U.S.Employment - some practical hints

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U.S.Employment - some practical hints[1]

Foreign companies opening a manufacturing facility in the U.S. are faced with broad U.S. labor laws which by no means do have anything in common with the erroneous belief in an outmoded principle of "hire and fire". Instead - to the surprise of many foreign companies - there are many laws, standards, judicial decisions and institutional guidelines with the objective to provide employees in the U.S. with strong legal protection. US. companies are not required to provide employees with a pension, but, if they do, a bundle of laws apply. Law does not mandate severance payments, but they are governed by contracts, policies, and past practice. Contracts could be labor contracts governed under the National Labor Relations Act and be formed by a handbook policy. Or, there could be a history of paying severance such that employees terminated in the future become entitled to severance payments. And, there may be a plant closure triggering certain payment obligations under the Federal Worker Adjustment & Retraining Notification Act or state plant closing or plant shutdown laws. And surprisingly, the practice of private employers (predominately uninformed foreign companies) of allowing employees to take time off for overtime hours at the rate of one and one half hours compensatory time off for every one hour of overtime worked, as opposed to paying promptly in cash for the overtime hours, violates Section 7 of the Fair Labor Standards Act.


The brief summary of the statutes referred to in the following (Labor Management Reporting and Disclosure Act, The Americans with Disabilities Act, Plant Closings and Layoffs,  The Family and Medical Leave Act and Fair Labor Standards Act) shall give a short glimpse of the perils to the foreign investor and his attorney which when not properly taken care of by an appropriate labor and plant organization may pose a financial threat to a company not to be underestimated.


The information provided shall make the reader sensitive for U.S. employment issues and provide him and her with the material for questions to be asked when mandating its local attorney with drafting an employee handbook and preparing the foreign company for its legal responsibility as an employer under the umbrella of U.S .labor laws. Such attorney should consider issues like avoiding to create a contract by handing out the handbook, maintaining an "at-will" relationship, avoiding probationary periods, establishing benefits clearly, setting forth work rules, procedures and required policies, instructing supervisory personnel how to use the handbook and its procedures, considering possible union contract conflicts, setting forth who may exclusively modify the rules laid down in the handbook and securing compliance of all company personnel with the handbook. Since laws are changing over the years and vary from state to state, consulting your local attorney is necessary to be informed about the most recent legislation.


§         The Labor Management Reporting and Disclosure Act (also known as the Landrum-Griffin Act, LMRDA) deals with the relationship between a union and its members. It provides for safeguarding of Union funds, reporting and disclosure of financial transactions, and administrative practices of union officials, Labor consultants, etc. The Act is administered by DOL's Employment Standards Administration, Office of Labor-Management Standards (OLMS).


§The Americans with Disabilities Act (ADA) provides certain rights for individuals with dis­abilities. The act affects the areas of employment, public services and transportation, public accommodations, and telecommunications. The employment provisions of the ADA are in  effect for all businesses with 15 or more employees. The Equal Employment Opportunity Commission (EEOC) is charged with enforcement of the ADA.


The ADA generally protects individuals with a "disability" which is defined as (1) a physical or mental impairment that substantially limits one or more of the major life activities of the individual; (2) a record of such impairment; and (3) the perception of having such an impairment. The ADA does not protect individuals who cur­rently engage in the use of illegal drugs. An employer is allowed to test job appli­cants for drug use; however, the employer may not discriminate against a person who has successfully completed a supervised drug rehabilitation program and no longer engages in the illegal use of drugs. The ADA prohibits employers from discriminat­ing against a "qualified individual with a disability" because of the disability. Discrimination is prohibit­ed in almost all areas of employment: job applica­tions; hiring; advancement and discharge; compen­sation; job training; and other terms, conditions, and privileges of employment .


The ADA protects "qualified individuals with a disability" who, with or without reasonable accom­modation, can perform the essential functions of the employment position. The employer's judgment as to what are the essential functions of a job is given consideration. Evidence of the essential functions of the job may be a written job description prepared beforeadvertising and interviewing for a job. It is therefore imperative that the employer makes sure that the job descriptions, par­ticularly for physically demanding positions, describe the essential functions of the job and reflect the actual tasks performed by existing employees performing similar jobs.


The employer must comply with all phases of the ADA. The employer should take the following steps to comply with the ADA:


§         Prepare a company policy of nondiscrimination.

§         Prepare a job description for all positions of employment.

§         Prepare an employment application form that complies with the ADA.

§         Educate hiring personnel of the ADA so that they know the dos and don'ts of the job interview.

§         Institute a policy of the post-offer medical examination.

§         Make a final decision on whether to hire or withdraw a conditional offer of employment based on the employment application form, job interview, and post-offer medical examination.


§         Plant Closings and Layoffs by employers may be subject to the Worker Adjustment and Retraining Notification Act (WARN) which provides for early warning to employees of the proposed layoffs or plant closings. Questions on WARN may be addressed to DOL's Employment and Training Administration (ETA).


In general, employers are covered by WARN if they have 100 or more employees, not counting employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than 20 hours a week. Regular federal, state and local government entities, which provide public services, are not covered. Employees entitled to notice under WARN include hourly and salaried workers, as well as managerial and supervisory employees.


WARN requires employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs. This notice must be provided to affected workers or their representatives (e.g., a labor union), to the state dislocated worker unit, and to the appropriate local government. A covered plant closing occurs when a facility or operating unit is shut down for more than 6 months, and 50 or more workers lose their jobs as a result during a 30-day period. A covered mass layoff occurs when a layoff of 6 months or longer affects 500 or more workers, or 33 percent or more of the employer's workforce when the layoffs affect between 50 and 499 workers. The number of affected workers is the total number laid off during a 30- or in some cases 90-day period.


WARN does not apply to the closing of temporary facilities, or the completion of an activity when the workers were hired only for the duration of that activity. WARN also provides for less than 60 days notice when the layoffs were the result of the closing a faltering company, unforeseeable business circumstances, or a natural disaster.


The Department of Labor has published a pamphlet entitled "A Guide to Advance Notice of Closings and Layoffs," which describes the Worker Adjustment and Retraining Notification Act. Requests for copies of the pamphlet, or general questions on the regulations, may be addressed to: U.S. Department of Labor, Employment and Training Administration Office of Work-Based Learning Room N-4469, 200 Constitution Avenue, N.W.-Washington, DC 20210, phone (202) 219-5577. The Department, since it does not have administrative or enforcement authority under WARN, cannot provide specific advice or guidance with respect to individual situations.


An employer who violates the WARN provisions is liable to each employee for an amount equal to back pay and benefits for the period of the violation, up to 60 days. This may be reduced by the period of any notice that was given, and any voluntary payments made by the employer to the employee.


An employer who fails to provide the required notice to the unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. This may be avoided if the employer satisfies the liability to each employee within 3 weeks after the closing or layoff. Enforcement of WARN requirements is through the United States district courts. Workers, or their representatives, and units of local government may bring individual or class action suits. The Court may allow reasonable attorneys fees as part of any final judgement.


Relation to State, Local and Other Federal Laws WARN is in addition to, and does not preempt any other federal, state or local law, or any employer/employee agreement which requires other notification or benefit.


§         The Family and Medical Leave Act (FMLA) is applicable to any employer, which includes integrated employers and successors in interest, who is engaged in commerce or in any industry or activity affecting commerce, and who has 50 or more employees for each working day during at least 20 calendar weeks or more in the current or preceding calendar year. All public agencies (state and local government), some federal agencies and local education agencies (schools) are covered. Employers do not need to meet the 50-employee test. Most federal employees are covered by Title II of FMLA and are subject to regulations issued by the Office of Personnel Management.


In order to be "eligible" for FMLA leave an employee must be employed by a covered employer, and work at a worksite where at least 50 employees are employed at or within 75 miles (road - surface miles); must have worked at least 12 months (do not have to be consecutive) for the employer; and, must have worked at least 1250 hours during the 12 months immediately preceding the date of commencement of FMLA leave.


The FMLA provides an entitlement of up to 12 weeks of unpaid leave during any 12 months for the following reasons:

  • Birth or placement for adoption or foster care of a child;
  • To care for an immediate family member (spouse, child, parent) who has a serious health condition; or
  • For the employee's own serious health condition.

An employer must maintain group health benefits that an employee was receiving at the time leave begins, during periods of unpaid FMLA leave, at the same level and in the same manner as if the employee had continued to work. Under most circumstances, an employee may elect or the employer may require the use of any accrued paid leave (vacation, sick, personal, etc.) for periods of unpaid FMLA leave. FMLA leave may be taken in blocks of time less than the full 12 weeks on an intermittent or reduced leave basis. Taking of intermittent leave for the birth, placement for adoption, or foster care of a child must be approved by the employer.


When leave is foreseeable, an employee must provide the employer with at least 30 days notice of the need for leave. If the leave is not foreseeable, then notice must be given as soon as practicable. An employer may require medical certification of a serious health condition from the employee, and may require periodic reports during the period of leave of the employee's status and intent to return to work, as well as "fitness-for-duty" certification upon return to work in appropriate situations.


When the employee returns from FMLA leave the employee is entitled to be restored to the same job the employee left when leave commenced. In the event the same job is not available, the employer must place the employee in an equivalent job with equivalent pay, benefits, responsibilities, etc. The employee is not entitled to accrue benefits during periods of unpaid FMLA leave, but must be returned to employment with the same benefits at the same levels as existed when leave commenced. Any benefits accrued at the time leave began are retained by the employee.


Employers are required to post a notice for employees that outlines the basic provisions of FMLA and are subject to a civil money penalty for wilfully failing to post such notice. Employers are prohibited from discriminating against or interfering with employees who take FMLA leave.


FMLA is administered by the Employment Standards Administration's Wage and Hour Division. Employees or any person may file penalties or complaints with the Employment Standards Administration, U.S. Department of Labor (usually through the nearest office of the Wage and Hour Division). Employees have private rights of action without involvement of the Department to correct violations and recover damages. The Secretary may file suit to insure compliance and recover damages if a complaint cannot be resolved administratively.


A number of States have family leave statutes. Nothing in the FMLA supersedes a provision of State law that is more beneficial to the employee, and employers must comply with the more beneficial provision. Under some circumstances, an employee with a disability may have rights under the Americans with Disabilities Act.


The Fair Labor Standards Act (FLSA) prescribes minimum wage and overtime pay (and record-keeping) standards affecting most private and public employment, including homework. The Wage and Hour Division of DOL's Employment Standards Administration (ESA) administer the Act.


1. The Minimum Wage and Overtime provisions of the FLSA require the following from employers of covered employees who are not otherwise exempt:


§         Employers must pay covered employees a minimum wage of currently not less than $ 5.15an hour. (Employers may pay employees on a piece-rate basis and under some circumstances consider the tips of employees as part of their wages.)


§         While not placing a limit on the total hours which may be worked, the Act requires that covered employees, unless otherwise exempt, be paid not less than one and one-half times their regular rates of pay for all hours worked in excess of 40 in a workweek.


Overtime Pay May Not be Waived - the requirement that overtime must be paid after 40 hours a week may not be waived by agreement between the employer and employee(s). Similarly, an agreement that only 8 hours a day or only 40 hours a week as working time will clearly fail. An announcement by the employer that no overtime work will be permitted or that overtime work will not be paid for unless authorized in advance, also will not impair the employee's right to compensation for the overtime worked.


The FLSA short test for over-time exemption:


Employee must earn at least $250 per week and:


1.       Primary duty is management, i.e. overall head of operations or a department.

2.       Directs on a regular basis the work of 2 or more employees.

3.       Hires and discharges employees and is responsible for recommending promotions and employee reviews.

4.       In the normal course of work exercises discretionary powers.

5.       Devotes no more that 20% of the hours worked to non-executive work.


They have to meet all the requirements or the company owes overtime pay.


2. Homework requirements of the FLSA generally prohibit the performance of certain types of work in an employee's home unless the employer has obtained prior certification from the Department of Labor.

[1] Im folgenden handelt es sich um Auszüge aus anstehenden Veröffentlichungen in Fachzeitschriften.