Monthly Archives: March 2015

TERMINATING A BUSINESS PARTNER: MAKING THE BEST OF A BAD SITUATION

A significant portion of the Bourque Law Firm’s practice is devoted to litigating business disputes, including shareholder and contract disputes. This edition of the HR Law Insider discusses the all too frequent situation where owners of a business clash and a decision is made to terminate a co-owner’s employment.

THE HARDEST DECISION:  TO END A RELATIONSHIP

One of the toughest decisions a business owner can make is to terminate a co-owner’s employment.  Making such a decision will not only end someone’s job, it will likely fracture or destroy a relationship.  Given the rights afforded to minority business owners, the decision to relieve a co-owner of his or her job should be carefully thought out.

ARIZONA IS AN “AT-WILL” EMPLOYMENT STATE

Absent an agreement providing for a definite term of employment or  mandating termination only for cause, employment in Arizona is terminable at-will.

Under the Arizona Employment Act, an employee has a claim against an employer for termination of employment ONLY if one or more of the following circumstances have occurred:

(a) The employer has terminated the employment relationship of an employee in breach of an employment contract.

(b) The employer has terminated the employment relationship of an employee in violation of an Arizona statute.

(c) The employer has terminated the employment relationship of an employee in retaliation for certain conduct.  For example, it is unlawful to terminate an employee for:

  • The refusal by the employee to commit an act or omission that would violate the Constitution of Arizona or its statutes.
  • The disclosure by the employee in a reasonable manner that the employee has information or a reasonable belief that the employer, or an employee of the employer, has violated, is violating or will violate the Constitution of Arizona or an Arizona statute to either the employer or a representative of the employer who the employee reasonably believes is in a managerial or supervisory position and has the authority to investigate the information provided by the employee and to take action to prevent further violations of the Constitution of Arizona or  an Arizona statute.

Thus, employees in Arizona have very limited rights to bring wrongful discharge claims (in addition to any potential claims under federal law).

DOES THE AT-WILL DOCTRINE APPLY TO CO-OWNERS? 

The at-will doctrine does indeed apply to co-owners of a business.  Absent an agreement that entitles a minority co-owner to continued employment, the co-owner’s employment is terminable at-will.

Before deciding whether to terminate a co-owner’s employment, a majority owner(s) should consider:

*  Is there a potential agreement which gives the co-owner employment rights, such as an employment agreement, a shareholder’s agreement, a buy-sell agreement, or company bylaws?

*  Would termination potentially violate any Arizona statute?

*  Would termination potentially violate any federal statute?

*  Would termination arguably be in retaliation for the employee’s protected conduct?

*  What corporate formalities, if any, need to be followed?

BE PREPARED FOR THE AFTERMATH

In the “typical” employee discharge situation, the relationship ends and the parties go their separate ways.  This is not the case when the parties remain co-owners — still attached at the proverbial hip.

Terminated co-owners are often very unhappy.  When terminating a co-owner’s employment, assume that the fired co-owner will vigorously and aggressively exercise his or her rights.  It is therefore critical to treat co-owners fairly, comply with all agreements, and to follow corporate formalities.  In short, be prepared beforehand.

THE CORPORATE LAW INSIDER

Arizona has a number of statutes that protect corporate shareholders and members of limited liability companies.  Visit http://corporatelawinsider.com/ for one such example:  corporate shareholders  — whether employees or not — are entitled to obtain substantial documents and information about the corporation’s financial and business affairs.

 

 

THE LUFTHANSA DISASTER: HOW WELL DO YOU KNOW YOUR EMPLOYEES?

28 year-old Andreas Lubitz had a “deliberate desire to destroy the plane. He … refused to open the door of the cockpit to the pilot and deliberately began the descent of the plane.” Lubitz, according to the prosecutor who uttered those words, is the sole cause of the Lufthansa disaster that is dominating today’s news.

A mother of Lubitz’ schoolmate said today that Lubitz had told her daughter he had taken a break from his pilot training because he was suffering from depression.  “Apparently he had a burnout, he was in depression,” the woman, whom the paper did not name.  She said her daughter had seen him again just before Christmas and that he had appeared normal. She added he was a “lovely boy.” “He had a good family background,” she told the paper.

Did Lufthansa know that its young pilot had mental problems?  If not, should it have known?  And what can Lufthansa, or any employer, do when it suspects or knows an employee has mental problems?

This HR Law Insider edition discusses (1) evaluating job applicants thru personality tests and (2) how to handle job applicants and employees with depression and other major mental issues.

PERSONALITY TESTING OF JOB APPLICANTS IS WIDESPREAD AND COMMON — AND UNDER EEOC INVESTIGATION

According to a recent Wall Street Journal article, workers who apply online at RadioShack Corp. must say if they agree with the statement: “Over the course of the day, I can experience many mood changes.” Lowe’s Cos. asks job seekers if they “believe that others have good intentions.” A test at McDonald’s Corp. said: “If something very bad happens, it takes some time before I feel happy again.”

According to the Journal, “the use of online personality tests by employers has surged in the past decade as they try to streamline the hiring process, especially for customer-service jobs. Such tests are used to assess the personality, skills, cognitive abilities and other traits of 60% to 70% of prospective workers in the U.S., up from 30% to 40% about five years ago, estimates Josh Bersin, principal of consulting firm Bersin by Deloitte, a unit of auditor Deloitte LLP.”

However, the authors note that the Equal Employment Opportunity commission is investigating whether personality tests discriminate against people with disabilities. As part of the investigation, officials are trying to determine if the tests shut out people suffering from mental illnesses such as depression or bipolar disorder, even if they have the right skills for the job, according to EEOC documents.

EEOC officials won’t comment on the investigation, according to the Journal, who quotes Christopher Kuczynski, EEOC acting associate legal counsel on the topic: “if a person’s results are affected by the fact that they have an impairment and the results are used to exclude the person from a job, the employer needs to defend their use of the test even if the test was lawful and administered correctly,” says Christopher Kuczynski, EEOC acting associate legal counsel.

Businesses can continue to conduct widespread personality testing.  However, companies should closely monitor any developments in the area of personality testing. Certain types of testing could be rendered illegal overnight by one court ruling.

IS IT LAWFUL TO TEST JOB APPLICANTS OR EMPLOYEES FOR DEPRESSION AND OTHER MAJOR MENTAL DISORDERS?

Major depressive disorder is the leading cause of disability among adults 15 to 44 years old, affecting nearly 7 percent of adults in the U.S. each year, according to the National Institute of Mental Health. Depression causes an estimated $23 billion in lost productivity in the U.S. each year.

The EEOC provides the following guidance for employers dealing with psychiatric disabilities, including depression:

May an employer ask questions on a job application about history of
treatment of mental illness, hospitalization, or the existence of mental
or emotional illness or psychiatric disability?

No.  An employer may not ask questions that are likely to elicit
information about a disability before making an offer of employment.
Questions on a job application about psychiatric disability or mental or
emotional illness or about treatment are likely to elicit information
about a psychiatric disability and therefore are prohibited before an
offer of employment is made.

When may an employer lawfully ask an individual about a psychiatric
disability under the ADA?

An employer may ask for disability-related information, including
information about psychiatric disability, only in the following limited
circumstances:

Application Stage:  Employers are prohibited from asking
disability-related questions before making an offer of employment.  An
exception, however, is if an applicant asks for reasonable accommodation
for the hiring process.  If the need for this accommodation is not
obvious, an employer may ask an applicant for reasonable documentation
about his/her disability.  The employer may require the applicant to
provide documentation from an appropriate professional concerning his/her
disability and functional limitations.  A variety of health professionals
may provide such documentation regarding psychiatric disabilities
including primary health care professionals, psychiatrists,
psychologists, psychiatric nurses, and licensed mental health
professionals such as licensed clinical social workers and licensed
professional counselors.

An employer should make clear to the applicant why it is requesting such
information, i.e., to verify the existence of a disability and the need
for an accommodation.  Furthermore, the employer may request only
information necessary to accomplish these limited purposes.

Example A:  An applicant for a secretarial job asks to take a
typing test in a quiet location rather than in a busy reception area
“because of a medical condition.”  The employer may make
disability-related inquiries at this point because the applicant’s need
for reasonable accommodation under the ADA is not obvious based on the
statement that an accommodation is needed “because of a medical
condition.”  Specifically, the employer may ask the applicant to provide
documentation showing that she has an impairment that substantially limits
a major life activity and that she needs to take the typing test in a
quiet location because of disability-related functional limitations.

Although an employer may not ask an applicant if s/he will need reasonable
accommodation for the job, there is an exception if the employer could
reasonably believe, before making a job offer, that the applicant will
need accommodation to perform the functions of the job.  For an individual
with a non-visible disability, this may occur if the individual
voluntarily discloses his/her disability or if s/he voluntarily tells the
employer that s/he needs reasonable accommodation to perform the job.  The  employer may then ask certain limited questions, specifically:

  • whether the applicant needs reasonable accommodation; and
  • what type of reasonable accommodation would be needed to
    perform the functions of the job.

Post-offer of employment:  After an  employer extends an offer of employment, the employer may require a  medical examination (including a psychiatric examination) or ask questions  related to disability (including questions about psychiatric disability) if the employer subjects all entering employees in the same job category  to the same inquiries or examinations regardless of disability.  The  inquiries and examinations do not need to be related to the job.

During employment:  During employment, employers may test when a disability-related inquiry or medical  examination of an employee is “job-related and consistent with business  necessity.” This requirement may be met when an employer has a  reasonable belief, based on objective evidence, that: (1) an employee’s  ability to perform essential job functions will be impaired by a medical  condition; or (2) an employee will pose a direct threat due to a medical  condition.  Thus, for example, inquiries or medical examinations are permitted if they follow-up on a request for reasonable accommodation when  the need for accommodation is not obvious, or if they address reasonable concerns about whether an individual is fit to perform essential functions  of his/her position.  In addition, inquiries or examinations are permitted  if they are required by another Federal law or regulation. In these  situations, the inquiries or examinations must not exceed the scope of the  specific medical condition and its effect on the employee’s ability, with
or without reasonable accommodation, to perform essential job functions or
to work without posing a direct threat.

Example B:  A delivery person does not learn the route he is
required to take when he makes deliveries in a particular neighborhood.
He often does not deliver items at all or delivers them to the wrong
address.  He is not adequately performing his essential function of making
deliveries.  There is no indication, however, that his failure to learn
his route is related in any way to a medical condition.  Because the
employer does not have a reasonable belief, based on objective evidence,
that this individual’s ability to perform his essential job function is
impaired by a medical condition, a medical examination (including a
psychiatric examination) or disability-related inquiries would not be
job-related and consistent with business necessity.

Example C:  A limousine service knows that one of its best
drivers has bipolar disorder and had a manic episode last year, which
started when he was driving a group of diplomats to around-the-clock
meetings.  During the manic episode, the chauffeur engaged in behavior
that posed a direct threat to himself and others (he repeatedly drove a
company limousine in a reckless manner).  After a short leave of absence,
he returned to work and to his usual high level of performance.  The
limousine service now wants to assign him to drive several business
executives who may begin around-the-clock labor negotiations during the
next several weeks.  The employer is concerned, however, that this will
trigger another manic episode and that, as a result, the employee will
drive recklessly and pose a significant risk of substantial harm to
himself and others.  There is no indication that the employee’s condition
has changed in the last year, or that his manic episode last year was not
precipitated by the assignment to drive to around-the-clock meetings.  The
employer may make disability-related inquiries, or require a medical
examination, because it has a reasonable belief, based on objective
evidence, that the employee will pose a direct threat to himself or others
due to a medical condition.

Example D:  An employee with depression seeks to return to
work after a leave of absence during which she was hospitalized and her
medication was adjusted.  Her employer may request a fitness-for-duty
examination because it has a reasonable belief, based on the employee’s
hospitalization and medication adjustment, that her ability to perform
essential job functions may continue to be impaired by a medical
condition.  This examination, however, must be limited to the effect of
her depression on her ability, with or without reasonable accommodation,
to perform essential job functions.  Inquiries about her entire
psychiatric history or about the details of her therapy sessions would,
for example, exceed this limited scope.

CONCLUSION
Who was Andreas Lubitz?  The coming hours and days will reveal many truths.  These truths will, in turn, lead to much finger pointing and two critical questions:  (1) how could this disaster have been avoided and (2) how can future such disasters be avoided?

Most every business will encounter employees with mental disorders.  Psychiatric problems are — sadly and sometimes tragically — all too frequent.  It is hoped that this article will assist employers in navigating the oftentimes very rough seas associated with mental health problems.

 

 

ROCK AND ROLL: THE MCDOWELL MOUNTAIN MUSIC FESTIVAL

Do you like great music, good times, and spring weather?  Then I will see you this coming weekend at the McDowell Mountain Music Festival (MMMF) at Margaret Hance Park in Phoenix.   The MMMF starts Friday and runs thru Sunday. This year’s bands are arguably the best ever, with something for everyone.

Here is the MMMF website, which contains everything you need to know about the festivities:  http://mmmf.com/

Here is a track from one my favorite acts (who will be playing Saturday night), Trombone Shorty:


Here is another of my favorites also playing Saturday night — Thievery Corporation:

Why is a music festival being discussed on the HR Law Insider website?  To highlight the many ways in which businesses can support charities and their communities.   In this instance, Wespac Construction (here in Phoenix) and its owners go out of their way to support the festival.  ALL of the proceeds from the festival will benefit two local, family-based, non-profits: Phoenix Children’s Hospital Foundation and UMOM New Day Center.

So, I’ll see you Saturday night. Together, as a community, we can support a great cause.

 

SEX AND DRUGS AND ROCK AND ROLL: PART II

This is the second article in HR Law Insider’s trilogy on Sex and Drugs and Rock and Roll.  Drugs are pervasive in American society.  Because of this fact, business owners all too frequently encounter impaired employees and/or employees they suspect are using drugs or alcohol.  What is the best way to deal with the problem while staying within the confines of the law?  Read on.

HAVE AN UPDATED DRUG AND ALCOHOL POLICY

Every business should have a policy prohibiting being impaired at work or using illegal substances.   Such a policy discourages impairment, allows for the discipline and/or termination of impaired employees, and helps protect against third party claims should an impaired employee injure someone or otherwise engage in misconduct.

Society is constantly changing and so too are the laws regarding drugs and alcohol.  For example, medical marijuana is changing the landscape of what is acceptable both within and outside the workplace:  http://hrlawinsider.com/2015/02/medical-marijuana-and-the-workplace-the-straight-dope/.

Therefore, as with other workplace policies, employers should conduct self-audits from time to time to ensure their policies are current and compliant with existing laws.

WHETHER TO DRUG TEST

Should every business drug test?  No.  Many businesses do not believe they have a problem, do not wish to incur the cost or administrative burden, and/or feel that drug testing is too invasive on their employees’ lives.

Such a viewpoint is perfectly fine.  However, I encourage most employers to at least have a policy that gives them the option to test for drugs and alcohol.  This arguably gives a company the best of both worlds:  it is not required to test anyone, but if an unexpected situation arises where a company would like to test because it suspects there is an impaired employee on duty, it can do so.

Of course, certain employers are required to drug test applicants and employees.  The United States Department of Transportation and  Federal Aviation Administration, among others, require drug testing of certain employees (e.g. drivers with commercial drivers licenses, employees working on airplane equipment).

ARIZONA EMPLOYERS WHO CHOOSE TO HAVE A POLICY SHOULD FOLLOW A.R.S. 23-493    

Arizona has a “safe harbor” statute that provides certain protections to employers who drug test employees.  Thus, if your business wants to have the option of testing employees, it is wise (and easy) to comply with the following:

23-493.04. Testing policy requirements

A. Testing or retesting for the presence of drugs or alcohol by an employer shall be carried out within the terms of a written policy that has been distributed to every employee subject to testing or that has been made available to employees in the same manner as the employer informs its employees of other personnel practices, including inclusion in a personnel handbook or manual or posting in a place accessible to employees. The employer shall inform prospective employees that they must undergo drug testing. The written policy shall include at least the following:

1. A statement of the employer’s policy respecting drug and alcohol use by employees.

2. A description of those employees or prospective employees who are subject to testing.

3. The circumstances under which testing may be required.

4. The substances as to which testing may be required.

5. A description of the testing methods and collection procedures to be used.

6. The consequences of a refusal to participate in the testing.

7. Any adverse personnel action that may be taken based on the testing procedure or results.

8. The right of an employee, on request, to obtain the written test results.

9. The right of an employee, on request, to explain in a confidential setting, a positive test result.

10. A statement of the employer’s policy regarding the confidentiality of the test results.

B. Within the terms of the written policy, an employer may require the collection and testing of samples for any job-related purposes consistent with business necessity including:

1. Investigation of possible individual employee impairment.  “Impairment” means symptoms that a prospective employee or employee while working may be under the influence of drugs or alcohol that may decrease or lessen the employee’s performance of the duties or tasks of the employee’s job position, including symptoms of the employee’s speech, walking, standing, physical dexterity, agility, coordination, actions, movement, demeanor, appearance, clothing, odor, irrational or unusual behavior, negligence or carelessness in operating equipment, machinery or production or manufacturing processes, disregard for the safety of the employee or others, involvement in an accident that results in serious damage to equipment, machinery or property, disruption of a production or manufacturing process, any injury to the employee or others or other symptoms causing a reasonable suspicion of the use of drugs or alcohol.

2. Investigation of accidents in the workplace. Employees may be required to undergo drug testing or alcohol impairment testing for accidents if the test is taken as soon as practicable after an accident and the test is administered to employees who the employer reasonably believes may have contributed to the accident.

3. Maintenance of safety for employees, customers, clients or the public at large.

4. Maintenance of productivity, quality of products or services or security of property or information.

5. Reasonable suspicion that an employee may be affected by the use of drugs or alcohol and that the use may adversely affect the job performance or the work environment.

C. In addition to the provisions of subsection B, employees or groups of employees may be required to undergo drug testing on a random or chance basis.

D. If an employer institutes a policy of drug testing or alcohol impairment testing under this article, all compensated employees including officers, directors and supervisors shall be uniformly included in the testing policy.

E. Nothing in this article shall be construed to encourage, discourage, restrict, limit, prohibit or require on-site drug testing or alcohol impairment testing.

CONCLUSION

Certain employers are required to test employees for drugs and alcohol, but most are not.  Even if your company is not required to test and does not currently intend to test, it is nevertheless prudent to consider having a policy which provides for the option of testing.  If your company elects to have such a policy, it is not required to follow ARS 23-493; however, it should follow this statute because of the safe harbor benefits the statute provides (e.g. immunization against certain kinds of lawsuits).

The most common situation I encounter is when a company suspects an employee is impaired, but is unsure of what to do.  In Arizona, there is no requirement that an employer have a drug testing policy in order to test that suspect employee.  However, without a written drug testing policy, the risk of mistakes and employee claims  rises;  better to have a policy and procedure in place — an easy thing to do — rather than to wing it on the fly.

This HR Law Insider video illustrates the myriad of problems associated with drug and alcohol use courtesy of  “The Dude” and one of my favorite rock and roll bands — Creedence Clearwater Revival:

 

 

 

 

 

SEX AND DRUGS AND ROCK AND ROLL

Like it or not, sex and drugs and rock and roll are part of the workplace. The next three editions of the HR Law Insider examine how business owners and human resource managers deal with these combustible issues.

This HR Law Insider edition deals with “anti-fraternization” policies employers use to try and discourage employees from embarking on sexual or romantic relationships with each other. The next edition discusses what employers should do when they suspect employees are using drugs or alcohol. The third edition in the trilogy addresses emerging cultural trends that often confound and frustrate employers.

THE NUMBERS DO NOT LIE:  WORKPLACE RELATIONSHIPS ARE COMMONPLACE

According to a recent survey of 8,000 workers by the job-search website CareerBuilder.com, four out of 10 employees have dated someone at work; 17 percent have done it twice.

The majority of relationships occurred between peers.   29 percent of workers who have dated someone at work dated someone above them in the company hierarchy; 16 percent admitted to dating a boss. Women were more likely to date someone higher up in their organization — 38 percent compared to 21 percent of men.

ADDRESSING EMPLOYER CONCERNS THRU ANTI-FRATERNIZATION POLICIES

There are many wonderful things that can occur as a result of office relationships.  The seeds for many a marriage have been planted with a chance  encounter at the water cooler or at a company sponsored happy hour or charity event.

On the other hand, office relationships can set the stage for a number of problems:  gossip; lack of professionalism; allegations of favoritism or nepotism; claims of sexual harassment or discrimination; and lost productivity.

If your company is concerned about these or other problems associated with workplace relationships, it may lawfully prohibit such relationships.  Typically, this should done thru a policy in an employee handbook (although it may be done verbally or thru other means).

 SELECT THE POLICY THAT BEST FITS THE SITUATION

There are many different types of policies that cover workplace relationships.  For example:  some policies contain outright prohibitions on all relationships among all employees; other policies ban only relationships between superiors (manager, supervisor) and subordinates who work directly for them; still other policies allow such relationships if the relationship is disclosed and the employees mutually agree that one of the two employees will move within the company so that they  no longer have a working relationship; and, other policies allow the relationship to continue as long as it is disclosed and the parties sign an acknowledgment that they will not engage in any conduct that amounts to discrimination or that would affect the company.

The foregoing policies are but examples.  There are many permutations on these policies.  To date, courts have been very accepting of workplace relationship policies, which have withstood judicial scrutiny time and again.

MAKING THE DECISION WHETHER TO IMPLEMENT AN ANTI-FRATERNIZATION POLICY OR SCRAP AN EXISTING ONE

I encourage all business owners to review their policies once a year to decide:  what is working, what is not working, and what is needed to comply with any recently enacted laws. Reviewing one’s anti-fraternization policy (or lack thereof) is simply part of this prudent business practice — of managing one’s company and employees to achieve the best possible result.

Many businesses believe that anti-fraternization policies are a solid means of avoiding many headaches and potential claims.  Indeed, I have defended several companies which were sued when supervisor/subordinate relationships went south — lawsuits that theoretically would not have occurred had there been anti-fraternization policies in place.

Other businesses, however, believe that workplace relationship policies are unnecessary, ineffective, or bad for morale; they believe that good management, rather than anti-fraternization policies, is the best way to inoculate against the potential ills associated with workplace relationships.

Regardless of the choice your company makes, understand this:  workplace relationships are happening, will continue to happen, and will continue to cause trouble for employers who ignore the pitfalls and mayhem that often result when relationships crumble.

CONCLUSION

If a workplace relationship occurs in violation of a company policy, your business typically has every right to terminate the employment relationship; this is particularly so when the relationship has put the company at risk. Employers, however, generally should not terminate subordinate employees — particularly when they are female — lest the termination itself give rise to a claim.  As with many workplace issues, every case is unique and counsel should be consulted before action is taken.

 

HOW TO DEAL WITH OFF-DUTY EMPLOYEE MISCONDUCT

Most employee handbooks state that employees may be disciplined or discharged for various types of misconduct within the workplace. But when, if at all, may employers terminate employees for misconduct outside the workplace? This edition of the HR Law Insider provides the answers.

FIRST THINGS FIRST: MAKE SURE YOUR EMPLOYEE HANDBOOK OR EMPLOYMENT CONTRACT ADDRESSES OFF-DUTY MISCONDUCT

All employee handbooks should contain language stating that off-duty misconduct may result in discipline up to and including discharge. Such provisions should provide the employer with maximum discretion to determine what types of off-duty misconduct qualify for discipline.

By way of example, the Standards of Conduct section of an employee handbook might include the following as a terminable offense: “Employee misconduct outside the workplace, including illegal, immoral, or offensive acts, which may, as determined in the Company’s sole discretion, reflect adversely upon the Company, impact the Company negatively, raise a safety concern, adversely affect the employee’s ability or credibility to fulfill the Employee’s job responsibilities, or adversely affect other employees’ job responsibilities or ability to do their jobs.”

If an employee handbook fails to include such a provision, it does not mean that the employer is unable to discipline or discharge an employee for off-duty misconduct — employers are still able to fire employees for such misconduct. However, in the absence of a provision for off-duty misconduct, the risk of a discrimination or other claim rises.

When an individual employment contract limits termination to only those circumstances where there is “good cause,” and off-duty misconduct is not listed as good cause to terminate, such a termination might constitute a breach of contract by the employer.

Thus, every handbook and every employment contract should include a provision covering employee misconduct outside the workplace.

DEALING WITH REAL WORLD SITUATIONS

 Here are common situations I have seen play out over the years:

* On Monday morning the spouse of an employee calls into work and says “John has been arrested and is in jail; it’s all a big mistake.”

* Employer hears through the grapevine that employee has been arrested for DUI or in a Sheriff Joe or other sting operation.

* Employer is tipped off to employee’s offensive social media posts.

* Employer learns that supervisor (usually male) and subordinate (usually female) are in a relationship and are having problems.

As with just about any situation, the first step for the prudent employer is to gather facts — to investigate. Sadly, it turns out that most arrests are not “all a big mistake.” However, employers should investigate with an open mind — letting the facts, not conjecture, guide their decisions.

Of course, an employee’s background with his or her company may greatly influence an employer’s ultimate decision: a 20 year employee with a spotless record who provides a great benefit to a company is typically given much more leeway than someone who is new to the job or a marginal performer. This is normal and appropriate, subject to setting a precedent which the company may need to follow into the future (see below).

In some instances it may be impossible to determine exactly what has happened. This may lead to a very difficult decision. The key for employers, who are not held to a standard of perfection but rather one of good faith, will be to demonstrate that (1) a fair and thorough investigation was conducted and (2) the employer’s decision was made for a bona fide business reason and not for an improper (e.g. discriminatory or retaliatory) reason.

RED FLAGS: WHEN DISCIPLINE OR DISCHARGE IS RISKY OR DOWNRIGHT INADVISABLE 

There will be times when terminating an employee for off-duty misconduct will get a company sued. For example:

* Terminating an employee for posting “offensive” material on Facebook about working conditions may result in a Section 7 Complaint under the National Labor Relations Act (see previous edition of the HR Law Insider).

* Terminating a minority or older employee for off-duty misconduct, when in the past non-minority or younger employees have not been terminated for such misconduct.

*In Arizona, terminating an employee for smoking pot away from the workplace when the employee has a medical marijuana card and is not impaired at work.

When making any employment decisions, business owners should always ensure their decisions cannot be challenged as treating employees differently based on following: race, color, religion, genetic information, national origin, sex (including same sex), pregnancy, childbirth or related medical conditions, age, disability or handicap, citizenship status and service member status.

In addition, federal law prohibits making employment decisions based on whether an employee has taken time off under the Family Medical Leave Act, made a safety complaint to OSHA, questioned overtime practices, or filed a charge of discrimination or harassment. 

THE FLIP SIDE: EMPLOYER LIABILITY FOR FAILING TO TAKE ACTION WHEN LEARNING OF OFF-DUTY MISCONDUCT

Failing to discipline, discharge, or otherwise deal with an employee who has engaged in off-duty misconduct may lead to a claim for negligent hiring, supervision, or retention against the employer. For example:

* An employer who learns that its employee has a DUI risks liability when it allows the employee to continue to drive a company vehicle.

* An employer who learns that its employee has been arrested or convicted of a violent crime or sex crime exposes itself to significant liability when it allows the employee to continue to interact with members of the public on behalf of the company.

CONCLUSION 

Employers confronted with off-duty misconduct must carefully balance the risk of discharging the employee against the risk of not acting. The risk of associated with discharging an employee can be minimized, if not eliminated, by a methodical investigation and decision making process. If an employer decides to retain an employee who it knows has engaged in off-duty misconduct, it should do so consciously — knowing that it may have created a precedent going forward — and in a way that mitigates potential liability.

Off-duty misconduct situations can be among the most difficult for employers. As such, employers should consult legal counsel when the inevitable “it’s all a big mistake” call comes in on that random Monday morning.