James Myers

Monday, 22 July 2002 10:09

You said what?

Business owners and supervisors are often asked to give references about former employees. Few businesses may be aware, however, that they can open themselves up to lawsuits when they provide any type of subjective information about a former employee.

Employees can sue former employers for defamation if they believe that the employer has said untrue things about their abilities or job performance, causing a prospective employer to not offer a job. The risk of a lawsuit is greater if the employee has filed a discrimination suit against the former employer, because anything negative the employer says about the employee to a prospective employer may be considered retaliation against the employee for filing the original discrimination suit.

To complicate matters further, businesses may also be held liable for failing to reveal the misdeeds of former employees if the employer provides only favorable or incomplete references about a former employee.

In a recent case, the courts held a school district liable when it gave a glowing review of a former principal and neglected to tell the hiring school district that there were allegations that the principal had molested a young boy. The principal was caught molesting another student in his new place of employment. The second school district successfully sued the first district for giving a negligent referral.

To avoid the risks involved in giving references, businesses should create a policy stating that it will not give subjective information about any former employee. Under such a policy, the company only verifies the titles of former employees and their dates of employment. But make sure the policy is strictly followed and that no one attempts to speak even "off the record."

Those companies who wish to provide more detailed references about former employees can reduce their risk of being sued by requiring all employees to sign a statement that they will not sue the company because of job references. These forms should be signed by all employees when they are hired. Although some states require all employees to sign such releases, Pennsylvania law does not require it.

In addition, no existing Pennsylvania law provides protection to employers who give job references. These "good faith" laws do exist in 26 other states and offer varying degrees of protection to employers who release truthful references about former employees.

A case for mandatory arbitration clauses

Businesses that require employees to arbitrate employment disputes can avoid expensive litigation and runaway jury verdicts. Moreover, consider these benefits: Arbitration is confidential, arbitrated cases are not a matter of public record like lawsuits, and arbitrations typically move more quickly to resolution than lawsuits.

An agreement to arbitrate is enforceable under the Federal Arbitration Act, provided that it is in writing and is irrevocable as to pending disputes. The courts scrutinize the provisions of arbitration agreements for overall fairness and preservation of fundamental due process rights. Provisions that should be in any arbitration agreement include:

1. A description of the claims that are within the scope of the agreement

2. A procedure for initiating and notifying the parties of the arbitration demand

3. A provision for selecting the arbitrator(s)

4. Mandatory informal mediation as a prerequisite to arbitration

5. Procedures for conducting the hearing and pre-hearing discovery

6. Allocation of costs

7. A statement that an arbitration agreement does not enhance or diminish the at-will nature of employment

8. A choice of which laws will be applied (usually the laws of the place of employment)

9. A confidentiality requirement regarding the arbitration and its final outcome

10. A provision reserving the right of the employer to prospectively terminate or modify the arbitration agreement

11. A provision that determines where the arbitration will take place.

Legal Affairs is compiled by the attorneys of Eckert Seamans Cherin & Mellott LLC, a national law firm headquartered in Pittsburgh.

Monday, 22 July 2002 10:05

Legal briefs

May an employee seek a job transfer to another position within the company where he or she would not be subjected to prolonged and inordinate stress by co-workers as an accommodation under the Americans with Disabilities Act?

The 3rd Circuit Court of Appeals answered the question with a resounding "no" in the case of Gaul vs. Lucent Technologies Inc. In that case, the court found that this special consideration "would impose a wholly impractical obligation on...any employer," and, therefore, was unreasonable as a matter of law.

How to handle employee absences during Pennsylvania "emergency" days

A relatively new law in Pennsylvania prohibits employers from disciplining employees who are unable to get to work because of road closures resulting from a state of emergency declared by a governmental body. That law, Act 4 of 1998, was signed by Gov. Ridge on Jan. 29, 1998, and went into effect 60 days later.

Under Act 4, an employer may not terminate or otherwise discipline an employee for failing to report to work because of a road closure, in the county of the employer's place of business or in the county of the employee's residence, resulting from a declared state of emergency. The employer need not, however, pay employees who fail to report to work under these circumstances.

An employer who violates Act 4 will be required to reimburse its employees for all monetary losses resulting from any discipline. In addition, if the matter is adjudicated, the violating employer will also be liable for all attorneys' fees and court costs.

New hires mean additional Labor Department paperwork

A new federal law has created additional paperwork for businesses before new employees can start their first day on the job.

Businesses now must notify the state Department of Labor and Industry of every new person they hire, or rehire, within 20 days of employment. This new requirement went into effect Jan. 1, 1998, as a means to implement the federal Personal Responsibility and Work Opportunities Reconciliation Act of 1996. The law requires each state to maintain a directory of all new hires for the purpose of enhancing child-support enforcement.

Companies must include the employee's name, address and Social Security number, as well as the employer's name and telephone number, on a form supplied by the Department of Labor or in an electronic form. The information can be attached to the W-4 form that companies send the state Labor Department.

Companies that don't follow the rule face a warning for their first omission and a $25 fine for each subsequent oversight. Companies found to be in collusion with an employee to withhold the information face $500 fines.

Law Briefs is compiled by attorneys of Eckert Seamans Cherin & Mellott, LLC, a national law firm based in Pittsburgh.