Notification – or lack thereof – is a critical component of employee-based lawsuits. Notice to employees of your policies and procedures not only deters lawsuits, it helps you establish and maintain consistency in your own company’s practices. And even if you end up in court, there is nothing more persuasive to a judge or jury than an employer’s compliance with its own policies.
Following are some notification tips and reminders for several federal laws to help ensure you win the court’s favor and keep your employees “in the know.”
Fair Credit Reporting Act. Ever considered using an outside investigator to look into allegations of workplace misconduct, such a embezzlement or theft? Historically, the Fair Credit Reporting Act (FCRA) required an employer using an outside investigator to inform employees that their conduct was being investigated before the investigation began. This notice requirement significantly cut down of the effectiveness of an investigation.
However, the Fair and Accurate Credit Transactions Act has now amended the FCRA to exclude communications made by a third party to an employer in connection with an investigation of suspected misconduct relating to employment or compliance with written employment policies and applicable laws and regulations. Thus, under the new law, if you hire a third-party investigator to investigate employee misconduct, you no longer have to:
- Notify the employee before conducting the investigation;
- Obtain the employee’s prior consent; or
- Fully disclose investigative reports to the employee before taking any adverse action against the employee.
Note, however, that not all notification requirements have been eliminated. You are now required to notify an employee that a third-party investigation was conducted after an adverse action has been taken.
Other FCRA notification requirements remain in effect. FCRA requirements that employers continue to provide certain notices before and after requesting credit information are unchanged.
- Before obtaining a credit report, you must notify the applicant or employee in writing (in a document consisting solely of this notice);
- You must also obtain the applicant’s or employee’s written authorization before asking a credit bureau for a report – this is usually included in the application for employment;
- If you rely on a credit report for an adverse action, you must give the individual a copy of his/her credit report and a statement of his/her rights under the FCRA before taking any adverse action;
- After taking the adverse action, you must give the applicant or employee notice orally, in writing, or electronically, that the action has been taken. This “adverse action notice” must include:
- The name, address and phone number of the credit bureau that supplied the credit report;
- A statement that the credit bureau that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it; and
- A notice of the individual’s right to dispute the accuracy or completeness of any information the bureau furnished, and his/her right to an additional free credit report from the credit bureau upon request within 60 days
FAMILY AND MEDICAL LEAVE ACT. The Family and Medical Leave Act (FMLA) is riddled with notification requirements, from an initial request for leave to an employee’s return to work and every event in between. It is essential in negotiating this minefield that you have clear, written procedures and notice forms in place to handle all FMLA requests.
Before anything else, you must post a notice detailing both the employer’s and the employee’s rights and responsibilities under the FMLA.
If you have an employee handbook or policies regarding employee benefits, you need to include a policy about FMLA. If you do not have a handbook or written policies, you must provide notification of FMLA rights and responsibilities to an employee whenever s/he requests leave. Written notice detailing these rights and responsibilities and explaining any consequences of failing to meet deadlines and other obligations must also be provided for the first time in each six-month period that an employee gives notice of the need for FMLA leave (if FMLA leave is taken during the six-month period.) And, for goodness’ sake, get the employee’s signature acknowledging receipt of any and all notices.
By way of example, following are some courts’ take on whether or not an employee had adequate notice of FMLA obligations:
- An employee called in to tell his employer that his pregnant wife’s physician instructed him to stay home to care for his wife until their child’s birth. The judge in that case held that that request, without more, was not sufficient to “trigger” FMLA or require the employer to provide FMLA leave. First, the employee did not request the leave in advance. To qualify for immediate leave, he would have had to have given the employer notice that there was a change in his wife’s medical condition or that there was a medical emergency. According to this court, an employee who merely states s/he needs to stay home to care for a spouse or child isn’t enough to put an employer on notice of a need for immediate leave. (Aubuchon v. Knauf Fiberglass, S.D. IN., 2003.)
- In answer to an employee’s FMLA lawsuit, the employer claimed that plaintiff failed to provide adequate notice of her condition and failed to provide medical certification of her condition. The court sided with the employee because the employer never asked for certification and, after the employee said she needed four days off and would have continuing treatments, the employer never followed up to find out if FMLA was indicated. If you want medical certification to back up an employee’s leave request, you must ask for it! FMLA provides that an employer may request medical certification to determine whether or not the law applies to a leave request. It does not state that an employee must provide such certification with an initial request for leave in order for the absence to be covered under FMLA. (Carmen v. Unison Behavioral Health Group, Inc., N.D. OH, 2003)
- The employer interfered with an employee’s FMLA rights when it fired him for failing to follow its policy requiring submission of written leave requests within three working days. You cannot require employees to follow notification procedures that are more restrictive than those required under FMLA. This employer’s typical “3-day notice” requirement conflicted with the more lenient FMLA notice requirements. The law provides that an employer may require an employee to comply with normal procedural requirements for requesting leave, but the employer cannot disallow or delay the employee’s FMLA leave for failure to comply with the rules if the employee gives timely verbal or other notice. If your leave policies requiring notice are more stringent that the FMLA notice requirements, you need to revise your policies. (Cavin v. Honda of America Met., Inc., 6th Cir., 2003.)
- In response to an employee’s FMLA lawsuit, the employer claimed the employee never requested FMLA leave. The court rejected the argument because the employer knew the employee had been hospitalized and was seriously injured. Don’t be fooled into believing that if the employee doesn’t specifically ask for “FMLA leave” that the leave can’t be counted as such. Remind all manages and supervisors that employees do not have to say “leave,” “leave of absence,” or “FMLA” to put the company on notice that FMLA leave may be implicated.
CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT (COBRA). One of the heaviest-laden notification laws is found in COBRA. And there are new notice rules in the making as this article is published, although final rules have not yet been released. The Department of Labor has indicated that there will be a six-month “grace period” for compliance with the new rules once they are issued.
In the interim, you need clear administrative procedures and thorough record keeping to ensure compliance and avoid costly lawsuits. Among the notices that must be kept are:
Copies of general notices;
Copies of specific notices; and
Completed election forms.
COBRA does not prescribe the content or format of the election form. Make sure you form is clear that each beneficiary can separately elect continuation coverage. And even if you provide an election form, you probably can’t demand that that form alone constitutes election.
Unfortunately, using a third party to issue your COBRA notices may not relieve you of legal liability should the employee fail to receive a timely election form. For example, in one case, an employee who had been hospitalized with symptomatic HIV had his policy canceled but the plan failed to send him his COBRA notice of right to elect continuation coverage. There was a resulting six-week gap in health coverage. Although the employer retroactively reinstated COBRA coverage, the employee sued over the failure to provide timely COBRA election notice. The employee won, although “modestly,” with a $2,237 penalty for the failure and $9,256 in attorney’s fees. (Veneziano v. Long Island Pipe Fabrication and Supply, 3rd Cir., 2003.)
Employers – not the insurance company – are responsible for sending out timely COBRA notice, even where the third party is under contract to send notices. Solution? Build into the contract with the third party a mechanism for tracking and mailing COBRA election notices, have the third party supply you with a report summarizing how they have handled employee qualifying events and notices. A copy of a computer-generated log might suffice. Match the information with your own records. If there are any notices that were missed, demand they be sent immediately and document your request. Be sure that the plan notifies you of any notices that come back so you can maintain them in your own files.
WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT (WARN). WARN requires covered employers to give employees 60 days’ advance notice of a planned layoff or shutdown that results in loss of work for more tan six months, termination, or a specific reduction in work hours.
All WARN notices must be in writing. You must use any “reasonable” method to deliver notices so they are “timely received.” Typically, delivery includes first class mail, personal delivery with signed receipt, or, sometimes, inclusion of a notice in a paycheck.
Following are the essential ingredients of a WARN notice:
- Statement explaining whether the planned closing or mass layoff is expected to be temporary or permanent;
- Explanation of whether the entire facility will be closed;
- Time frame for when you expect to close the facility or begin mass layoffs, and when employees can expect employment to be terminated;
- Clarification of whether or not “bumping” rights exists;
- Name and telephone number of company official who can provide additional information; and
- Any other relevant information (e.g., how long a facility is expected to be closed).
What kind of “warning” does an employer have to have before it is obligated to give a WARN notice? An employer must give 60 days’ advance notice where it is “reasonably foreseeable” that the company must close or institute layoffs, etc. For example, employees’ WARN lawsuit failed where the employer admittedly did not give 60 days’ advance notice because it did not know that its biggest customer would decide not to renew its contract. You will have to evaluate whether your company’s closing is foreseeable and not whether it is an eventual and inevitable demise of business. (Watson v. Michigan Industrial Holdings, Inc., 6th Cir., 2002.)
All information in this article is informational only and is not legal advice. Should you have any questions or a situation requiring advice, please contact an attorney.
Copyright 2004 by Garlo Ward, P.C., all rights reserved.
Lakeway, Texas 78734 USA