Job separation
agreements that provide enhanced benefits to
employees upon termination in exchange for
limiting subsequent claims against the employer
are increasingly used today. However, as we have
previously warned, it is every employee’s right to
file a discrimination charge against an employer
and the job separation agreement does not bargain
away that right. The EEOC goes further saying that
such an agreement must not even leave the
impression that it does. In some cases the EEOC
has even gone so far as to require an employer to
send notification to former employees stating that
their right to file a discrimination claim was not
barred by the agreement that they signed upon
termination. That would seem to be a clear
indication that wording of such agreements must be
carefully drafted to comply with this position of
the EEOC.
But in seeming contradiction to
the above, the Sixth Circuit Court of Appeals
recently upheld
the finding of a lower court that a release
with ‘a no obligation to rehire’ provision did, in
fact, bar a later filing of a charge of age
discrimination by an employee who was passed over
for other positions with the employer. As always,
the ruling addressed the particular facts of the
case before the court but it illustrates the care
with which such Agreements must be executed. To
avoid problems in hiring and terminating employees
consider attending one of the Chamber seminars on
the subject of "How
to Hire the Best, Handle Problem Employees and
Fire". |
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| In 2006 the number of
class action cases filed in federal court under
the Fair Labor Standards Act (FLSA) exceeded by a
significant margin the number of such cases filed
under all anti-discrimination statutes combined.
And the size of the judgments has been equally
impressive. The accurate classification of workers
as ‘exempt’ and ‘non-exempt’ determines whether an
employee must be paid for overtime worked.
Additionally, an employer must have adequate
workplace procedures to insure that all work
performed by ‘non-exempt’ workers is properly
paid. These two factors, worker classification and
time recording, are key to avoiding problems under
FLSA. They are particularly important given the
aggressive enforcement actions of the Department
of Labor. Has your company performed a ‘wage and
hour’ audit recently? If not, you should probably
put such an audit on the calendar for 2007.
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ANSWERS FROM THE HELPLINE
HOW
TO DETERMINE IF YOUR EMPLOYEE IS EXEMPT OR
NON-EXEMPT
Q. What
is the difference between exempt and
non-exempt?
A. Exempt means
exempt from overtime. In other words, you are not
required to pay overtime for employees classified
as 'exempt'. Non-exempt employees must be paid
time and one-half for all hours worked over 40 per
week.
Q. If I
pay my employees a salary, does that mean I don’t
have to pay them overtime for hours over 40?
Not necessarily. An employee can be paid a
salary and still be non-exempt. In that case,
hours over 40 must be paid at time and one-half
the regular rate, figured by dividing the salary
by the number of hours the salary is intended to
compensate.
Q. How do I know
if an employee should be considered exempt or
non-exempt?
A. There are two
tests an employee must meet to be classified as
exempt. The first is the pay test. An employee
must be paid at least $455 per week or a minimum
salary of $23,660 per year. The second test is a
duty test. Executives, professionals, and
administrators may not spend more than 50% of
their time performing non-exempt work. Outside
salespersons can also be classified as exempt,
there is no pay test, however, the employee cannot
perform non-exempt work more than 20% of the time.
Q. Can you give
me examples of Executives, Professionals, and
Administrators?
A. An executive is
part of management, supervising at least 2
employees. They must have the authority or input
on hiring and firing. A professional has to have
formal education, and use discretion and judgment.
Creative work of an artistic nature is also in
this category. An administrator must have the
authority to make meaningful decisions affecting
operations. An administrator should perform exempt
work relative to management policies or general
business operations and exercise discretion and
independent judgment in this work.
Q. What are some
examples of non-exempt work?
A. The
following are simple examples of non-exempt work:
- Manual work
- Production work
- Routine clerical duties such as bookkeeping,
billing, and filing
- Preparing payrolls
- Checking and inspection of goods as a
production operation, rather than as a
supervisory function
- Performing maintenance work
- Repairing machines, as distinguished from an
occasional adjustment
- Making a sale, replenishing stock, except
for training purposes
- Performing the same kind of work as the
employees supervised
Certain
highly-paid commission employees of retail or
service establishments, truck drivers and some
others involved in the transportation of goods
interstate, (and sometimes intrastate), members of
religious organizations whose functions are
spiritual or religious, volunteers, and a few
others may be classified as exempt. A call to the
Illinois and U.S. Department of Labor can help you
determine industry specific exemptions.
Knowing what you can and can't do will
help you prevent costly mistakes. To discuss
your specific issues, members can contact the
Chamber HelpLine. Let Pam Holleman our
Manager of Human Resource Information help you
deal with problems safely and avoid disputes. You
can reach the Helpline toll-free at 800-322-4722.
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The following are the
results of a national survey of employer sponsored
health care plans conducted by the Kaiser Family
Foundation and the Health Research and Educational
Trust:
In the 12 months ending in the
spring of 2006 the average annual premiums on
employer sponsored health insurance increased by
7.7% to $4,242 for single coverage and $11,480 for
families. This compared with increases of 9.2% in
2005 and 11.2% in 2004. While the rate of increase
continued to decline, it still represented much
faster growth than overall inflation (3.5%) or
wages (3.8%). Of course, these are just averages
so individual employer plans may have changed by
significantly greater or lesser amounts, e.g., 42%
of covered workers experienced increases of 5% or
less while 13% increased by more than 15%.
More than 75% of workers with single
coverage contribute some portion of the premiums
($627 on average) with more than 90% of workers
with family coverage paying a portion ($2,973) of
the cost. There has been no significant change in
the percent of premiums paid by workers over that
past several years ( about 16% for single coverage
and 27% for family premiums).
Sixty
percent (60%) of small firms (3-199 workers)
offered health benefits in 2006 down from 65% in
1999. Ninety-eight percent (98%) of large firms
had health plans for employees, a 1% decline
from1999. |
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| Retaliation claims
continue to grow in number and employers must be
able to defend against such charges. Consider this
situation: An employee files a discrimination
charge against his employer. He subsequently drops
the discrimination charge but instead charges the
employer with adverse actions taken in retaliation
for his prior discrimination claims. Can the
employee prevail absent the underlying claim of
discrimination for which the retaliation is
alleged? A New Jersey Supreme Court ruling may
give guidance in defending against such a
retaliation suit. The Court recently held that the
plaintiff must show that the claimed retaliation
was in response to an underlying reasonable, good
faith charge of discrimination. The reasoning of
the Court was based upon federal precedents and it
also guards against retaliation claims filed
preemptively in anticipation of an adverse
employment action. |
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| The number of
discrimination complaints filed with the Equal
Employment Opportunity Commission (EEOC) in 2006
rose for the first time since 2002. Over 75,000
charges were filed against private sector
employers. All charge categories increased for the
year except age and pay with race, sex and
retaliation continuing to be the highest volume
categories. Sexual harassment claims (a form of
sex discrimination) totaled more than 12,000 with
15% of the claims filed by males. Charging parties
to claims settled in 2006 received over $274
million through EEOC actions. |
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| The Illinois Chamber is
offering another seminar in HR management
practices designed to make you an expert in
‘How
to Hire the Best, Handle Problem Employees and
Fire’. As with previous seminars in
this series, the material will be presented by
leading practitioners in the field of HR
management and law and attendees will earn 6.5
CEU’s from the HRCI. Register
now to attend at one of the seminar’s three
(3) convenient locations and learn how to get the
most from your staff while avoiding the
increasingly complex problems of HR
management. |
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| Current
Economic Indicators |
| Your membership in the
Illinois Chamber pays! We offer valuable programs
and services to our members at special discounts.
In addition to our growing list of outstanding
seminars and workshops the following programs will
help you with your everyday business needs.
Learn more about these
programs and how they benefit your company when
you Join
the Leaders! |
| |
| The Chamber urges all
Illinois employers to recognize their Guard and
Reserve employees by signing and displaying the
ESGR Statement of Support. To get yours go to the
ESGR web site link above and complete a simple
online form. You will receive a personalized
certificate that demonstrates your support. Also
visit the SBA
Veteran's Business Development web site for
assistance to small business owners that have
employees activated in the Guard or
Reserves. |
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The HR Exec -
Copyright © 2007 The Illinois Chamber
Wood
S. McComb, Editor
Pam
Holleman, Manager, Human Resource Information
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