Delaware Employment Law Blog

Good documentation practices during the hiring process can help employers avoid a failure-to-hire claim.  And that's a good thing, considering that failure-to-hire claims are costly. Just ask Perdue.  The poultry company has agreed to a pay out of more than $800k to settle a claim of disparate impact arising from what the DOL concluded to be systematic discrimination against non-Hispanic job applicants. 

Disparate Impact Claim

A Labor Department news release states an evaluation in 2005 and 2006 by the Office of Federal Contract Compliance Programs (OFCCP) found the Salisbury-based company failed to comply with federal employment laws at its poultry processing plants in Rockingham, N.C., Dillon, S.C., and Monterey, Tenn. (The OFCCP has jurisdiction because Perdue supplies poultry under a federal contract to the U.S. Department of Agriculture.)

The settlement agreement will require Perdue to pay $800,000 in back wages and interest to 750 women and minorities who were not hired during the relevant time period.  The company also will make employment offers to some of those who were not hired but who are still interested in employment with Perdue.  In those cases, the employees will receive retroactive company service dates for purposes of benefits and promotion rights. 

Documentation Regrets

Perdue officials denied the allegations on the basis that many applicants were unqualified for employment or withdrew from consideration for employment.  They stated that the company agreed to a settlement only to avoid protracted litigation, according to the company. The VP of HR said in a company statement:

Perdue is committed to treating all job applicants fairly. We regret we did not more carefully document our hiring process for production associates, which led to these concerns by the OFCCP and, ultimately, to this settlement.

Perdue has implemented new procedures to ensure it retains all relevant documentation of its selection processes and is also conducting training of its human resources staff to assure appropriate implementation of Perdue's hiring and employment practices, according to the company statement.

Interviewing Best Practices

Interviewing is one of the most neglected areas in employment law.  When I teach seminars on lawful interviewing, I will inevitably see faces filled with shock and despair as they realize just how many of the best practices have not been implemented in their organization. 

Documentation is key in hiring.  If you keep notes and records only on the people you hired, you will have nothing to refer to in a failure-to-hire claim.  And let's be honest, the ones you didn't hire are likely the ones who were the least memorable.  Can you remember candidates you interviewed and rejected in 2005 and 2006? 

Without an established and consistent documentation and record-retention policy for the hiring policy, a failure-to-hire claim can be nearly impossible to defend.  Just ask Perdue.

Source:  Delaware News Journal, Gwenn Garland

Many employers use severance agreements as a way to protect their business from legal liability arising from terminating employees.  Larger companies sometimes use them in just about every termination, while most smaller companies are more selective--offering severance packages only when there is a particularly volatile situation or where there is already a suspicion that the employee will try to sue.  Here are the Top 5 tips that every employer should know about severance agreements before offering one to a soon-to-be former employee.

Who Should Be Offered a Severance Agreement?

The modern school of thought says that employers should consider offering a severance package to all persons who are laid off during a reduction in force (RIF) and to any employee who, for whatever reason, may be particularly inclined to sue. 

Some employers offer severance agreements to every person they terminate.  This becomes problematic, though, when they find themselves having to offer to pay money to an employee with serious policy infractions.  For example, do you really want to offer severance to an employee who is being terminated because he was found to have harassed several female employees?  Probably not.  And he's probably not likely to sue the company.  But, because they've always given severance, the employer is hesitant not to do the same for this employee. 

Specific Requirements for Employees Over 40 Who Are Offered a Severance Package

The Office of Federal Contract Compliance Programs (OFCCP) regulates a variety of record-keeping and tracking requirements.  For example, OFCCP is charged with enforcement of internet application recordkeeping, affirmative action plans, and compensation-audit plans. 

For severance agreements offered to employees aged 40 and over, the OFCCP imposes certain requirements that require strict compliance.  Specifically, the agreement must provide that the employee has 21 (or 45, in the case of layoffs) days to consider the offer.  Then, even after acceptance, the employee has seven days to revoke their decision. 

Failure to include this very specific language can result not only in the agreement being unenforceable, but also in liability against the employer if the employee files suit on the ground that the agreement is not in compliance with the law.  It can also invoke a visit from the Department of Labor. 

What the Severance Agreement Can and Should Prohibit

A severance agreement should prohibit the employee from filing suit on his or her own behalf against the employer from any and all claims arising from the employment relationship.  It should also prohibit the employee from encouraging or assisting others in filing suit against the company. 

The agreement may not prohibit the employee from filing a Charge of Discrimination with the EEOC or local state agency.  But it can prohibit the employee from collecting any damages if the EEOC pursues a suit on the employee's behalf against the employer. 

There has recently been discussion on whether an employee can waive his or her rights under the FMLA. For a while, there was some indication by the courts that such a waiver would not be enforceable.  Recent guidance indicates the opposite--that FMLA claims indeed can be waived in a severance agreement.

Another area subject to debate is the inclusion of a "no-hire" provision.  Some courts have held that an employer who requires its employee to agree not to reapply for future work with the company is actually engaging in unlawful retaliation.  But, again, some recent court decisions have found that an employer who refuses to rehire a former employee who had been fired previously where the refusal is based on a "no-hire" provision, is not engaging in retaliation. 

What to Do When an Employee Wants to Negotiated a Severance Agreement Offer

The answer to this question is more about instincts than anything else.  Especially where the employer does not offer every terminated employee a severance agreement, it is easier to refuse to negotiate it and extend a "take-it-or-leave-it" type offer.

This is especially true if the employee is going to run up the clock with your lawyer.  Remember to include the costs of negotiation in your settlement offer.  If you are wiling to negotiate for an additional amount, try to quantify that amount in advance and realize that, once your expenses have reached that pre-defined maximum, then you either have to cease negotiations with the former employee or reduce the offer so you break even at the end. 

It is not uncommon for employees to attempt to negotiate.  Often, this is more of a pride issue than anything else.  If you're able to be flexible with any point, it may be enough to satisfy the employee that she walked away with her pride still intact.

Other than more money, consider whether a positive or neutral letter of reference may satisfy the negotiating employee.  Or maybe offer to pay his first 2 months of COBRA payments, especially if this may be an area of concern for the employee because of a special health-care need in his family. 

Use a Lawyer

This point cannot be stressed enough.  I have lots of clients who want to reuse old severance agreements as boilerplate agreements instead of calling me for a new one each time.  Really, this is not a good idea.  I can put together a custom severance agreement that is appropriate for the circumstances specific to the employee in less than a half-hour for regular clients and for businesses I know something about or with which I have worked before. 

This is a small price to pay when compared to the expense of a lawsuit brought by an employee who already received severance payments but who was given a defective severance agreement based on a standard, one-size-fits-all template or form. 

And the same goes for the employee. Don't just "let" them use a lawyer.  Encourage it.  And, to be legally compliant, state as much in big, bold, letters on the agreement itself.  It is in your best interest the employee fully understand what rights they are releasing to prevent buyer's remorse.

The Office of Federal Contract Compliance Programs (OFCCP) issued a final rule on mandatory job listing by federal contracts. The rule is equired by the Vietnam Era Veterans' Readjustment Assistance Act,* (“VEVRAA”) and the Jobs for Veterans Act of 2002 (“JVA”). Federal contractors are required to list almost all job openings with “the state workforce agency job bank where the opening occurs or with the local employment service delivery system where the opening occurs.” The exceptions to this rule include openings for executive and top management positions, positions that are to be filled internally, and positions that will last three days or less.

You can read the new rule and the OFCCP’s discussion of the rationale for the rule, titled, "Nondiscrimination and Affirmative Action Obligations of Contractors and Subcontractors Regarding Protected Veterans" in the Federal Register.

*38 U.S.C. 4212