting a policy to inform employees about appropriate use of camera phones at work. The policy will necessarily depend on the employer's interests in regulating employee conduct. For example, some employers might be concerned about theft of trade secrets and confidential information, others might be more interested in ensuring privacy in bathrooms and dressing rooms, and still others may be primarily concerned with the effect that gadgets have on productivity.

Before completely banning camera phones, employers should consider the effect that such restrictions may have on employee satisfaction and morale. In some workplaces, a strict policy against possession of any recording device will be too restrictive. In others, such as research and development facilities, a complete ban may be the only solution.

Some employers will find that the most appropriate solution is to prohibit possessing recording devices in restricted areas. An alternative is to restrict the use of recording devices without prohibiting the presence of the device. Finally, the most extreme position is to prohibit the presence of any form of recording device from the workplace.

An employer implementing a new policy, or changing an existing policy, should be sure to put employees on notice of the policy update.

Is an employer allowed to perform credit checks on job applicants? Many employers seek to perform credit checks on all job applicants, regardless of the position for which the applicant is applying. Although credit checks are not per se illegal, performing global credit checks on all job applicants, regardless of the position for which they are applying, raises numerous legal concerns.

One such concern is the possibility that credit checks may impose a disparate impact on minorities. The U.S. Equal Employment Opportunity Commission (EEOC) has taken the position, and courts have held, that credit checks, when conducted on all job applicants, result in a disparate impact on minorities.

In addition, some states, for example, Minnesota, prohibit discrimination based on receipt of public assistance. Federal bankruptcy law prohibits discrimination based on bankruptcy history or bankruptcy claim filing status. An employer that does not have unnecessary information about the financial condition of applicants will reduce its exposure to liability for discrimination on these bases.

Another legal red flag is raised by the Fair Credit Reporting Act (FCRA), which contains protections for US job applicants by requiring employers to comply with disclosure and consent requirements when seeking to obtain credit information from applicants and employees. Employers that seek credit information open themselves up for legal exposure to the FCRA's complicated requirements.

Employers are advised to conduct credit checks on job applicants only where the credit check is job related and consistent with business necessity, such as when poor credit is indicative of an applicant's lack of qualification to perform the job or when the position is one of financial responsibility.

Are electronic signatures that use click technology valid? Many employers prefer the ease of using click technology, as opposed to an electronic signature pad. Yet there are legitimate concerns that doing so may result in signatures that are ineffective or not legally binding.

Questions often arise in the context of the Fair Credit Reporting Act, which permits a consumer reporting agency to provide a consumer report when it is “in accordance with the written instructions of the consumer to whom it relates.” In the past, the Federal Trade Commission (FTC) took the position that an electronic “mouse click” did not constitute “written” authorisation by the consumer under Section 604(a)(2) of the FCRA.

The Electronic Signatures in Global and National Commerce (ESIGN) Act provides that a signature, contract, or other record relating to a transaction in or involving interstate commerce may not be denied legal effect, validity, or enforceability solely because it is in electronic form. The ESIGN Act defines the term “electronic signature” as an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.

Furthermore, the ESIGN Act defines the term “transaction” as an action or set of actions relating to the conduct of business, consumer, or commercial affairs between two or more persons ... This broad definition of “transaction” appears to include the scenario in which a business that needs a consumer report on an individual includes clear authorisation by the individual to obtain his or her consumer report in a contract or application form. As a result, the FTC's current position is that the FCRA's requirement that an individual give written authorisation to obtain a consumer report may be satisfied by obtaining an authorisation in electronic form, whether it be via e-mail, mouse click, or by other electronic means.

May an employer refuse to hire an individual who was previously terminated for failing a drug test? In Raytheon Co. v. Hernandez, the U.S. Supreme Court recently held that a neutral no-rehire policy as to employees formerly terminated for violating workplace conduct rules, even if they have successfully completed a substance abuse rehabilitation programme, is not unlawful disparate-treatment discrimination.

The case involved an employee, Hernandez, who was terminated from his employment at Raytheon for testing positive for cocaine, which violated the company's workplace conduct rules. A few years later, Hernandez reapplied for employment with Raytheon. His application was rejected based on his previous termination for workplace misconduct, which he alleged was unlawful disability discrimination based on his record of drug addiction and/or because he was regarded as being a drug addict.

Raytheon may have more significant implications for the art of pleading than it does for drug testing policies. In Raytheon, Hernandez presented his case based on a disparate treatment theory. Not until Hernandez's response to his former employer's motion for summary judgment did he argue in the alternative that even if the company's no-rehire policy were neutral, it nonetheless had a disparate impact on drug addicts.

As Hernandez had not pursued the disparate-impact argument in a timely manner, the only argument that the Supreme Court could rightly hear was that of disparate-treatment. The Supreme Court found that Raytheon's policy of not rehiring previously dismissed employees would be a legitimate defence unless Hernandez could prove that the policy was used as an excuse, and that his application was rejected because of his history of drug use.

Due to this argument not being proved and that the information surrounding it was unclear, the court sent the case back to the 9th Circuit Court to re-examine the facts to determine why Hernandez was not rehired. On 23 March 2004, the 9th Circuit ruled that there was a genuine issue of material fact as to whether the employer failed to re-hire plaintiff because of his “status as an alcoholic,” rather than in reliance on a uniform no re-hire policy. It reversed the trial court's grant of summary judgment for Raytheon and remanded the case for trial.

It remains unclear whether, if the argument had been timely raised, the Court would have held that the company's policy resulted in disparate impact discrimination.

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