Top 10 Mistakes Employers Make

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(Photo above courtesy of Bryant Lovlien Jarvis)

It is not always easy to navigate the ever-changing landscape of Oregon employment law. Below are a few tips for employers to consider.

Misunderstanding “At-Will” Employment. Employers should establish in writing that employment is at will and that employment may be terminated with or without cause, with or without prior notice, and at any time, at the option of the employer. Employers should also be aware that just because an employee is “at will” does not mean that the employee can be terminated for an unlawful reason. For example, in Oregon, terminating an employee for exercising the employee’s use of protected sick leave is not permissible. Many employers terminate employees based on the idea that their employees are “at will” without analyzing the specific circumstances involved and any potential legal claims that might arise.

Hiring and Screening. Employers should have a clear hiring process compliant with applicable law. The interview and screening processes (including background checks) and related questions should be reviewed carefully to ensure up-to-date compliance.

Failing to Follow Established Policies. Employers should have an employee handbook that is current and compliant with Oregon law and must be careful to follow the rules set forth in that handbook. This seems simple, but failing to follow established policies creates potential liability for employers. A few of the current “hot topics” relating to employer policies include substance abuse policies (for example, is marijuana use on or off-the-job restricted?), smoking policies (is vaping restricted?), and social media policies (are employees prohibited from posting on social media about the business and/or from referencing the business?).

Failing to Secure Proper Documents from Key Employees. Employers should consider having employees sign confidentiality agreements if protecting certain information is important to the business. If an employee is creating any intellectual property within the scope of his or her work for the employer, the employer should consider obtaining a written assignment of that work from employee to employer. Failing to protect intellectual property can be costly for the business if a dispute arises later. Noncompetition agreements in Oregon are enforceable only in very specific circumstances and should be analyzed carefully.

Improper Classifications as Independent Contractors. The Department of Labor is continually cracking down on misclassification of employees as independent contractors. Many employers classify individuals as independent contractors to save money. The consequences of failing to properly classify an individual as an employee can be significant, including potential liability for back pay, back taxes, and other damages and penalties.

Improperly Classifying Employees as Exempt. Many employers pay employees on a “salary” basis and believe that, therefore, they are not required to pay these employees for overtime. A misclassification, however, may result in liability for overtime. The employer bears the burden to prove that an employee’s status is exempt from overtime. In order for an employee to be properly classified as “exempt” in Oregon, the employee must:

(1) perform specific duties (for example, exempt executive, exempt supervisor, and exempt professional employee are a few categories, each with very specific requirements), and

(2) be paid on a salary basis (for example, the employee is paid a predetermined and fixed salary that is not subject to reduction for variations in the quality or quantity of work performed). The amount of salary an employer must pay for an employee to qualify as exempt may soon change. Currently, employees who make less than $23,660 ($455 per week) are entitled to overtime wages under the Fair Labor Standards Act. On December 1, 2016, this threshold was set to increase to $47,476 ($913 per week). However, a federal judge has temporarily blocked implementation of this change, and it is unclear how the issue will ultimately be resolved. In sum, the classification of exempt employees is a complicated process, and employers should stay tuned for final resolution of this issue.

Failing to Follow Process Required by Leave Laws. Navigating employment leave laws is a complicated process. The analysis often depends on the number of employees and the type of leave involved (for example, employers with six or more employees in Oregon must comply with Oregon’s disability laws). Oregon has mandatory paid sick leave for employers employing ten or more employees in the State of Oregon.

Employee Records. Employers should maintain a personnel file for each employee. This personnel file must contain the time and pay records of the employee. Employers should document all disciplinary actions and be clear in employee reviews about any performance issues.

Paychecks. On termination, there are specific rules regarding final paychecks, including time periods within which employees must be paid. Employers often wait until the next pay period to issue an employee’s final paycheck, and this delay may result in significant penalties to the employer. Additionally, employers are very limited in what they may deduct from an employee’s paycheck. For example, even in egregious circumstances such as theft, an employer may not deduct from the employee’s paycheck amounts that an employee stole from the company. Improper deductions can create liability for employers.

Failing to Review Insurance Coverage. Employers need to maintain many types of insurance and should review their policies at least annually. Some types of insurance (for example Employment Practices Liability Coverage (EPLI)) are optional. Even with the best proactive approach, however, employee issues can still arise, and defending against them is expensive. Employers should consider obtaining EPLI for their business if it makes economic sense to secure this type of coverage.

This article is a summary for informational purposes only. Each party should consult their own legal advisor. Heather J. Hansen is a shareholder at Bryant Lovlien & Jarvis, P.C. She advises clients in business, employment, and real estate matters. For more information, visit www.bljlawyers.com.

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Heather J Hansen at Bryant Lovlien and Jarvis PC

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