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Fundamentals of Employment Law in the District of Columbia

Tom Harrington, Principal, The Employment Law Group

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Overview/Summary

At-Will Doctrine; Principles and Considerations for Employment Agreements

Key Hiring Considerations – Legal Requirements and Pitfalls

Principles of the Fair Labor Standards Act (FLSA)

Family Medical Leave – Overview The DCHRA Accommodating Disabilities – Overview

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Employment At Will; and Contractual Employment Relationships

In the District of Columbia, if employers do not offer their employees a definite term of employment, the parties’ relationship is at will, i.e., terminable at the will of either party, so long as the employer does not terminate the employee for an unlawful reason.

Employers choose to offer their employees employment agreements for a variety of reasons.

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Employment At-Will Doctrine

An employee is “at-will” if there is no definite term of employment.

› Bible Way Church of Our Lord Jesus Christ of the Apostolic Faith of Washington, D.C. v. Beards, 680 A.2d 419 (D.C. 1996)

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Limits of the Employment At-Will Doctrine

DC recognizes limitations to the at-will doctrine

Terminated employees can bring claims based on:› Wrongful discharge› Breach of contract› Breach of implied covenant of good

faith and fair dealing› Promissory Estoppel

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Avoiding Issues with Oral Contracts

Oral promises limit employers’ rights to terminate at-will employees only in very limited circumstances. Oral promises must be definitive and limited in duration.

Oral promises can run afoul of the statute of frauds which requires contracts that cannot be performed within one year to be in writing and signed by the party to be charged in order to support a claim for breach of contract.

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Implied Contracts

› DC courts recognize that at-will employment can be unilaterally modified by statements issued inEmployee handbooksPersonnel manualsCompany documents

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Implied Contracts

To prove that an implied contract exists, an employee must show that the employee and the employer clearly intended to form a contract.

To make this showing, the employee must establish that the communication from the employer to the employee contained unequivocal provisions that the employer intended to be bound.

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Implied Contracts Employers can defeat implied contracts

› By showing that the employee failed to comply with employment policy guidelines - Domen v. Nat’l Rehab. Hosp., 925 F. Supp. 830 (D.D.C. 1996)

› By using disclaimers that specify, unambiguously, that an employee’s employment remains at will despite statements in applications, handbooks, and other similar company communications that might be construed to the contrary. - Smith v. Union Labor Life Ins. Co., 620 A.2d 265 (D.C. 1993)

› Courts that find a handbook disclaimer to be ambiguous or otherwise imprecisely drafted will give it no effect

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Implied Covenant of Good Faith and Fair Dealing

DC courts have recognized a claim for breach of the IMPLIED covenant of good faith and fair dealing in employment claims. - Paul v. Howard Univ., 754 A.2d 797 (D.C. 2000).

 MD and VA do not recognize the implied covenant of fair dealing with regard to termination by either side in an at-will employment relationship

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Promissory Estoppel

DC courts have recognized promissory estoppel as a limitation to the employment at-will doctrine.

To prove promissory estoppel, an employee must show: › the existence of a promise › that the promise reasonably induced

reliance› that the promise was relied on to the

detriment of the employee.

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Key Terms of Employment Agreements

Title Scope of Employment

› Aligns expectations re responsibilities and reporting

› Provides guidance “for cause” and “good reason” early contract termination

› Balance employer’s need for flexibility with employee’s desire for certainty

Activities Outside Work - Moonlighting Integration Clause

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Terms of Agreement

At-Will› Employer or employee may terminate the

agreement at any time for any legal reason

Terms of Years › limits termination before an agreed date

to specific circumstances› security to parties› leverage to attract candidates

Length of term – usually 1-3 years.

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Early Termination

Early Termination “Cause” – What circumstances enable an

employer to terminate before expiration of term with no further obligations?

“Good Reason” – What circumstances enable an employee to terminate before expiration of term without losing benefits?

Death or Disability Voluntary

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Early Termination

“Cause” Definition› Employers want it broad with

substantial discretion› Employees want:

specific and egregious violations notice and opportunity to cure

› Financial Consequence: salary and benefits to termination date

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Early Termination:Definition of “Cause”

In D.C., an employee is disqualified from receiving unemployment compensation benefits if he has engaged in gross misconduct in connection with his employment.› D.C. defines “gross misconduct” as “an act

which deliberately or willfully violates the employer's rules, deliberately or willfully threatens or violates the employer's interests, shows a repeated disregard for the employee's obligation to the employer, or disregards standards of behavior which an employer has a right to expect of its employee.”

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Considerations

Post Employment Restrictions Competition Solicitation

› Customers› Employees

Duration Confidentiality “Claw Back” provisions for violation

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Prospective Covenants

Employee’s Return of Equipment› Laptops › Phones

If employer pays for usage, specifically state that employee is responsible for personal charges

› Credit Cards Specifically state that employee is responsible

for personal charges that might be discovered

› Security Cards

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Prospective Covenants:Non-Competition Agreements

Employers require employees to sign non-competition agreements to prevent employees from taking their talents and employer’s trade secrets to competitors.

Courts critically examine and narrowly construe non-compete agreements.

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Prospective Covenants:Non-Competition Agreements

Is the noncompetition agreement/the restrictive covenant enforceable?

An employer seeking to enforce a non-compete must show that the restrictive covenant is supported by consideration

Courts will likely enforce a non-competition agreement that is › narrowly drawn to protect the employer’s legitimate

business interest › not unduly burdensome on the employee’s ability to earn

a living› not against public policy

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Prospective Covenants:Non-Competition Agreements

Courts consider› The temporal scope of the non-compete › The geographic scope of the non-

compete › The clarity and unambiguous nature of

the non-compete Courts are less likely to enforce

restrictive covenants that hinder an employee’s ability to earn a living

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Key Considerations in Hiring

Business Needs Legal Requirements

› Anti-discrimination laws Disparate Treatment Disparate Impact

› Americans With Disabilities Act Accommodation Requirements Unlawful Questions

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Identifying and Communicating Job Requirements

Functional Job Descriptions› Key Duties› Key Skills› Reverse engineer: what would disqualify a

candidate? Job Qualifications

› Minimum Qualifications› Preferred Qualifications› Avoid Disparate Impact Liability› Key Principles: Job-Related & Avoiding

Inconsistent Standards

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Legal Requirements and Pitfalls

Recordkeeping One-year retention requirement for “any

personnel or employment record made or kept by an employer”

Two-year retention period for government contractors with 150+ employees

Includes interview notes Ledbetter Fair Pay Act: records relating to pay decisions

should be kept indefinitely Do not write it down if you

would not want a jury to see it

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Legal Requirements and Pitfalls

Employment Selection Tests› Uniform Guidelines on Employee Selection

Procedures (1978) Renewed EEOC attention to Employment

Testing:› Does the test disproportionately impact a

protected group?› Validation studies required to show that test is

“job-related and consistent with business necessity”

› Need evidence, not opinions› Bottom line: No tests without

HR approval

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Legal Requirements and Pitfalls

Setting Compensation Equitably› Ledbetter Fair Pay Act› Disparate impact

starting salaries negotiating differences

› Consistent criteria Fair Labor Standards Act

› Exempt vs. non-exempt› Individual liability

Other Compensation Issues› Commissions› Bonuses› Advances or Relocation Stipends

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Questions to Avoid Disability

› No pre-offer questions Pregnancy Personal Life

› Children & Marriage› National Origin› Religion› Age

Instead…› Focus on Job Purpose› Don’t Make Assumptions› Don’t Overpromise

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What You Should Say Questions Understanding of the nature of this job? Ever been asked to leave a job? Ever had an internal complaint made about you? Any reason cannot meet hours/travel/physical

demands? Resume gaps? Circumstances that need explanation?

Information Full disclosure Consistency

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Transition to the Hire Choose Best Qualified Candidate

› Document basis for choice› Customer preference issues› Job-related factors only

Offer Letter› At-will employment› Conditional offers› Contract and promissory estoppel› Signs on to company policies› Ancillary agreements

non-compete intellectual property

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Requirements under the FLSA

Under FLSA, employers must: Pay minimum wage to employees Pay overtime to employees who

work more than 40 hours in a work week

Ensure accurate record-keeping Regulations identify and exclude

certain employees (exempt) from coverage

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Types of Positions

Non-Exempt Employees covered under the FLSA for time-and-one-half overtime

“Common Enterprise” Employees must be paid time and half for all work at ANY of the enterprises

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Types of Positions Exempt Employees are not covered by

FLSA. Examples:

Executive Exemption Exempt: CEO and General Manager Non-Exempt: Electrician and Car Wash Manager

Administrative Exemption Exempt: CFO and HR Director Non-Exempt: Clerical Employee and Messenger

Professional Exemption Exempt: Physician and Attorney Non-Exempt – Paramedic and Field Technician

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Common Violations of FLSA Overtime Requirements

Misclassifying all IT employees as exempt because of the common misperception that all jobs involving computers are necessarily highly complex and require exceptional expertise.

Misclassifying pharmaceutical sales representatives as “exempt” under the “Outside Sales” exemption merely because the term “sales” is included in the title of the employees’ position.

Misclassifying an employee as “exempt” merely because the employee’s job title includes the term “manager.”

Requiring employees to work “off the clock” without pay Refusing to pay overtime to an employee where

overtime was not approved in advance.

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Partial Day Docking

Generally, an employer cannot reduce an employee’s pay for a partial day because doing so would convert an FLSA exempt employee into a non-exempt employee and make them eligible for overtime pay.

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Scope of the FLSA Exemption

Exemptions are narrowly construed against employers, and should be limited to those situations that plainly and unmistakably come within the terms of the exemptions. McCloskey & Co. v. Dickinson, 56 A.2d 442 (D.C. Ap. 1947).

To qualify as an exempt employee, an employee must meet both the “duties test” and a “salary basis test” for specified exemption.

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How to Avoid Common Mistakes when Classifying Employees

Do not equate the exercise of skill with the exercise of discretion and independent judgment

Do not designate an employee as exempt under the professional exemption merely because the employee has an advanced degree

Do not designate an employee as exempt under “computer employee” exemption merely because the employee’s a job title references computers

Do not automatically equate “salaried” with “exempt”

Conduct a thorough job-analysis

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Family And Medical Leave Act Coverage

DCFMLA: 20 or more employees in the District. D.C. Code § 32-516(1). Employee has 1 year of tenure and worked at least 1,000 hours within previous 12 months.

FMLA: 50 or more employees within 75 miles for each working day during 20 or more calendar weeks in the current or preceding year. 29 U.S.C. § 2611(2)(B)(ii). Employee has 1,250 hours of service within past 12 months.

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Benefits DCFMLA: 16 workweeks of leave

per 24 month period. D.C. Code §§ 32-502 to 503.

FMLA: 12 workweeks per 12 month period. 29 U.S.C § 2612.

Employees shall not lose benefits or seniority while on leave.

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Calculating Leave FMLA – An employer may elect from 4

different ways to calculate the 12 month period provided by 29 C.F.R § 825.200(b). › Calendar year;› Any fixed 12-month “leave year.” E.g., fiscal

year, year required by state law, or starting employee’s anniversary date;

› 12-month period measured forward from the start of the any employee’s FMLA leave; or

› Rolling 12-month period measured backward from the start of the employee’s FMLA leave.

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Intermittent Leave

Leave may be taken intermittently when medically necessary.

Employees are expected to consult with their employers prior to scheduling medical treatments and make a reasonable effort to avoid undue disruptions to employer operations.

Employees may request a reduced work schedule if medically necessary.

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Theories of Liability Entitlement/interference

› Employer denied an employee’s leave.

› Employer badgered an employee to the point of interfering with the employee’s right.

Retaliation› Employer discriminates against an

employee who took leave or otherwise retaliates.

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DCHRA It shall be an unlawful discriminatory practice to

do any of the following acts, wholly or partially for a discriminatory reason based upon the actual or perceived: race, color, religion, national origin, sex, age, marital status, personal appearance, sexual orientation, gender identity or expression, family responsibilities, genetic information, disability, matriculation, or political affiliation of any individual.

› D.C. Code § 2-1402.11

The “Wholly or partially” language allows for a broad causation standard that is easier to meet than under federal anti-discrimination statutes.

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DCHRA Claims under 42 U.S.C. § 1981 and the

DCHRA are analyzed using the Supreme Court's approach in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), the seminal case establishing the burden of proof in employment discrimination cases under Title VII.

Under this familiar framework, the plaintiff first has the burden of proving by a preponderance of the evidence a prima facie case of discrimination. McDonnell Douglas, 411 U.S. at 802.

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DCHRA If the plaintiff succeeds in establishing a

prima facie case, the burden shifts to the defendant to articulate some legitimate, nondiscriminatory reason for the adverse action.

Then, assuming the employer articulates a legitimate reason for its actions, the burden shifts back to the plaintiff to demonstrate by a preponderance of the evidence that the employer's stated reason was a pretext for discrimination.

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ADA- Overview

The Americans with Disabilities Act (ADA) prohibits excluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association. 42 U.S.C.A. § 12112(b)(4).

This provision is intended to protect any qualified individual, whether or not that individual has a disability, from discrimination because that person is known to have an association or relationship with an individual who has a known disability. 29 C.F.R. Part 1630, Appendix § 1630.8.

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ADA – Prima Facie Elements

In a failure to accommodate case, a plaintiff establishes a prima facie case by showing

› (1) that he was an individual who had a disability within the meaning of the statute;

› (2) that the[employer] had notice of his disability;

› (3) that with reasonable accommodation he could perform the essential functions of the position ...; and

› (4) that the [employer] refused to make such accommodations.

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ADA – Qualified Performer A qualified person can perform

the essential functions of his job with or without reasonable accommodation.

An individual who cannot perform the essential duties of his job, even with an accommodation, is not “qualified” under the statute.

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ADA - Disability According to the ADA, an individual is disabled if that

individual (1) has a physical or mental impairment that substantially limits one or more of the individual's major life activities; (2) has a record of such an impairment; or (3) is regarded as having such an impairment.

An impairment is sufficiently severe to substantially limit a major life activity if it prevents an individual from performing a major life activity or significantly restricts the condition, manner, or duration under which an individual can perform a major life activity, as compared to the average person in the general population. See 29 C.F.R. § 1630.2(j) (1996).

Under the ADAAA and its implementing regulations, an impairment is not categorically excluded from being a disability simply because it is temporary.