Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

In this job environment, companies are tending to use severance agreements as a way to limit their exposure to lawsuits down the road, and part ways with employees on as amicable a basis as possible.

I've previously written some the legal issues that arise with layoffs and severance agreements.  But often times, the agreements are matter of negotiation.  As with any negotiations, getting to a resolution is based, at least in part, on the expectations that the other side has for a deal.

An interesting article online this week at BusinessWeek advises executives on "How to Part on the Best of Terms".  It's an interested read, particularly for companies to understand what advice employees are receiving when they receive severance agreements to review.

The amount of money in severance, as the article notes, is usually calculated at one or two weeks of severance for each year of service, but more and more, employees and companies are negotiating other aspects of a severance agreement besides just money, including health benefits, outplacement services, and restrictive covenants (like non-compete clauses). 

And what advice is given to executives to get the "best" package? According to the article: "Don't Take It Personally. Speak to Someone Who's On Your Side. Determine Exactly What You Want."

For employers, the article is a fresh reminder that no matter how difficult it may be for the employer to make the decision, it's almost always harder on the employee.  Understanding what may be going through the executive's mind and understanding what their needs may be, may be a good path to follow in wrapping up any severance agreement with that employee.

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BusinessWeek has an in-depth article this week on business checks and the accuracy of those records.  Its a thought-provoking article that suggests that background checks are a "Wild Wild West" where nothing is regulated.  Moreover, despite the headline that question the accuracy of background checks, the article itself doesn't contain any statistics or studies to show that. Rather, they use anecdotes to make the point.

But when you look at the article, I was struck by one paragraph that's buried deep in text:

The company [ChoicePoint] conducts 10 million background checks annually and estimates it has about 20% of the U.S. market. "The number of complaints vs. transactions is very low," says Katherine Bryant, vice-president for consumer advocacy. The [Federal Trade Commission] has logged 695 complaints against ChoicePoint since 2005, some of which related to [a single] identity-theft episode.

So, for those doing math at home,and if these numbers are to be trusted, there is a 0.000023 percent complaint rate over the last three years filed with the Federal Trade Commission for background checks conducted by ChoicePoint.  That doesn't strike me as a huge issue whatsoever.

Are there issues with faulty records on some? Absolutely.  But the numbers presented in this article hardly suggests a rampant problem with background checks.

And as for the contention that background checks are fairly unregulated, that's an overstatement as well.

For employers, following the Federal Fair Credit Reporting Act  is an important  part of avoiding liability for background checks.

As its core and very broadly, the FCRA imposes three general requirements on a company that seeks to obtain and use a background check (known as a "consumer report") for employment purposes: 

(1) the company procuring the report must make certain disclosures to, and obtain authorization from, the job applicant;
(2) the company must make certain representations to the consumer reporting agency from which the report is procured; and, 
(3) the company that uses that report for employment purposes must make certain disclosures to the applicant both before and after taking any adverse action against the applicant based on the report.

I've discussed these requirements further in a prior post available here. 

The Federal Trade Commission, the government agency responsible for oversight of this law, has a good primer on the subject for employers. 

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For employment lawyers and HR professionals, it's "old" news that overtime lawsuits are a major concern.  Business Week picks up on that trend in next week's Cover Story entitled: "Wage Wars: Does your Boss Owe You Overtime". 

According to the article:

No one tracks precise figures, but lawyers on both sides estimate that over the last few years companies have collectively paid out more than $1 billion annually to resolve these claims, which are usually brought on behalf of large groups of employees.

Yes, you read that right. A BILLION dollars. 

Is this estimate true? Who knows.  But considering that the Labor Department estimates that 86 percent of the workforce is subject to overtime rules, that number suggests that there may still be lots of other potential lawsuits out there.  Connecticut has had no shortage of these lawsuits either. 

What's an employer to do? Clearly, some pro-active steps are always in order. 

• Audit your exempt employees.  Go over job descriptions and compare that with actual duties.  Sometimes "managers" are just glorified sales workers.
• Take seriously any complaints by employees about their overtime.  If there is a problem, odds are the complaining employee isn't the only one with the problem.  And that means the potential for a class action case. 
  
• Educate your Human Resource personnel and, even better, your payroll people about the overtime rules.  In particular, even if people are receiving overtime, make sure its calculated correctly.
• When in doubt, get advice.  These issues never get "better" overtime. If anything, when overtime issues are allowed to fester, the risk for companies increases substantially.  Working with an attorney and payroll personnel to comply with the law with ensure that the little issues don't turn into big ones. 
  

We'll discuss more about wage and hour claims in upcoming posts, but for background on the issue, the Business Week article is a good background piece.

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