The Pareto principle posits that 80 percent of the effects of something come from 20 percent of the causes. As applied to employers, and more particularly human resource professionals, 80 percent of personnel issues typically are caused by 20 percent of the workforce. Employing a few best practices when working with these individuals, as well as recognizing when it’s time to call your attorney, can prevent personnel issues from evolving into employment liability claims.

Best practices
Employers can minimize or avoid most employment liability claims by:

•  Implementing a well-written, concise employee handbook that clearly sets forth company policies and procedures;
•  Providing frequent supervisor and manager training on managing employee expectations and productivity;
•  Conducting prompt, timely, complete and impartial investigations of all employee complaints made in good faith;
•  Documenting employment-related communications and corrective action carefully and appropriately; and
•  Taking corrective action fairly, consistently and appropriately when necessary.

In most cases, following these best practices will minimize employment-related lawsuits; however, there will still be times when you should call your employment law attorney.

Why to call your attorney

First, you are expected to know the myriad of federal, state, and local laws that affect the employment relationship. An employer’s lack of knowledge is not a “get out of jail free card.”

Second, due to the unequal power differential between the employer and the employee, the employer is subject to greater scrutiny.

Third, when civil or administrative claims are filed against you, an experienced employment law attorney can advise you on the applicable law and associated court or administrative processes that must be followed to defend the claim.

Finally, calling your employment law attorney when personnel issues arise is a good business practice. Your employment law attorney knows the nuances of each applicable law and can help you strategize a strong defensive position from the beginning, taking into account all required obligations. In other words, you wouldn’t hire a butcher to do heart surgery just because he or she is good with a knife.

When to call your attorney

When should you call your employment law attorney? The following situations justify a call, but please keep in mind that this list is not exhaustive:

•  When there is any situation that could involve handcuffs – i.e., criminal acts. These could include immigration violations, misuse of computer networks and workplace violence;
•  When you are served with an administrative complaint from: the Bureau of Labor and Industries (BOLI), the Equal Employment Opportunity Commission (EEOC), the U.S. Department of Labor, the Occupational Safety and Health Administration (OSHA), the National Labor Relations Board (NLRB), or others;
•  When you are served with a lawsuit alleging employment-related claims;
•  When an employee complains of mistreatment in the workplace or complains of a “hostile work environment;”
•  When an employee complains that you are breaking federal, state or local laws;
•  When an employee complains about not being paid overtime;
•  When you want to use employment agreements, severance agreements, non-competition agreements, or confidentiality and non-solicitation agreements;
•  When there are incidences of serious workplace injuries, death or workplace violence; or
•  When you are considering terminating employment for performance failures or reduction of workforce.

There are other times when calling your employment law attorney makes good sense. For example, after the conclusion of a statewide legislative session, call your attorney to discuss changes in employment-related laws or new enactments that would affect the employment relationship. This will allow you sufficient time to evaluate the laws’ effect, modify employee policies and procedures accordingly, and train supervisors and managers.

Another situation would be when you learn of court holdings that you may feel change the law or affect your policies and procedures.
Finally, your employment law attorney is a great resource to provide training for supervisors, managers and executives. Such training should include an annual session on harassment and discrimination avoidance based on the established company policies. Other recommended training could include new supervisors and managers, documenting the employment relationship (discipline and corrective behavior processes), and lawful recruitment practices.

In implementing best employment practices employers minimize their exposure to large employment liability claims. This, in turn, reduces the overall cost of employment-related legal expenses.

In cases where claims are unavoidable, employment law attorneys can serve as critical management tools when used effectively. Develop a relationship with your employment law attorney that allows you to handle 80 percent of your organization’s employment personnel issues, so you’ll only need to call your employment law attorney for that other 20 percent.

Ronald Guerra is an attorney in Jordan Ramis PC’s labor and employment law practice group. He is an employment litigator who handles the full range of disputes that arise out of employment relationships. Contact him at 503-598-5540 or at ron.guerra@jordanramis.com.

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It seemed like an easy solution – get extra help. The company had transcription work that had to be done. So the company hired someone in the local community to help, based on the terms of a personal services contract (PSC). Problem solved?

Shortly after the PSC work was completed, the transcriber filed a claim for unemployment benefits with the employment department. The company learned of the claim upon receipt of a notice of claim from the employment department requesting the reason for the separation. The company responded that the person was not an employee, but rather an independent contractor, and provided a copy of the PSC to the employment department.

Unfortunately, the company had made one of the most common misclassification mistakes: It erroneously believed that a PSC created an independent contractor relationship because the PSC said so. The company was wrong.

When a claim is filed for unemployment compensation, two things happen. First, the employment department’s benefits personnel must determine whether the claimant is eligible to receive unemployment compensation. Second, the employment department’s tax personnel must confirm an account to charge for the payments if the claim is to be paid.

When tax personnel discover that no account exists, or otherwise question the relationship between the claimant and an employer, they conduct an investigation. In this case, the tax personnel will look at the PSC and the department’s evaluation of the independent contractor statute and its implementation of administrative rules.

Oregon Revised Statute 670.600 is the independent contractor statute. It provides that an “independent contractor” is someone who provides services for remuneration and who, in the provision of the services:

“(a) is free from direction and control over the means and manner of providing the services, subject only to the right of the person for whom the services are provided to specify the desired results;

(b) is customarily engaged in an independently established business;

(c) is licensed under ORS Chapter 671 or 701 if the person provides services for which a license is required under ORS Chapter 671 or 701; and

(d) is responsible for obtaining other licenses or certificates necessary to provide the services.”

The question of being “free from direction and control” is centered on the “means” and “manner” of providing the services. “Means” are the resources used or needed in performing the services. To be free of direction and control over the means, a contractor must be free to choose the tools, equipment, labor, devices, etc. For transcription work this would mean the transcription machine, the typewriter or computer and printer, the software, etc.

“Manner” is the method by which the services are performed. To be free from direction and control over the manner of providing the services the contractor must determine how to perform the work. For transcription work this could include the work schedule, the process and procedures used to complete the transcription, and the delivery methods of the finished product.

To be “customarily engaged in an independently established business” three of the following five elements must be met:

1. Contractor maintains a business location:

• Separate from the business or work location of the person for whom the services are provided; or

• That is in a portion of the person’s residence and that portion is used primarily for business.

2. Contractor bears the risk of loss related to the business or the provisions of services as shown by factors such as:

• Contractor enters into fixed-price contracts;

• Contractor is required to correct defective work;

• Contractor warrants the services provided; or

• Contractor negotiates indemnification agreements or purchases liability insurance, performance bonds, or errors and omissions insurance.

3. Contractor provides contracted services for two or more different persons within a 12-month period or person routinely engages in business advertising, solicitation or other marketing efforts reasonably calculated to obtain new contracts to provide similar services.

4. Contractor makes significant investment in the business through means such as:

• Purchasing tools and equipment;

• Paying for premises or facilities where the services are provided; or

• Paying for licenses, certificates or specialized training to provide the services.

5. Contractor has the authority to hire other persons to provide or to assist in providing the services and has the authority to fire those persons.

In the situation under discussion here, when the employment department tax auditor calls the claimant to discuss the nature of that person’s business he learns that:

• She goes to the company office for four hours twice each week to work;

• The company provides the work station, including the computer, software, printer, and other equipment;

• Someone in the company instructs the person and directs how she is to perform her work; and

• She does work for only the company.

On these facts, the employment department tax auditor concludes that the person was not an independent contractor, but rather an employee. As such, the company becomes liable for payment of the unemployment claim if the person is otherwise eligible. This finding may also subject the company to additional penalties from the Oregon Department of Revenue and the Workers’ Compensation Board for failing to withhold taxes or to pay a premium for workers’ compensation coverage.

The lesson to be learned is that simply saying someone is an independent contractor in a personal services contract does not make it so. Further, every PSC should be evaluated in light of the independent contractor statute to make sure that the person or entity actually meets the necessary requirements. Failure to conduct this evaluation completely and carefully can have serious ramifications for any employer.

Ronald Guerra is an attorney in Jordan Ramis PC’s labor and employment law practice group. He is an employment litigator, and handles matters for private and public clients. Contact him at 503-598-5540 or ron.guerra@jordanramis.com.

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Annual employee performance reviews rank right near the top as a supervisor’s least favorite task. Because of this and other work demands, evaluations are easy to put off, rush through or even avoid altogether.

Employee performance reviews can be excellent communication tools, but they also can be used against employers as evidence of bias, unlawful discrimination or retaliation.

When employees know what is expected of them and can gauge how they are performing, they feel respected. Research has shown that employees who work in environments where they feel respected and appreciated have fewer sick days and are more productive.

When developing and writing evaluations, consider the following tips:

1. Use the same measurement standards and criteria for all employees performing the same job.

A thorough analysis of the job will provide criteria for performance evaluation consistent with the job description. When evaluating performance, managers should consider an employee’s responsibilities and skills and whether identified goals have been met. If an evaluation has a rating system, a negative remark or an exceptional rating should be supported by specific examples.

2. Give accurate evaluations.

Supervisors should not comment on what they do not know as fact. Employees need to know their personal strengths and areas needing improvement, as well as what is expected.

3. Take notes throughout the evaluation period.

Writing from scratch about a year’s worth of events can be a daunting task. Instead, jot down notes on employee performance as occasions arise. This includes occasions when the employee exceeded expectations as well as when they weren’t met.

Notes don’t need to be extensive, but rather only specific enough to serve as reminders when evaluations take place.

Also, use an employee’s last review as a benchmark standard for the next one. Remember to consider the entire year, and not only the last few months or one incident.

4. Exercise professionalism when writing and presenting the evaluation.

Measure performance, not personality traits. Supervisors should ensure the review process is as objective as possible. Address behavior or conduct, not characteristics or personalities.  Avoid using terms such as “always” or “never.”

5. Do not give an overly favorable, inflated evaluation.

Evaluations often are scrutinized by the Bureau of Labor and Industries or the Equal Employment Opportunity Commission when employees file claims of discrimination. Employers defending these claims often assert deficient performance as the reason for the discipline, discharge or layoff. But if evaluations are inflated, they will appear to be inconsistent with the asserted reason for termination of employment. Consequently, the credibility of the reasoning will be questioned.

6. Do not make comments about absenteeism if the absences are protected by law (i.e., workers’ compensation time loss, FMLA or OFLA).

These types of comments can be used against employers as evidence of displeasure about employees’ participation in protected activity.

7. Do not make promises to an employee.

Circumstances can and do change beyond a supervisor’s control. Unfulfilled promises diminish a supervisor’s credibility and in some cases can form the basis for a claim of breach of contract.

8. Do not make inconsistent statements or set unattainable goals.

After drafting the evaluation, review it carefully for inconsistencies. Mixed messages will only confuse employees and can prove embarrassing when supervisors are questioned about them.

Setting unattainable goals can result in employees feeling defeated before they begin. A successful employee means a successful supervisor or manager. Attainable goals are good for everyone.

9. Do not make remarks about a person’s protected status or protected activity.

Such remarks can be used against employers to show bias or intent to discriminate. Personal opinion, bias or feelings should not influence the evaluation.

10. Do not couple the evaluation with discipline.

There should be no surprises during an evaluation conference. Discipline should closely follow the offense. A prior disciplinary matter may, however, be reflected in a rating. If discipline is administered during the meeting, an employee is less likely to listen and comprehend the rest of the information presented.

Employers should not let their anxieties keep them from giving regular evaluations, especially if they are the basis for compensation adjustment.

Remember, employees expect to be evaluated. Consider providing spaces on your report for employee comments and action plans to engage employees in the process, and thereby gain their agreement to focus on improvement.

Finally, don’t forget to sign and date the evaluation. A review document is not useful in a reduction in force or in a claim defense if the evaluation period and date cannot be identified.

Ronald Guerra is an attorney in Jordan Ramis PC’s labor and employment law practice group.  Contact him at 503-598-5540 or at ron.guerra@jordanramis.com.

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In June, the Bush administration took action that will affect all entities that contract with the federal government to provide goods or services, with the exception of micropurchase threshold contracts, which generally have a limit of $3,000, and off-the-shelf items commonly known as COTS items. Executive Order 12989, as amended on June 6, requires that all federal contractors verify the employment eligibility of their workforce through an electronic employment verification system approved by the Department of Homeland Security. It is no surprise that the DHS quickly designated the E-Verify program, operated by the U.S. Citizenship and Immigration Services, in partnership with the Social Security Administration, as the electronic employment eligibility verification system that all federal contractors must use, as required by the amended EO.

Under the amended EO, all federal contractors are required to verify all new employees hired during the contract term “to perform employment duties within the United States,” and not only employees hired to work on the subject federal contract work site. Further, the amended EO also requires the federal contractor to use the DHS-approved system to verify the eligibility of “all persons assigned by the contractor to perform work within the United States” on the federal contract project. This language appears to include subcontractors and their employees who are “assigned by the contractor” to perform work on the jobsite. The amended EO will have unforeseen consequences for federal contractors, including increased costs of recruitment, potential loss of an otherwise qualified workforce, and increased risk of a work site enforcement action.

The proposed rule implementing the amended EO was published in the Federal Register on June 12, and the public comment period closed on Aug. 11. The final rule is expected to be issued shortly; therefore, federal contractors and subcontractors should take the following action now to prepare for the new rules.

• Become familiar with the E-Verify Memorandum of Understanding. The MOU will require a change in how the I-9 process is completed. Consult competent legal counsel to understand the MOU terms and its application to any specific organization.

• Review present I-9 completion procedures. The MOU requires that copies be retained of the documents the employee submits for employment eligibility and verification. The MOU will also require that any List B document submitted by an employee contain a photograph of the individual. Reviewing the current procedures now and preparing for any necessary modifications as a result of the new rule will assist a company avoid making a mistake when the final rule is published and effective.

• Conduct an audit of all I-9 documents. Ensure that every employee hired after Nov. 6, 1986, has a properly completed I-9 form on file. Make required necessary corrections to deficient I-9 forms, and complete new I-9 forms if any are missing. Remember that an I-9 form is required for owners and officers of the company if they began work after Nov. 6, 1986.

Identify common errors and use them as the basis for appropriate training of personnel in charge of the I-9 process.

• Review all federal contracts to identify actual employees who are assigned to perform work on the federal contract project. Don’t overlook accounting, financial, and administrative personnel who provide services related to the federal contract or whose compensation is allocated against the federal contract project.

• Review and identify all subcontractors or independent contractors that provide personnel or services to the federal contract project.

• Review all subcontractor and independent contractor contracts to determine what, if any, modification to contract language will be necessary when the new rule is implemented. Consult legal counsel for assistance in drafting appropriate contract language that will be used in future contracts.

• Evaluate any additional costs or expenses that may be incurred in future contracts to determine whether to continue participating in federal contract projects, either as a contractor or subcontractor. Consider the increased cost of monitoring subcontractors or independent contractors for compliance with the new rule.

• Ensure that any appointment or selection process for employees on federal contract projects is nondiscriminatory. Do not base selection criteria on whether you believe any given employee or class of employees will pass the E-Verify verification process.

Taking the time to carefully review the effects of the new proposed rule will make compliance more manageable when the rule goes into effect.

Ronald G. Guerra is a member of the Employment Law practice group with Jordan Schrader Ramis PC. Contact him at 503-598-5540 or ron.guerra@jordanschrader.com.

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