Employers are well served to develop a strategy for hiring. One strategy may be the “defensive hiring process.” Although the name sounds bad, the strategy itself is sound. Defensive hiring allows the company to identify the most qualified candidates for open positions and screen out those applicants who are unlikely to be assets to the organization.

There are multiple benefits of defensive hiring, such as fewer employee relations problems, higher customer satisfaction, and higher productivity. Most employment lawsuits are caused by poor hiring decisions. Similarly, other employee discontent and morale issues are often related to employees who should not have been hired by the organization in the first place. Eliminating these employees before they are hired is the key.

Similarly, qualified and satisfied employees create satisfied customers. The converse is true as well, which means that poor hiring decisions will ultimately lead to poor customer service. Poor customer service financially impacts the company, and either directly or indirectly, every other employee.

Finally, poor hiring decisions affect productivity in two ways: 1, an unqualified candidate will produce less than you expect; and 2, that same candidate will distract other employees and cause their productivity to decline as well.

The question now becomes: How does one go about defensive hiring? Fortunately, the characteristics of a potential problem employee are readily identifiable in the hiring process. The following procedures are designed to help you identify these characteristics so that you are hiring defensively.

First, the employer should establish a defensive hiring checklist. This will let every individual involved in the hiring process ensure that each step the employer has deemed worthwhile and necessary is completed prior to making an offer of employment. The most basic checklists will contain items such as a timely application, an assessment of the application, a screening interview, a secondary interview, background and reference checks, and a decision concerning a potential offer.

While the application review process is pending, don’t promise anyone a job conditioned upon completion of any particular item on the checklist. For example, do not tell an applicant, “You are hired so long as your job references check out.” If you do this, you may inappropriately raise the expectations of the applicant, who will expect a much more detailed explanation if you decide not to make an offer.

You may also find a better applicant prior to the offer being extended, which leaves you in a difficult position. It is better to simply wait until the entire process is complete before making anything that could be construed as a promise of employment.

Generally, the initial contact with the applicant will come in the form of the application. This is your first insight into potential employees. Make it count. Was it submitted timely? Be cautious in allowing late applications. If someone cannot meet the deadline for an application, what are the chances the person will meet other deadlines? Also, thoroughly review the application for “red flags.”

Red flags may include: unexplained gaps in job history; blanks and/or incomplete responses; prior employment terminations; reasons for leaving prior jobs indicating a negative attitude toward management (e.g., personality conflicts, “disagreements” with management, leaving by “mutual agreement,” poor working conditions, etc.); lack of candor regarding background; a history of declining wages; criminal convictions, within the last 10 years, that are pertinent to the job; and lack of personal references. While any one of these items may not in and of itself disqualify an applicant, the items should be evaluated because they may indicate that an applicant is not a wise choice for employment.

Ideally, every applicant should be interviewed by at least two supervisors. However, the initial interview is usually a “screening interview,” beyond which no interviews will be necessary if the initial decision is that the candidate is not ideal. Although in-person interviews are always preferable, the screening interview may be handled by telephone, particularly for employees who will use the telephone in the course of performing their job duties.

Three of the keys to successful interviewing are: 1, getting applicants to talk; 2, listening to what they say; and 3, taking notes. Resist the temptation to spend the majority of your interview time “selling” the candidate on the position. Good interviewers generally are talking during 20 percent of the interview and listening during 80 percent.

Supervisors should have several standard questions directed to each and every applicant, so that they and their answers can be compared more consistently. Interviews should also always include questions asking applicants to divulge what they have liked and disliked in their prior jobs.

Supervisors often wonder whether they should take notes when they interview applicants. Take any notes necessary to allow you to remember key aspects. Notes should never be written directly on the employment application itself because it will become a part of the company’s personnel records. One common technique for taking notes is to write them on post-it notes, which can be attached to the application while it is pending. When the application process is completed, irrespective of how it concludes, the notes should be discarded.

Once a potential candidate has been identified from the interview process, the next step is usually to check references. Both personal and professional references should be checked for every applicant.

Even though many former employers whom you call may refuse to provide substantive information, attempt to contact at least three for each applicant. Try to call former supervisors directly rather than personnel departments or business offices. If people seem hesitant to answer direct questions, ask them indirect questions such as, “Is Jane eligible for rehire?” Sometimes indirect questions and answers are all you will get, but that doesn’t mean they aren’t informative.

Once you have an applicant who successfully meets all items on your defensive hiring checklist, you are ready to make an offer. While no system is foolproof, establishing a solid procedure and following it each time is one way that employers can lessen the odds of hiring problem employees who eat up time, resources, morale and profits.

Mitch Baker is the managing partner in the Portland office of Fisher & Phillips LLP. He defends employers in labor and employment law matters. Contact him at 503-242-4262 or mbaker@laborlawyers.com.

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This Valentine’s Day, some employees may be celebrating the fact that they’ve found romance at the office. Love may be a wonderful thing, but in the workplace it can put a company at risk.

Two romantically involved employees can create a variety of workplace challenges. For example, if one is a manager and the other is a subordinate, the obvious concerns are potential conflicts of interest, or favoritism and clouded judgment.

And regardless of the employees’ position on the corporate ladder, employers must prepare for the potential ramifications of a less-than-amicable future breakup. After a split, one person may redefine as sexual harassment behavior that he or she previously welcomed. If a lawsuit results, the company faces attorney fees, negative publicity and workplace disruption.

Flirting with disaster

Employers should take these proactive steps to insulate themselves from the liability that can arise from such relationships:

• Update the company’s harassment policy. Distribute it to all employees upon hire and keep a signed acknowledgment-of-receipt form in each employee’s file.

• Consider implementing a policy that discourages dating between co-workers and forbids it among supervisors and subordinates with a direct reporting relationship.

• Require employees who are dating to disclose the relationship to a company official. By requiring disclosure and publicizing the requirement, the company gives other employees some assurance that processes are in place to prevent harassment, favoritism or retaliation due to personal relationships.

• Use “love contracts” that document in writing the disclosures and acknowledgments from employees involved in a workplace romance.

Contracting love

If love blossoms at work – and surveys show that it often does – employers can require the two employees involved to sign a written confirmation that their relationship is voluntary, and that they both understand and agree to abide by company policies that deal with harassment in the workplace.

These so-called love contracts can protect an employer from liability for harassment and retaliation claims when workplace romances go south. A typical love contract confirms that neither party harassed or threatened the other to enter into the relationship and that neither employee feels compelled to maintain the relationship to retain his or her job or to receive employment opportunities or benefits of any kind.

Love contracts also may include:

• Both parties’ acknowledgment of their understanding that either one may terminate the relationship at any time without any adverse employment consequence.

• Both parties’ acknowledgment that neither will take adverse action against the other, nor will they engage in any form of favoritism or preferential treatment for the other in connection with their employment.

• Each person’s affirmation that they will not allow their personal relationship to interfere with their job performance.

• An agreement from the romantically linked employees that they will not engage in workplace conduct that other employees could perceive as intimate physical conduct, such as kissing or hugging.

• An acknowledgment that all computers, telephone equipment, email and voice mail systems are company property and may be accessed by the employer at any time without prior notice to individuals who use them.

• An agreement that, if the employees have a future dispute with each other or the company, they will resolve it through confidential, binding arbitration rather than through the court system.

Whether the document is an enforceable contract doesn’t matter and is almost beside the point. The real strength of a love contract lies in the nature of the acknowledgments made. It shows that the employer took affirmative steps to maintain a workplace free from sexual harassment and retaliation and serves as powerful evidence that, at least at the time of execution, the relationship was consensual.

Finally, it reaffirms that both employees are aware of the existence of a policy prohibiting sexual harassment, discrimination, retaliation and their obligation to abide by it.

As with many other steps an employer can take, a love contract can be a strong deterrent to employee claims, but it will not prevent all future litigation arising out of a workplace relationship.

What it does do is lay the groundwork for a solid defense should a lawsuit develop.

Mitch Baker is the managing partner in the Portland office of Fisher & Phillips LLP, which is dedicated to representing the interests of management. Contact him at mbaker@laborlawyers.com or 503-242-4262.

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Beginning Jan. 1 of next year nearly all businesses with employees working in Portland will be required to start providing sick leave for their employees. For the majority of those employees their sick leave will be paid time off.

For any employers who weren’t paying attention when this citywide ordinance was passed, this could be quite a shock.  However, if employers understand the rules, compliance should not prove to be too complicated.

With the exception of federal, state, and local government agencies (other than the city of Portland), nearly all employers with employees working within Portland are covered by the ordinance. The only distinction that is made for the size of the employer is whether the new mandatory sick leave will be paid or unpaid leave. Companies employing six or more people for 240 hours or more within Portland are required to provide the leave as paid time off. Companies with five or fewer such employees must provide the same sick leave, but are not obligated to pay employees during their leave.

Only those employees who work 240 or more hours with the city limits are covered by the ordinance. Time spent traveling through the city does not count, unless the employee stops within the city to perform work-related tasks. For example, an employee whose job involves driving back and forth from Beaverton to Gresham each day, without stopping along the way to perform work tasks, will not be eligible even if the time travelling within the city limits exceeds 240 hours. However, an employee whose job involves traveling from Beaverton to Gresham and back making deliveries, including within Portland, will be able to count all of the time they spend within the city limits toward the 240 hour requirement.

Leave accrual: bank on it

Current employees will begin accruing the new sick leave on January 1, 2014. Employees hired after that darw will begin accruing hours on their first day of work, but will not be eligible to begin using their hours during their first 90 days of employment. The sick leave will accrue at the rate of one hour of sick leave for every thirty hours they work within the city, up to a maximum of 40 hours per year.  For accrual purposes, full-time exempt employees are presumed to work 40 hours per week.

While employees may not accrue more than 40 hours in a year, they must be allowed to carry over their unused hours to the next year, up to a maximum of 40 hours. As they are only allowed to accrue, use and carryover 40 hours each year, the employee’s sick leave bank can never exceed 80 hours, although only 40 are available for use in a year.

By way of example, if an employee works all of 2014 without using any sick leave, he or she will carry 40 hours over into 2015. The employee will then start 2015 with a full bank of 40 hours. The employee will also begin accruing additional hours, up to a maximum of 40 more for 2015. Assuming the employee does not use any sick leave in 2015, he or she would have 80 hours of sick leave in their accrual bank on December 31, 2015, but only 40 would carry over into 2016. The remaining 40 hours would expire.

Now, assume the employee uses all 40 of those hours beginning on January 1, 2016. He or she would still be eligible to accrue another 40 hours in 2016, but those hours would have to be carried over into 2017 because the employee had already used the maximum allowed in a year.

Several scenarios

Employees may not use more than 40 hours of the new mandatory sick leave in a year. The employees must be allowed to use the sick leave in increments of one hour, unless the employer chooses to allow smaller increments.

The leave may only be used for hours the employee is scheduled to work within the city of Portland, but may be used for a variety of reasons. First, the hours may be used for the diagnosis, care or treatment of the employee’s or a family members’ illness, injury or health condition. In addition, they may be used in connection with Oregon’s Domestic Violence Leave provisions. They also may be used to cover scheduled work time if the employee or an employee’s family member poses a health threat to the community, if the employee’s place of work is closed due to a public health emergency, or if the school or place of care attended by an employee’s child is closed due to a public health emergency.

Details, details, details

There are several other noteworthy provisions in the new ordinance. Employers are not required to cash out of any accrued — but unused — sick leave upon termination, but if the employee is rehired within six months the accrued leave must be returned to them. Employers are required to post notices containing employees’ rights under this ordinance, in English and in any other language used to communicate with the workforce. Employers may not retaliate against employees for exercising their rights under this ordinance, and it shall be enforced by the Oregon Bureau of Labor and Industries (BOLI).

The bottom line: employers should read the ordinance in its entirety to ensure compliance.

An on a final note, this ordinance is intended to set a floor, not a ceiling. Employers are free to provide more leave than the law requires, but they must ensure that their policies allow for at least the minimum requirements established by the ordinance and that there are no use restrictions in their current policy that would violate the ordinance.

Mitch Baker is a partner in the Portland-based law firm of Fisher & Phillips. He can be reached at 503-242-4262 or at mbaker@laborlawyers.com.

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Q: As a human resources employee, I am often called upon to counsel
managers prior to their taking disciplinary actions against problem employees. Many times the manager just wants to terminate the employee for performance problems without any documentation or warnings in the file. As I talk to the manager about the importance of documenting problems and giving second chances, I invariably get the notion of “at will” employment thrown back at me. How am I supposed to reconcile “at will” employment with all of the actual constraints and limitations imposed upon employers?

A: Many people who’ve heard of the concept of at-will employment don’t understand exactly how it works in practice.

At-will employment technically means the person works at the will of both parties. In other words, if at any time either party no longer wants the relationship to continue, it can end without cause or prior notice to the other side. This typically is described in employment agreements or handbooks as being able to terminate the employment relationship at any time and for any reason or no reason at all.

This is likely the problem you are running into. Managers often ask why they need to document problems with employees or give second chances, warnings or other forms of progressive discipline if they can truly terminate an employee for any reason or even no reason at all.

The problem is that although Oregon is an employment-at-will state, there are many exceptions to the rule.

First, state and federal laws prevent discrimination based on such characteristics as race, gender, national origin, age and religion. Additional laws prevent employers from terminating employees based on the employees’ disabilities or their use of protected leave. Laws prevent employers from retaliating against employees who make complaints about certain types of unlawful conduct. And then there’s the ever-evolving case law concept of wrongful termination, which prevents employers from terminating employees for fulfilling important public duties or exercising private employment rights. All of these protected classes and categories work to alter the at-will nature of the relationship.

The response you probably hear from the managers when you talk them through these issues is, if they’re not firing the employees for any of these unlawful reasons, why can’t they just go ahead and fire them? This is really the heart of the matter.

Because there are so many different protected classes, there is always the threat of a terminated employee fitting into one of those classes and assuming he or she was fired for that status. Then the issue becomes not why you terminated the employee but whether you can prove that you didn’t terminate for an unlawful reason.

This is when documentation, warnings and other forms of progressive discipline pay off. If you’ve created a history of giving warnings and engaging in progressive discipline, it will be much easier to convince a judge or jury that the reason you gave for the termination was the actual reason you fired the employee.

This is the part you need to explain to the managers. Although the law technically allows you to terminate an employee because you don’t like the color of her shirt, try to imagine standing up in front of a judge and jury and convincing them you actually fired her for that reason. Now, imagine that employee has taken family leave this year, is the oldest person in the office and has recently complained about sexual harassment. If your manager can’t prove the employee was terminated for a legitimate reason, and one that actually warrants termination, chances are he or she is creating potential liability for the company.

Mitch Baker is of counsel at the Portland office of Fisher & Phillips and specializes in labor and employment law and employment discrimination. Contact him at 503-242-4262 or mbaker@laborlawyers.com.

The post ‘At will’ firing shouldn’t lack a reason appeared first on Daily Journal of Commerce.

Q: My company recently discovered that a well-liked employee had been embezzling money from us for some time. We terminated him immediately and contacted the police to press charges. But we didn’t tell the other employees why he was let go because we didn’t want to do anything to jeopardize our investigation or the possibility of prosecution.

However, now we’re seeing a drop in morale because the other employees can only speculate as to why he was fired without warning. We want to tell them what happened, but we don’t want to give the guy a defamation claim against us. What can we do?

A: First off, always remember that truth is an absolute defense against a defamation claim.

In other words, as long as what you say is true, there is no defamation liability, regardless of how bad it makes the other person look.

However, “truth” is a factual defense, and it usually takes a trial to determine whether what you said was true from a legal perspective. Anyone who has been all the way through trial, particularly if he or she paid for the lawyers, will likely tell you that you don’t want to say something if it means you’ll have to go all the way through a trial to defend yourself.

With that said, you ask a good question. The law holds that statements that a person has committed theft are defamatory “as a matter of law.” Many people assume this means that anytime you say someone committed theft, you automatically defame them. This is not the case.

“As a matter of law,” in this context, simply means the person making the claim doesn’t need to prove the statement would cause a reasonable person harm or damages. It’s presumed that if you untruthfully accuse someone of theft, it causes him or her harm. This makes it easier for people to bring defamation claims based upon accusations of theft as opposed to other reasons for terminations.

Fortunately, Oregon law provides employers additional protection, giving them a qualified privilege to make statements that either protect their interests or are on a subject of mutual concern.

Oregon case law has held that statements made to employees to protect morale falls within this definition. Accordingly, for your former employee to prove a defamation case against you, he won’t just have to prove you said something untrue. He’ll have to prove you knew it was untrue when you said it or that you had no reason to believe it was true. This makes a huge difference from a litigation perspective.

If your former employee brings a claim for defamation because you tell the other employees about his theft, as long as there is enough evidence that a reasonable person could conclude he stole from the company, you’re entitled to the qualified privilege and the case will likely be decided on motions long before it goes to trial.

If you terminated the employee for theft, you should have enough evidence that the theft occurred that this won’t be a problem. However, if you simply suspected him of theft and fired him before gathering the evidence – which, by the way, is still lawful from an employment standpoint – I would recommend you not make any statement to the employees about his suspected theft until you actually have enough evidence to support it.

Finally, there is also a statutory qualified immunity for information an employer discloses about a former employee’s job performance to a prospective employer at the request of the prospective employer or the employee. That should come in handy if the terminated worker applies for another job and, foolishly, provides your contact information to the prospective employer.

Mitch Baker is of counsel at the Portland office of Fisher & Phillips and specializes in labor and employment law and employment discrimination. Contact him at 503-242-4262 or mbaker@laborlawyers.com.

The post Reason for firing doesn’t have to be secret appeared first on Daily Journal of Commerce.

Oregon non-competition law is about to change.

Although there are many changes coming Jan. 1, two are especially significant: Non-compete agreements will only be valid if the covered employee is exempt from overtime, and employees must be informed of non-compete requirements at least two weeks before they start work.

For employers that have historically relied on non-compete agreements, these requirements effectively preclude their use. These employers will be left wondering how to protect themselves from departing workers. However, even without non-competes, options are still available.

In addition to narrowing the scope of enforceable non-competes, the Jan. 1 changes remove non-solicitation agreements from the definition of what constitutes a non-compete agreement. Until now, Oregon courts have held that non-solicitation agreements are the same as non-competes. Accordingly, non-solicitation agreements – deals with employees not to solicit customers, suppliers or other employees upon their departure – are, like non-competes, only valid if signed within the first three days of work or upon a “bona fide advancement” – a significant promotion involving an increase in title, pay and duties.

By specifically removing non-solicitation agreements from the statute, the amendment allows employers to require workers to execute non-solicitation agreements without regard to how long ago they were hired or whether they’re being promoted. 

The Oregon Trade Secrets Act is another option for employers. The act precludes former employees from using or disclosing their employer’s trade secrets, which are defined as information that derives independent economic value and is subject to reasonable efforts to maintain its secrecy. Although the standard of proof is higher on a Trade Secrets Act claim than on a contract claim, if the employer can show that the former employee’s actions were willful and malicious, the act allows for the recovery of triple damages and attorney fees, in addition to injunctive relief.

By limiting the former employee’s ability to use the specific confidential information he or she had access to during employment, the act provides employers with a degree of protection they might previously have gained from non-competes. In fact, a properly worded non-solicitation agreement, coupled with the Oregon Trade Secrets Act, can approximate the protection the employer had with a non-compete agreement.

A non-compete is generally justified as a way to protect an employer’s assets by preventing a former employee from going across the street to compete against it while knowing all of the employer’s inner workings, processes and customers. However, as discussed above, a non-solicitation agreement can be used to stop the former employer from contacting the employer’s customers, current employees and, in certain circumstances, suppliers. And the Trade Secrets Act prevents the former employee from using or sharing the employer’s unique programs, processes, techniques, methods and customer lists. If the employer successfully uses both of these tools, there’s little damage a former worker can do.

However, successful use can be difficult.

In non-compete litigation, the issues are simple. Was there a valid non-compete? Did the former employer go to a competitor? The first issue is simply a legal question; the second issue is straightforward from a proof standpoint.

But to enforce a non-solicitation agreement, an employer must be able to prove that the former employee targeted its customers and that it suffered damages as a result. This can be difficult. Customers that leave likely won’t want to help prosecute someone they’re now taking their business to. So even if the employer suffered damages from that customer’s departure, it’s hard to get the customer to admit to the solicitation. Even if it does, the customer generally argues it would have left anyway. And customers that don’t leave might be happy to tell you about the solicitation, but you’ll have a hard time proving damages occurred.

Moreover, from a business standpoint, most employers don’t want to drag their customers into messy litigation. Similarly, while the Trade Secrets Act provides protection, it’s difficult to enforce because of the standards of proof.

While much of the protection of a non-compete can be replicated on paper with a non-solicitation agreement and the Trade Secrets Act, enforcement is a challenge. For this reason, employers that can meet the new requirements should still use non-competes.

Mitch Baker is of counsel at the Portland office of Fisher & Phillips and specializes in labor and employment law and employment discrimination. Contact him at 503-242-4262 or mbaker@laborlawyers.com.

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Last month I described the new statutory provisions relating to arbitration provisions in employment agreements. Specifically, the new Oregon law requires employers to give potential employees at least 14 days’ notice of the need to enter into an arbitration agreement in connection with an offer of employment in order to be able to later enforce that arbitration agreement.

After the article was published, I received a few inquiries from my colleagues regarding the enforceability of the new statute itself. Their question was, basically, doesn’t the new Oregon statute impermissibly contradict the Federal Arbitration Act, which favors arbitration agreements, and is therefore unenforceable?

For the reasons below, my response is: Probably, but does your client want to pay the legal fees to find out?

The Federal Arbitration Act declares written provisions for arbitration “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” In other words, Congress precluded states from singling out arbitration provisions for suspect status, requiring instead that such provisions be placed upon the same footing as other contracts.

This issue came to the forefront after Montana mandated that notice a contract is subject to arbitration be typed in underlined capital letters on the first page of the contract. In the course of a dispute between a Montana Subway franchisee and the franchisor, the question of the enforceability of the arbitration agreement, which did not meet Montana’s requirement, became the central issue in the case, which went to the Montana Supreme Court and then the U.S. Supreme Court.

The U.S. Supreme Court held that the Montana statute was preempted by the Federal Arbitration Act – therefore, the statute was unenforceable and the arbitration provision in the contract was valid. The court reasoned that, although states are free to enact statutes that govern contracts generally, they are not permitted to single out arbitration agreements for more stringent requirements than other contracts. The court noted the Montana requirement applied only to arbitration agreements and no other types of contracts.

Let’s jump back to Oregon’s statute. Presumably, Oregon’s lawmakers were at least familiar with the U.S. Supreme Court’s position on adding conditions to arbitration agreements that are not applicable to other types of contracts. The question then becomes, why does Oregon think its statute is different from Montana’s?

The only answer I see, which is not a very good one, is that the Montana requirement applied only to arbitration agreements, whereas Oregon’s requirement applies to arbitration and noncompetition agreements. In invalidating the Montana statute, the U.S. Supreme Court used terminology such as “specifically and solely” arbitration agreements, and proclaimed that states were not allowed to “invalidate arbitration agreements under state laws applicable only to arbitration provisions.” Taken too literally, one might conclude that, because the Oregon statute does not apply “only” or “solely” to arbitration agreements, the Supreme Court’s analysis can be distinguished.

This seems to be a disingenuous approach. The court’s intention was clearly to prevent arbitration agreements from being treated more harshly than contracts in general. The fact that one other, traditionally disfavored, type of contract is also affected does not seem to warrant the Oregon statute being treated any differently than the Montana statute.

In the end, what does this mean to employers? It means some employer is likely going to appeal an Oregon court’s decision not to enforce an arbitration agreement based upon the new statute. It also means that employer will likely win in the end. However, the fight will likely be long and expensive. Arbitration generally is quicker and cheaper than litigation. That benefit will be negated if the employer is forced to spend years in appellate courts just fighting for the right to eventually arbitrate the matter.

However, in the interest of full disclosure, I’m not recommending that my clients get rid of their current arbitration agreements in their contracts, regardless of whether they can actually provide the 14 days’ notice. If the arbitration agreements are left in, the employer can always choose later whether it wishes to try and enforce the provision. Also, if and when someone does challenge the new law and it is thrown out, it will be nice for those employers who kept their arbitration agreements intact to now be able to start using them again. The alternative – removing arbitration agreements from employment contracts – will leave the employer without such provisions in the event the new statute is found unenforceable.

The post Don’t wait for court to toss arbitration law appeared first on Daily Journal of Commerce.

Q: My company recently went through some very expensive litigation with a former employee. As a result, we have been considering having our employees sign arbitration agreements to keep the costs down on future disputes.

I heard there have been some changes to the law on when employees can enter into arbitration agreements. Can you explain what those changes are?

A: Certainly. First, as you now know, litigation, particularly jury trial litigation, in the state and federal courts is very expensive. Many employers successfully have adopted arbitration agreement policies to cut those costs. However, this year the Legislature made a significant change to when employees may enter arbitration agreements. Under the new law, which takes effect Jan. 1, arbitration agreements between employers and employees are only valid if the employee is informed of the need to enter an arbitration agreement at least two weeks before starting work and in connection with a written job offer – or upon a bona fide advancement if he or she is already employed. After the first of the year, an employer no longer will be able to simply decide it wants to have arbitration agreements and then go sign up all of its employees.

Q: If the new law doesn’t take effect until Jan. 1, does that mean we can have all of our employees sign binding arbitration agreements right now?

A: Yes. That is exactly what it means. Although you will have to comply with the new law for any employees hired after the first of the year, there is nothing preventing you from requiring your current work force to enter into arbitration agreements right now.

Q: Many of our employees, particularly those at minimum wage or slightly above, start on the same day they are offered the job. How are we supposed to comply with the new law?

A: That is the question that many employers are struggling with. Legally, if employees start the same day they are offered their jobs, then any arbitration agreements they sign at that time likely will be unenforceable. Yet, it is unrealistic from a business perspective to require a two-week waiting period between the offer and the start date for most of these positions.

You’ll face two major barriers. One: Many times you will need a new employee to start right away because the previous employee just walked off without giving you notice. Two: Many employees seeking minimum wage positions will be unwilling to wait two weeks to start working.

Unfortunately, the reality probably will be that you will not be able to enter into enforceable arbitration agreements with many of these employees.

Q: What about bona fide advancements? What does that mean?

A: Although this term previously has not been applied to arbitration agreements in Oregon, there is no reason to think the preexisting case law relating to bona fide advancements with respect to noncompetition agreements will not be applied to the new provisions relating to arbitration agreements. Under existing noncompetition law, bona fide advancements are basically significant promotions. Although there is not an explicit and concrete definition of a bona fide advancement, it is generally accepted that it involves a change in compensation, responsibilities and title. In other words, a 50-cent per hour raise probably is not going to constitute a bona fide advancement.

Q: If we enter into arbitration agreements with our current employees but are unable to enter into them with new employees because of the change in the law, don’t we run the risk of being accused of discriminating against the current employees?

A: There is nothing that would prevent you from having some of your employees sign arbitration agreements while others do not, so long as the decision as to which employees enter the agreements is not made based upon a protected class status (i.e. race, religion, age, disability, etc.).

Here, the difference would be because of a change in the law, so it would certainly not constitute discrimination on your part.

Q: If we are unable to enter into arbitration agreements with our new employees, is there anything we can do to try and limit the litigation expenses if one of them brings a lawsuit against us?

A: An arbitration agreement would be preferable, but you could enter into a jury trial waiver agreement with the new employees. The employees would still be able to use the court systems to bring claims against you, but they would have given up their right to a jury trial.

Instead, the case would be heard by a judge. This can save significant expenses on cases that proceed all the way to trial.

However, few cases actually make it to trial, and jury trial waivers are somewhat disfavored. Accordingly, you have to make sure you do them right or you could end up spending more money fighting about whether the waivers are enforceable than you would on a trial.

Mitch Baker is of counsel at the Portland office of Fisher & Phillips, one of the United States’ largest law firms that represent employers in labor and employment matters. Baker specializes in labor and employment law and employment discrimination. He can be reached at 503-242-4262 or mbaker@laborlawyers.com. Fisher & Phillips’ Web site is at www.laborlawyers.com.

The post Want an arbitration agreement? Give notice appeared first on Daily Journal of Commerce.

Q: I understand there have been some changes to the Oregon Family Leave Act (OFLA) that may affect my company. Can you tell me what those changes are and what the effects will be?

A: There were three major legislative changes to OFLA this session that will take effect Jan. 1, 2008.

First, House Bill 2460 revised the OFLA statutes to prohibit OFLA leave from running while an employee is out on a compensable workers’ compensation injury. The bill also provides that OFLA leave will automatically begin to run when an otherwise OFLA-eligible employee out on a compensable workers’ compensation injury refuses a bona fide offer of light-duty or modified work before the worker is medically stationary.

Second, House Bill 2485 requires employers to allow employees to use any accrued paid sick leave while on OFLA leave, even if the employer’s policy would not otherwise allow the employee to do so. Prior to this bill, OFLA only required employers to allow the use of paid sick leave if the need for OFLA leave would be consistent with the employer’s usual sick-leave policy or if the employee was taking parental leave.

Third, House Bill 2635 allows employees to use OFLA leave to care for the employee’s grandparents or grandchildren who have serious health conditions. The important piece of this is that, because the federal Family and Medical Leave Act (FMLA) does not cover grandparents or grandchildren, an employee who is covered and eligible for both OFLA and FMLA who uses his or her 12 weeks of OFLA leave to care for a grandparent or grandchild has not technically used any FMLA leave and therefore has his or her entire 12 weeks remaining.

HB 2635 also creates a retroactive cause of action for retaliation under OFLA that will likely resolve the dispute between Oregon state courts and Oregon federal district courts over whether such a claim is available under OFLA.

Q: With the different rules for OFLA and FMLA and discrepancies in who is eligible, covered and qualified, it seems almost impossible for an employer to sort through all of this. Is there an easier way?

A: It certainly does seem like a daunting task when you look at it in its entirety. What I always recommend to employers learning to deal with OFLA and FMLA is to pull out the rules each and every time, even when comfortable with them. Then, for each instance where it may be applicable, walk through the steps.

First, determine whether you are a “covered employer” under each statute. If not, you can stop right there. If you are covered under one or both, look to determine whether the specific employee at issue is an “eligible employee” under the statute you are covered by.

Although this is typically an easy analysis under OFLA, the answer under FMLA can be more difficult to determine. For example, while FMLA requires that the employee have been on your books for at least 12 months, those months do not have to be consecutive. Accordingly, a former long-time employee who returns to the company after a year away will meet the employment eligibility requirements as soon as he or she completes 1,250 hours of work, even if he or she does so in five months’ time. However, like with the “covered” status test, if the particular employee is not eligible, you can stop your analysis.

If the employee is eligible under one or both of the statutes, then proceed to determine whether the requested leave is for a qualifying circumstance. This is the step where you will look at whose medical condition is at issue and whether it constitutes a “serious health condition” under the statutory scheme at issue.

If you break your analysis down into the steps above, you should find that the application of either OFLA or FMLA to any circumstance is actually quite simple.

Mitch Baker is of counsel at the Portland office of Fisher & Phillips, one of the United States’ largest law firms that represent employers in labor and employment matters. Baker specializes in labor and employment law and employment discrimination. He can be reached at 503-242-4262 or mbaker@laborlawyers.com. Fisher & Phillips’ Web site is at www.laborlawyers.com.

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Q: We pay our sales staff on a commission basis. Often, after a sale has been made and the employee has been paid, the product is returned for a refund. We have always reduced the employee’s pay in the next period by the amount of commission he or she was paid on the returned item. Now one of our employees claims this is an illegal wage deduction. Is he right?
A: No. However, there are a few things you should do to stay out of trouble.
Oregon law says an employer may not deduct any amount from an employee’s pay unless it falls within five defined categories. Generally, these categories are taxes, health insurance benefits, amounts authorized by a collective bargaining agreement, garnishment fees, and other amounts if authorized by the employee in writing and the ultimate recipient of the money is not the employer. This is likely the rule to which your employee is referring. However, he is making a common mistake.
With commissioned salespeople, so long as they make minimum wage and overtime (unless they qualify for an exemption), you can set up their pay plans however you would like. Typically this will include a deduction from the overall calculation based upon returns. This constitutes part of the original wage calculation, not a deduction from wages, as argued by your employee.
Some employers get into trouble with this because they do not use the correct terminology. During a pay period in which a product you sell can be returned, a payment made to an employee should be labeled an “advance.” The payment is then treated as an advance until the return period expires. The returned commission amount should be clearly reflected in a written calculation of the amount being paid. In other words, show the employee that he was already paid for a commission he wasn’t entitled to and that this is being removed from the current pay.
The commission schedule can also cause problems. Many employers create elaborate schedules of changing commission rates based on performance but fail completely to address returns. Make sure your written pay plan provides expressly what will happen when a product for which the employee has been paid a commission is returned. If the pay plan is silent on this point, not only will you have more trouble convincing a judge or jury that it really wasn’t a deduction but you will, at a minimum, damage the morale of your sales staff, who will see hits to their commissions that they weren’t expecting.
Q: OK, so I can deduct the commission from returned items from later paychecks. But what if doing so would take the employee below minimum wage for that pay period?
A: This is a little bit tricky, but if you set it up correctly in the beginning you can still do it.
If you calculate the employee’s wages for the period in which the advance was given combined with the period in which the advance was recouped, did the employee make at least minimum wage plus any applicable overtime for all of the hours worked during that period? If so, then you do not have a minimum wage or overtime problem.
The following example is a simple way to consider it: If I ask my employer to advance my next week’s salary this week, and it does, I can’t sue my employer next week for not paying me at least minimum wage. The fact that it was paid ahead of time does not make the later week in which no money was paid a violation.

Mitch Baker is of counsel at the Portland office of Fisher & Phillips, one of the United States’ largest law firms that represent employers in labor and employment matters. Baker specializes in labor and employment law and employment discrimination. He can be reached at 503-242-4262 or mbaker@laborlawyers.com. Fisher & Phillips’ Web site is at www.laborlawyers.com.

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