February 4, 2011

Unemployment Benefits for Voluntary Quit

One of the reasons the Employment Security Department (ESD) denies unemployment benefits is because the employee voluntarily quit without good cause.  As a general rule, unemployment benefits are not available to employees who voluntarily quit.  However, benefits are available when there was good cause for the voluntary quit.  There are a limited number of specific circumstances which ESD considers good cause for voluntarily quitting:
  • Quitting to accept a bona fide offer of work in covered employment
  • Quitting due to illness or disability of yourself or your immediate family under certain circumstances
  • Quitting to relocate for the employment of a spouse or domestic partner that is outside of the existing labor market area, if you remained employed as long as was reasonable prior to the move
  • Quitting to avoid domestic violence or stalking
  • Quitting due to a reduction in usual compensation of 25% or more
  • Quitting due to a reduction in usual hours of 25% or more
  • Quitting due to a change in worksite that causes a commute greater than is customary for workers in your job classification and labor market
  • Quitting due to a deterioration in worksite safety, when you reported the safety deterioration to the employer and the employer failed to correct it within a reasonable period of time
  • Quitting due to illegal activities at the worksite, when you reported the illegal activities to the employer and the employer failed to end the illegal activities within a reasonable period of time
  • Quitting due to a change in work that violates your religious convictions or sincere moral beliefs
  • Quitting due to entrance into an apprenticeship program approved by the Washington state apprenticeship training council
RCW 50.20.050.

For more information about unemployment compensation or to discuss your particular situation, contact a Washington unemployment attorney today.  Please do not use the information contained in this blog post to decide whether to voluntarily quit your job; consult with an attorney about your specific situation first.

September 30, 2010

Maternity Leave

You just found out your employee is pregnant.  Many employers hear this news with some measure of dread as they contemplate requests for months of maternity leave.  Some of that dread is fueled by confusion about exactly what the law requires.  Contacting an attorney before doing anything else could not only calm your worries, but also prevent a costly mistake.

When thinking about maternity leave, the first thing that comes to mind for most people is FMLA.  Indeed, FMLA does require maternity leave, but smaller employers are exempt, and not all employees qualify.  (For more information on FMLA, go here for a wealth of blogs and podcasts.)  But the analysis does not stop with FMLA. 

First and foremost, it is illegal to discriminate in employment based on pregnancy.  So, if you were thinking about taking care of this "problem," by simply firing your pregnant employee, think again.  (Specifically, think about whether you would want your wife, daughter, sister, friend, or yourself to get fired because of pregnancy.)  The laws against pregnancy discrimination apply to more employers and employees than FMLA.  In Washington, the Law Against Discrimination applies to employers with 8 or more employees.  Some cities, including Seattle, have a similar law which applies to employers of all sizes. 

Not discriminating against a pregnant employee obviously includes more than simply letting her keep her job.  In fact, it includes some maternity leave.  WAC 162-30-020, which discusses pregnancy discrimination under Washington law, says in part:

4) Leave policies.
(a) An employer shall provide a woman a leave of absence for the period of time that she is sick or temporarily disabled because of pregnancy or childbirth. Employers must treat a woman on pregnancy related leave the same as other employees on leave for sickness or other temporary disabilities. For example:
(i) If an employer provides paid leave for sickness, or other temporary disabilities, the employer should provide paid leave for pregnancy related sickness or disabilities;
* * *
(iv) If the employer permits extensions of leave time (e.g., use of vacation or leave without pay) for sickness or other temporary disabilities, the employer should permit such extensions for pregnancy related sickness or disabilities.
(b) There may be circumstances when the application of the employer's general leave policy to pregnancy or childbirth will not afford equal opportunity for women and men. One circumstance would be where the employer allows no leave for any sickness or other disability by any employee, or so little leave time that a pregnant woman must terminate employment. Because such a leave policy has a disparate impact on women, it is an unfair practice, unless the policy is justified by business necessity.
(c) An employer shall allow a woman to return to the same job, or a similar job of at least the same pay, if she has taken a leave of absence only for the actual period of disability relating to pregnancy or childbirth. Refusal to do so must be justified by adequate facts concerning business necessity.

Before denying a pregnant employee leave, even if you think it is justified by "business necessity," please consult with an attorney for advice about your specific situation.

September 9, 2010

Unpaid Wages, Part 3

In Parts 1 and 2, I discussed some of the consequences for not paying wages and strongly advised employers to pay their employees in full and on time whenever at all possible.  The trouble is, sometimes it just isn't possible because the money isn't there.  In that all-too-common situation, the employer is often "judgment proof."  In other words, even if the employee wins the lawsuit and gets a judgment, they cannot collect on it because there are no assets to take.  You can't squeeze blood from a beet. 

Washington's lawmakers recognized how often employers in unpaid wage cases are judgment proof and, in their attempt to ensure payment of wages, made certain individuals personally liable for unpaid wages.  Under RCW 49.52.070, any "officer, vice principal or agent of any employer" who wrongfully withholds wages shall be personally liable (except when the employee knowingly submits to the withholding, as discussed in Part 2.)  In practice, courts have interpreted this to mean those with some control over the payment of wages, especially check-writing authority, are personally liable.  Ellerman v. Centerpoint Prepress, 143 Wn.2d 514 (2000); Durand v. HIMC Corp., 151 Wn.App. 818 (2009).  The Durand court also noted that personal liability in these cases does not turn on piercing the corporate veil, so an employer's corporate structure does not protect the individuals from personal liability.  Federal law on the issue is similar, though not identical.  It is worth taking a look at this post for a discussion of federal law.

Individuals who have some control over the payment of wages need to be sure those wages are being paid.  Otherwise, they risk personal liability and may end up paying those wages out of their own paychecks.

September 2, 2010

Unpaid Wages, Part 2

In Part 1, I warned that financial inability to pay an employee's wages is insufficient to avoid a finding of willfulness and double damages.  But what is sufficient?  Washington courts have, so far, acknowledged only two instances when an employer's wage withholding was not willful, resulting in only single damages:
  1. When the employer was careless or erred in failing to pay, or
  2. When a bona fide dispute existed between the employer and employee regarding the payment of wages. 
Morgan v. Kingen, 166 Wash.2d 526, 534 (2009).  The typical case of carelessness or error is an inadvertent bookkeeping mistake.  In the case of a bona fide dispute, there must be a fairly debatable dispute over whether an employment relationship exists, or whether all or a portion of the wages must be paid.  Schilling v. Radio Holdings, Inc., 136 Wash. 2d 152, 161 (1998).  These exceptions are of no use to the employer who did not pay wages simply because there were insufficient funds to do so.

There is another route for avoiding double damages.  Double damages are not available to any employee who "knowingly submits" to the wage withholding.  RCW 49.52.070.  But, again, this is a narrow exception.  "A person knowingly submits to withholding of wages when he or she intentionally defers to his or her employer the decision as to whether, if ever, he or she will be paid."  Durand v. HIMC Corp., 151 Wn. App. 818, 836-37 (2009) (citing Chelius v. Questar Microsystems, Inc., 107 Wn. App. 678 (2001)).  In Durand, the court noted that staying on the job after the employer fails to pay does not constitute knowing submission.  The court also emphasized that the employee only agreed to temporary non-payment and always expected to be paid the full amount he had earned when the employer was financially able.  In other words, if an employer fails to pay its employees on time, but convinces them to continue working by making assurances that they will be paid in full later, the employees are not knowingly submitting to the withholding and the employer may still be liable for double damages.   

My esteemed colleague offers her two cents on wage withholding here.  For advice on your specific wage withholding issues, consult an attorney.

August 31, 2010

Unpaid Wages, Part 1

In the current economy, many employers are finding it difficult to make payroll. In many cases, employers are forced to lay off employees, often before the employer can catch up on overdue wage payments. The employer then risks a lawsuit for unpaid wages. In a discussion of the causes for a recent rise in wage and hour litigation, Christopher M. Pardo laments that reductions in force contribute to litigation by creating "a larger pool of disgruntled former employees who are potential plaintiffs." Christopher M. Pardo, The Cost of Doing Business: Mitigating Increasing Recession Wage and Hour Risks While Promoting Economic Recovery, 10 J. Bus. & Sec. L. 1, 6 (2009). Fearing they have no new job prospects, laid off employees become desperate for any income and, "desperation breeds litigation viewed as 'easy' money." Id. The financially-strapped employer who must lay off workers who are still owed wages is, indeed, in a very dangerous situation.
When there are insufficient funds to meet all financial obligations and an employer is forced to make difficult decisions about who to pay, it is important to know the potential consequences of each option.  The consequences for not paying an employee's wages are rather severe.  Washington employers who cannot pay their employees in full may be forced to pay double the amount of wages owed, plus steep interest and the employee’s attorney’s fees. RCW 49.52.070; Durand v. HIMC Corp., 151 Wn. App. 818 (2009). (An interesting, in-depth discussion of Durand and related cases may be found here.) Attorneys’ fees for both sides can quickly eclipse the actual wages owed. For this reason, it often makes sense for the employer to settle the lawsuit as quickly as possible. One of the factors which can prevent quick settlement is the usual disagreement about whether double damages would be awarded at trial.  This debate is particularly intense (and expensive) when the amount of wages in question is large enough to warrant paying significant attorneys' fees to argue the issue.
Under Washington law, an employer is only liable for double damages if, among other things, the wages were withheld willfully. RCW 49.52.050. Employers often latch onto this willfulness requirement, pointing to a financial inability to pay. They protest that their non-payment cannot be willful if they had no other choice. However, courts have adopted a very narrow definition of “willfully” in this context. Financial inability to pay, even bankruptcy, is insufficient to prevent a finding of willfulness and avoid double damages. Morgan v. Kingen, 166 Wash.2d 526, 535 (2009); Shilling v. Radio Holdings, Inc., 136 Wash.2d 152 (1998).

Whenever at all possible, it is best for employers to pay their employees in full and on time.  Sometimes, that just isn't possible.  If you find yourself unable to pay your employees, or are already facing a lawsuit, consult with an attorney.

May 20, 2010

Employee or Independent Contractor?

I was just reading Josh Waxman's post over at Washington Labor & Employment Wire about the Department of Labor's plans to reduce misclassification of employees as independent contractors.  In addition to DOL's plan, a new bill on the subject is being considered by Congress.  According to the bill itself, the Employee Misclassification Prevention Act (S. 3254H.R. 5107) aims to, "require persons [namely, employers] to keep records of non-employees [independent contractors] who perform labor or services for remuneration and to provide a special penalty for persons who misclassify employees as non-employees." 

While some employers intentionally misclassify employees as independent contractors for a variety of reasons, including saving money on payroll taxes and employee benefits, many employers unintentionally misclassify employees.  It's an easy mistake to make.  For starters, state law and federal law are not the same and both must be considered.  Both state and federal law use complex multi-factor tests to determine proper classification.  While lawyers, judges and legislators have a certain fondness for such tests, other people often have a difficult time applying them to particular situations.  Even the folks answering the help line over at Washington State Department of Labor and Industries ("LNI") occasionally get it wrong.  Perhaps in recognition of these difficulties, the IRS has a form, SS-8, which can be submitted to have the IRS formally determine the correct classification.  However, the IRS takes months to make that determination, and it is of no use when it comes to state law.  Because of these difficulties, it is my sincere hope that increased efforts to reduce misclassification include not only penalties, record keeping, plans and notices, but also more and better resources to help employers properly classify their workers.  In the meantime, for those struggling to correctly classify workers, LNI has a webinar and links to other resources on the issue.