The OFCCP will not schedule supply and service compliance evaluations from October 1 through October 15, 2014 in order to allow contractors time to review and become acquainted with the new compliance review scheduling letter and accompanying itemized listing, the agency announced last week. These newly revised documents will allow the OFCCP to seek more, and more detailed, information from federal contractors during the desk audit phase of compliance evaluations. The number of items contained in the itemized listing has increased from 11 to 22, and now includes information on reasonable accommodation policies, more specific demographic information on employment decisions, more precise data for compensation analysis (aggregate data rather than the disaggregate data) and more data regarding compliance with Section 503 of the Rehabilitation Act of 1973 (Section 503) and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA).
The Office of Management and Budget (OMB) approved the new scheduling letter and itemized listing, along with a revised compliance check letter, on September 30, 2014 — three years after the OFCCP submitted a revised proposal regarding changes to these documents. A notice announcing this approval, and highlighting some of changes, was published in the September 30, 2014 edition of the Federal Register (79 FR 58807-58808). OMB approval of all three documents, which are now posted on the OMB’s RegInfo.gov website, expires on March 31, 2016.
Notice of the revised proposal was published in the September 28, 2011 edition of the Federal Register (76 FR 60083-60084). The revised proposal addressed comments received regarding the OFCCP’s initial proposal issued in May of that year (76 FR 27670-27671) and, in response to those comments, contained several changes to the original proposal. The comment period on the revised proposal closed on October 28, 2011. The documents approved by the OMB on September 30, 2014 incorporate some, but not all, of the proposed changes from the 2011 revised proposal, as well as changes that the OFCCP states are needed to obtain the information required for evaluating the Section 503 and VEVRAA affirmative action programs under revised regulations which took effect earlier this year.
Changes to scheduling letter and itemized listing The September 30, 2014 Federal Register notice highlights the following approved changes:
- The scheduling letter will continue to allow contractors to submit employment activity data by either job group or job title. Thus, the OMB apparently rejected the OFCCP’s request to require contractors to submit data by job group and job title.
- Contractors will continue to provide this data by sex; however, they will submit race and ethnicity information using five specified categories instead of two broad categories (i.e., minority and nonminority).
- Regarding its compensation data requirements, the itemized listing will no longer requires that contractors submit annualized aggregate compensation data. Instead, contractors will be required to submit individualized employee compensation data as of the date of the workforce analysis in their Affirmative Action Programs, also noting the job title, job group and EEO-1 category.
- The definition of compensation is revised to include consideration of hours worked, incentive pay, merit increases, locality pay, and overtime.
- The revised letter requires contractors to provide the data electronically but only if they maintain it in an electronic format that is useable and readable.
- Several changes were made to the itemized listing to reflect regulatory changes since the letter was last approved, including changes to the OFCCP regulations regarding compensation, and regarding workers with disabilities and protected veterans.
Compliance check letter. The specific documents sought in the revised compliance check letter remain unchanged.
Supporting statement. The OFCCP’s supporting statement, which details the changes and the rationales behind them, and related documents are posted on the RegInfo.gov website at: http://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201104-1250-001.
In the past six weeks, FedEx’s independent contractor model has suffered a triple blow. First, in a late August decision that the concurring judge said “substantially unravels FedEx’s business model,” the Ninth Circuit ruled in two companion decisions that FedEx delivery drivers are employees, not independent contractors, as a matter of California and Oregon law.
Next, at the end of September, a divided NLRB held that, although D.C. Circuit decisions required it to reexamine its approach in independent contractor cases, it would decline adopt the appeals court’s interpretation of Sec. 2(3) of the NLRA and accordingly found that FedEx Home Delivery drivers were employees entitled to coverage under Sec. 2(3).
Finally, the first week of October, the Kansas Supreme Court determined that FedEx delivery drivers who drive on a full-time basis were employees as a matter of law under the Kansas Wage Payment Act and not independent contractors. This most recent case covers drivers in Kansas and is part of the same multidistrict litigation as the California and Oregon cases decided by the Ninth Circuit just over a month earlier.
How did we get here? When a wave of lawsuits challenged FedEx’s independent contractor model (with cases filed in 40 states), the Judicial Panel on Multidistrict Litigation consolidated the cases for multidistrict litigation proceedings in a federal district court in Indiana. The MDL court held that nearly all of the plaintiffs were independent contractors as a matter of law in those states where their status was guided by common law agency principles. That holding applied to the California and Oregon full-time delivery drivers in the Ninth Circuit companion cases.
When the Judicial Panel on Multidistrict Litigation consolidated the class actions, it designated the Kansas class action as the lead case. The district court determined that the Kansas class plaintiffs were independent contractors under the KWPA and granted summary judgment in favor of FedEx. On appeal, the Seventh Circuit concluded that Kansas law did not clearly indicate how it should decide a close case like this one and accordingly certified to the Kansas Supreme Court whether the drivers were employees of FedEx as a matter of law under the Kansas act.
Ninth Circuit right to control test. FedEx drivers were identified as independent contractors under the company’s operating agreement (OA) that governed the parties’ relationship. While the OAs were fairly clear, the Ninth Circuit found that to the extent they were ambiguous, extrinsic evidence supported a finding that FedEx exercised substantial enough control over the drivers to suggest they were not “independent contractors.” The court considered the following:
- FedEx’s extensive and detailed grooming and appearance standards, “from their hats down to their shoes and socks.”
- FedEx’s equally meticulous vehicle specifications, including being painted a specific shade of white, marked with the FedEx logo, conforming to specific dimensions.
- Drivers’ work hours are adjusted by FedEx managers so that they work 9.5 to 11 hours daily; they cannot leave their terminals in the morning until all their packages are available and must report back to the terminals before a specified time.
- FedEx determines what packages to deliver and when. Each driver is assigned a specific service area that only can be altered at FedEx’s sole discretion.
- FedEx’s right to control the workers’ “entrepreneurial opportunities”; drivers’ ability to operate more than one vehicle or route was contingent on FedEx’s approval. To hire additional help, drivers had to be “in good standing” and replacement drivers had to be “acceptable” to FedEx.
What did they think? California also takes into consideration the parties’ beliefs as to the nature of their relationship, and the OA said the drivers were independent contractors and disclaimed any authority to direct drivers as to the manner or means of their work. But other contract provisions, plus other policies and procedures, allowed FedEx to exert considerable control over the drivers’ day-to-day work. Neither FedEx’s belief nor the drivers’ own perceptions provided the final answer. Simply calling the drivers independent contractors didn’t make it so.
Plus, the drivers’ work was “wholly integrated” into the company’s operations. “The drivers look like FedEx employees, act like FedEx employees, are paid like FedEx employees,” the Ninth Circuit noted. And picking up and delivering packages is not just part of FedEx’s regular business, it is “essential to FedEx’s core business.”
Kansas Supreme Court. As the Seventh Circuit discovered, the Kansas Supreme Court had not specifically identified a test to definitively determine employment status under the KWPA. But Kansas courts have long emphasized the right to control test, and the primary distinction between it and the economic reality test used under the FLSA to determine employee-independent contractor status is that under the economic reality test, the right to control is not considered the single most important factor. The Kansas court ultimately determined that the 20-factor test is a tool to be used in Kansas to determine whether an employer/employee relationship exists under the KWPA, and this test includes economic reality considerations, while maintaining the primary focus on an employer’s right to control.
Although the district court primarily focused on the statements in the drivers’ operating agreement, saying the actual control that FedEx exercised over the drivers was not the question, the Kansas Supreme Court found that how FedEx implemented the operating agreement was a compelling factor in determining the company’s right to control its drivers. Viewing the factors as a whole, the Kansas high court concluded that FedEx had established an employment relationship with its delivery drivers but had dressed the relationship in independent contractor clothing.
NLRB. The issue in the NLRB decision was whether drivers operating out of a FedEx Home Delivery terminal in Connecticut were employees covered under Sec. 2(3) or, instead, were independent contractors, excluded from coverage. Although the Board had taken the position that the drivers were statutory employees, the D.C. Circuit subsequently held that drivers performing the same job at two FedEx facilities in Massachusetts were independent contractors. Acknowledging that this decision raised important questions about the Board’s approach in independent contractor cases, the Board decided to reexamine its approach.
Common law agency tests. The D.C. Circuit had found the common-law agency test was the appropriate legal standard, but over the course of recent decisions, the standard had changed its focus from the employer’s right to control to the “significant entrepreneurial opportunity for gain or loss.” Acknowledging that all common law considerations were relevant, the appeals court concluded that an important way to evaluate those factors was whether the position presented the opportunities and risks inherent in entrepreneurialism.
But the Board was not convinced. It had never held that entrepreneurial opportunity, in and of itself, was sufficient to establish independent contractor status, it said. In fact, “if a company offers its workers entrepreneurial opportunities that they cannot realistically take, then that does not add any weight to the company’s claim that the workers are independent contractors.” Thus, the Board rejected the D.C. Circuit’s view that it treated entrepreneurial opportunity as the decisive factor. While actual entrepreneurial opportunity for gain or loss remains relevant, it was just one aspect of a factor that asks whether the evidence tends to show that the worker is, in fact, rendering services as part of an independent business, said the Board, finding again that the FedEx Home Delivery drivers were employees under Sec. 2(3).
The Ninth Circuit decisions are Alexander v FedEx Ground Package System, Inc dba FedEx Home Delivery and Slayman v FedEx Ground Package System, Inc dba FedEx Home Delivery, Inc. The decision of the NLRB is FedEx Home Delivery, a division of FedEx Ground Package Systems, Inc., and the Kansas Supreme Court decision is Craig v FedEx Ground Package System, Inc.
When the Supreme Court begins it Fall 2014 term on Monday, October 6, it faces a line-up of labor and employment law cases that give the Justices the opportunity to substantially shape the practice area. The issues laid at the Court’s door include weighty issues such as whether the DOL must go through notice-and-comment rulemaking before changing prior regulatory interpretations and the right of courts to pass judgment on the adequacy of the EEOC’s pre-litigation conciliation efforts. The Justices will also examine the increasingly controversial question of whether time spent in employer security screens is compensable and the extent to which companies must accommodate pregnant workers in keeping with the accommodations they extend to non-pregnant workers.
Below is a brief run-down of cases that should be on the radar of labor and employment law practitioners:
DOL’s flip-flop on FLSA’s administrative exemption. Related petitions in Perez v. Mortgage Bankers Association and Nickols v. Mortgage Bankers Association ask the Court to resolve the question of whether a federal agency must engage in notice-and-comment rulemaking before it can significantly alter an interpretive rule that articulates an interpretation of an agency regulation. The petitions were brought, respectively, by the Secretary of Labor and an intervening mortgage loan officer. The Court has consolidated the petitions and slated the question for an hour of oral argument on Monday, December 1.
Below, the D.C. Circuit reversed a district court order dismissing the Mortgage Bankers Association’s challenge to a DOL Wage and Hour Division “Administrator Interpretation” concluding that mortgage loan officers were nonexempt under the FLSA (Mortgage Bankers Association v Harris, July 2, 2013, Brown, J). According to the appeals court, since the DOL’s most recent interpretation was at odds with its earlier interpretations, the agency was required to go through the notice-and-comment process.
EEOC’s duty to conciliate. In Mach Mining v. EEOC, the Justices are slated to resolve the increasingly controversial question of whether and to what extent courts may enforce the Commission’s mandatory duty to conciliate discrimination claims before filing suit. The case has not yet been set for oral argument.
The Seventh Circuit ruled that Mach Mining could not raise the EEOC’s failure to conciliate in good faith as an affirmative defense to the agency’s sex discrimination in hiring suit against the company. The decision was at odds with the rulings of other federal circuit courts. The language of Title VII, the lack of a meaningful standard for courts to apply, and the overall statutory scheme convinced the Seventh Circuit that an alleged failure to conciliate is not an affirmative defense to the merits of a discrimination suit. The Seventh Circuit also explained that finding in Title VII an implied failure-to-conciliate defense would add to that statute an unwarranted mechanism by which employers could avoid liability for unlawful discrimination.
There is a messy circuit split on the question that begs for resolution by the Court. According to the EEOC, in contrast to the Seventh Circuit, the Second, Fourth, Fifth, Sixth, Eighth, Tenth, and Eleventh Circuits have concluded that courts are permitted at least to inquire into the sufficiency of the agency’s informal conciliation efforts. However, those courts of appeals differ as to what standard the agency must meet and whether its failure to meet that standard warrants dismissal of a Title VII lawsuit on the merits.
Compensation for time spent in employer security screening. Integrity Staffing Solutions, Inc. v. Busk presents a question that employees are challenging more and more: Whether time spent in security screenings is compensable under the FLSA, as amended by the Portal-to-Portal Act? The Court will hear oral argument on Wednesday, October 8.
The petition for cert was filed by an employer that was sued by warehouse workers seeking back pay, overtime, and double damages under the FLSA for time spent in security screenings after the end of their work shifts. The employees purportedly were not compensated for up to 25 minutes spent at the end of their workday waiting to be searched and passed through metal detectors.
The district court initially dismissed the warehouse workers’ claims on the grounds that such activities were not compensable under the FLSA. But the Ninth Circuit saw it differently and reversed. As alleged, the security clearances were necessary to the employees’ primary work as warehouse employees and done for Integrity’s benefit, according to the appeals court. As a result, the employees stated a plausible claim for relief.
Integrity asserts that the Ninth Circuit’s ruling “squarely conflicts with decisions from the Second and Eleventh Circuits holding that time spent in security screenings is not subject to the FLSA because it is not ‘integral and indispensable’ to employees’ principal job activities.”
Pregnancy accommodations. In Young v. United Parcel Service, Inc., the Justices are asked to determine the extent to which employers must accommodate pregnant employees in light of accommodations extended to other workers. Specifically, the question for review is: “Whether, and in what circumstances, an employer that provides work accommodations to nonpregnant employees with work limitations must provide work accommodations to pregnant employees who are ‘similar in their ability or inability to work.’” The case is scheduled for oral argument on Wednesday, December 3.
The petition for cert was filed by an employee who became pregnant during a leave of absence to receive in vitro fertilization, but found when she tried to return to work, UPS would not accommodate her 20-pound weight-lifting restriction. The question presented is “exceptionally important,” according to the petition, which points to a recent observation by the EEOC’s General Counsel: “[d]iscrimination against pregnant women and caregivers potentially affects every family in the United States.”
The Fourth Circuit held that the UPS policy providing light-duty work only to employees who had on-the-job injuries, employees with disabilities accommodated under the ADA, and employees who had lost Department of Transportation (DOT) certification was not direct evidence of pregnancy-based sex discrimination. Nor could a pregnant employee who was unable to work during her pregnancy because of a lifting restriction establish a prima facie case of pregnancy discrimination because the court agreed that she was not similarly situated to employees with work-related injuries, ADA disabilities, or those who had lost DOT certification.
Employer knowledge of need for religious accommodation. On October 2, the Supreme Court agreed to review the Tenth Circuit’s decision in EEOC v Abercrombie & Fitch Stores, Inc. involving what kind of “actual knowledge” an employer must have to be on notice that a religious accommodation is required. After losing its argument in the Tenth Circuit that proof by any means of an employer’s knowledge of an existing conflict between an employee’s religious practice and the employer’s workplace policy is enough for purposes of a prima facie religious accommodation case, the EEOC filed its petition for certiorari this summer. Ironically, the clothing retailer already had agreed to modify the policy last fall.
The EEOC had prevailed in the district court, which granted summary judgment to the EEOC finding that Abercrombie & Fitch violated Title VII by failing to provide a reasonable religious accommodation to a Muslim woman’s wearing of a headscarf, or “hijab.” Almost exactly one year ago, the Tenth Circuit reversed, finding Abercrombie was entitled to summary judgment as a matter of law because there was no genuine issue of material fact that the prospective employee never informed the store prior to its hiring decision that she wore her “hijab” for religious reasons and that she needed an accommodation for that practice due to a conflict with Abercrombie’s clothing policy.
Other pending petitions. Other cases of interest to labor and employment practitioners include:
- M&G Polymers USA, LLC v. Tackett, set for oral argument on Monday, November 10. The case presents the question whether, when construing CBAs in LMRA cases, courts should presume that silence concerning the duration of retiree health-care benefits means the parties intended those benefits to vest and thus continue indefinitely.
- Department of Homeland Security v. MacLean, slated for oral argument on Tuesday, November 4. The Justices are asked to determine whether certain statutory protections in the Whistleblower Protection Act that are inapplicable when an employee makes a disclosure “specifically prohibited by law” can bar an agency from taking enforcement action against an employee who intentionally discloses Sensitive Security Information.
- Dart Cherokee Basin Operating Company v. Owens, scheduled for oral argument on Tuesday, October 6, places an important procedural question before the Justices: Whether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required “short and plain statement of the grounds for removal” enough?
Opening conference. The High Court held its opening conference on Monday, September 29. Following that conference, the Justices granted the petition for cert in EEOC v Abercrombie and Fitch Stores, Inc. and dismissed as improvidently granted Public Employees’ Retirement System of Mississippi v. IndyMac, a case that questioned whether filing of a putative class action serves, under the American Pipe rule, to satisfy the three-year time limitation in Sec. 13 of the Securities Act with respect to the claims of putative class members. Other pending petitions raise questions regarding the requirements of the test to determine compensable work under the FLSA when health and safety matters are at issue, ERISA’s anti-retaliation protections in the wake of unsolicited complaints to management, and whether a granted transfer request can be an adverse action in Title VII and ADEA discrimination cases, as well as several arbitration-related issues.
Fall protection tops the list of the most frequently cited workplace safety standards for fiscal year 2014, followed by hazard communication and scaffolding, according to preliminary figures from the Occupational Safety and Health Administration (OSHA). The list was announced by Patrick Kapust, deputy director of OSHA’s Directorate of Enforcement Programs, at the recent National Safety Council Congress and Expo.
The top 10 most frequently cited OSHA standards for FY 2014 include:
1. Fall Protection (29 CFR 1926.501) – 6,143;
2. Hazard Communication (29 CFR 1910.1200) – 5,161;
3. Scaffolding (29 CFR 1926.451) – 4,029;
4. Respiratory Protection (29 CFR 1910.134) – 3,223;
5. Lockout/Tagout (29 CFR 1910.147) – 2,704;
6. Powered Industrial Trucks (29 CFR 1910.178) – 2,662;
7. Electrical – Wiring Methods (29 CFR 1910.305) – 2,490;
8. Ladders (29 CFR 1926.1053) – 2,448;
9. Machine Guarding (29 CFR 1910.212) – 2,200; and
10. Electrical – General Requirements (29 CFR 1910.303) – 2,056.
Also just released, the Bureau of Labor Statistics’ latest Census of Fatal Occupational Injuries (CFOI) for 2013 indicates a preliminary total of 4,405 fatal work injuries were recorded in the U.S., lower than the revised count of 4,628 fatal work injuries in 2012. The rate of fatal work injury for U.S. workers in 2013 was 3.2 per 100,000 full-time equivalent workers, compared to a final rate of 3.4 per 100,000 in 2012. Final 2013 data from CFOI will be released in the late spring of 2015.
In line with the most frequently cited standard – fall protection – fatal falls, slips, or trips took the lives of 699 workers in 2013. Falls to a lower level accounted for 574 (82 percent) of those fatalities. In 2013, the height of the fall was reported for 466 of the fatal falls to a lower level. Of those, about 1 in 4 occurred after a fall of 10 feet or less. Another one-fifth of the fatal falls occurred from falls of over 30 feet. Ahead of fatal falls, depressingly, were 753 workers killed as a result of violence and other injuries by persons or animals, including 397 homicides and 270 suicides.
By Lorene D. Park, J.D.
Being fired is bad enough. What’s worse from the point of view of many courts? Worse is being told, in the termination letter, that you should find a less stressful job due to your heart condition. Or that your job functions were being transferred out of state, only to find out later that this was not the case. Or that the employer could not accommodate your schedule request even though your supervisor had previously approved it. In each of these real-life scenarios, the termination letters provided evidence that the employers engaged in unlawful discrimination or retaliation.
Get well now. For example, one employee, who was fired when his recovery from triple bypass heart surgery took “too long,” survived summary judgment on his claims of discrimination based on actual and perceived disability. The employer told its disability insurer it would accommodate the employee, who sent emails indicating his intent to return, but the employer then hired two replacements without physical limitations and sent the employee a termination letter that referred to his heart condition and the need for him to find a less stressful job. The federal district court in Louisiana found that the letter suggested that the employer regarded him as disabled and terminated him for that reason (Thomas v Hill).
Silence is not golden. Some attorneys might suggest that cases like this are a good reason to remain silent in the termination letter as to specific reasons for the discharge, but when it comes to questions of intent in discrimination and retaliation cases, silence is not golden. In one case, an employee who had threatened to sue the employer in the past was fired after violating a policy on computer use at work and after requesting an accommodation for his leg injury. The termination letter was silent as to the actual reason for his discharge, merely stating that the company was an at-will employer. To a federal district court in Arizona, this was inconsistent with termination letters the employer provided to other employees because their letters specified the reasons for their terminations. This was enough to raise a triable issue of fact on the employee’s disability discrimination claims (Maxwell v Verde Valley Ambulance Co, Inc).
In another case, a hospital defended its decision to fire an employee with severe depression and anxiety by citing years of “insubordinate and combative behavior,” but it never mentioned such conduct in her suspension memo or termination letter. A district court in Pennsylvania found a reasonable basis for concluding that her discharge, ostensibly for turning in a requested email an hour late, was pretext for discrimination, given that none of the incidents described by the employer were mentioned in the letter, the employee’s previous discipline did not list discharge as the next step, and she had good reviews (Franzi v UPMC Presbyterian Shadyside).
Given the importance of wording a termination letter just right and handling the termination process well, employers should take steps to avoid common pitfalls. Suggestions follow.
Verify the basis for discharge. Before writing the termination letter, review records, interview supervisors, or take other measures to confirm the factual basis for the discharge. For example, if an employee approved for FMLA leave was later fired for excessive absences, make sure none of the absences underlying the discharge were FMLA-qualifying. In another example, a termination letter stated that an accounts payable position was eliminated due to a new electronic record system, but other evidence suggested to a district court in Tennessee that the job was not actually eliminated by the time the employee would have returned from maternity leave, so she advanced her retaliatory discharge and FMLA interference claims (Hawkins v The Center for Spinal Surgery). In a case out of Minnesota, a federal court denied summary judgment on a race discrimination claim based in part on the fact that a termination letter stated the employer was unable to accommodate an employee’s scheduling request, even though her supervisor had previously approved it. The contradiction suggested pretext (Kennedy v Heritage of Edina, Inc).
Be consistent. Make sure the decision is consistent with any disciplinary policy. And even if there is no doubt that an employee violated a policy, ensure that the level of discipline is consistent with that imposed against others who engaged in similar conduct. For example, in an Ohio Court of Appeals case, an employee who was fired for sending sexually explicit emails in violation of an employer’s policy (according to the termination letter) could proceed to trial on his age discrimination claim because the company did not fire younger employees for substantially similar conduct (Bowditch v Mettler Toledo International, Inc).
Maintain a professional tone. The termination letter should be typed and should be professional and objective in tone. It should be dated and have a place for the employee’s signature.
Don’t mention protected characteristics. Do not mention health, age, sex, pregnancy, disability, or other protected characteristics in the termination letter or meeting. Also, avoid telling an employee to “look on the bright side.” For example, stating “This is a great time to retire anyway” could suggest that age was behind the discharge. Telling someone who took FMLA leave that “Now you can spend more time with your ailing wife” might suggest retaliation for that leave. And as mentioned with respect to the Thomas v Hill case, don’t suggest the employee would prefer a different job anyway due to his heart condition (or any disability).
Discuss the termination face-to-face. If possible, meet with the employee and deliver the letter to help avoid misunderstandings and address concerns that any individual might have upon being fired. The letter could provide a good outline for what should be discussed in the termination meeting, and following the letter could help the HR rep or other person conducting the meeting maintain a professional demeanor.
Write for a larger audience. You are delivering the letter to the employee – but how would the letter be read by the EEOC, a Facebook audience, or a jury? Provide enough background facts to keep things in context. If the employee was fired for violating a policy, or for failing to meet performance or behavioral standards, say so. Don’t leave it to a potential jury to fill in the blanks.
Be consistent after the fact. The reasons in the termination letter should also be the reasons provided if the decision is challenged later (perhaps in an EEOC charge). While it is okay to provide additional details on policy violations or other reasons outlined in a termination letter, avoid adding entirely new bases for the discharge that were not mentioned in the letter. Also, if you provide letters of recommendation, avoid saying anything that could contradict your stated reasons for terminating the employee. That could be used against you in court.
Avoid joint employer issues. Be mindful of the letterhead used. If an employee for company A was terminated on company B’s letterhead (or by company B’s HR personnel), that could suggest that both A and B exercised control over the termination decision and both could be liable as employers. Also, don’t use the terms “we” or “us” when referring to the employer. This could also become the basis for arguments that related companies received proper notice of EEOC charges or were joint employers for purposes of liability. For example, a federal court in Illinois refused to dismiss Title VII claims against three entities that arguably received notice of EEOC charges served on a CEO, as evidenced by shared offices, equipment, and owners, as well as by the fact that the CEO responded to an EEOC charge by commenting on when the employee “came to us” and stating “we” have always been an equal opportunity employer. Such language could also be problematic in termination letters (Jowers v Village Green Apartments, LLC).
Explain the employee’s rights and responsibilities. If you offer a severance package, the letter should reference the package. State that all property of the employer should be returned and perhaps provide a separate checklist of items, such as cell phones, computers, or keys. The employee should also be reminded of other contractual obligations (e.g., noncompete or nondisclosure agreements). In addition, provide information on available benefits, including COBRA documentation as appropriate. In one recent case, a federal court in Nevada ordered an employer to pay the maximum statutory daily penalty where the employee received an attachment to her termination letter explaining COBRA but was never provided an election form and was merely told that it would be sent separately (Honey v Dignity Health).
Final thoughts. The importance of a properly worded termination letter cannot be stressed enough. Mainly, it can provide evidence of an employer’s legitimate reason for taking the action it did. But it can also provide a roadmap for both employer and employee — guiding the employer through the termination meeting and helping maintain a professional tone, while also providing the employee with information underlying the decision and information on the next steps he or she needs to take. The termination letter also serves to document the employment action and, if EEOC charges are subsequently filed, can provide a ready response to any ensuing inquiry. With that in mind, be sure to have the employee sign the termination letter to acknowledge receipt. As with any document as important as this, having an attorney review the termination letter before delivering it is a good idea.