HOWE, ANDERSON & STEYER, P.C.

If your association or nonprofit organization has employees, you must concern yourself with applicable laws that govern hiring, firing and conduct in the workplace.  Just because you're a nonprofit organization doesn't mean you can't be sued for discrimination.  Mistakes in how you treat your employees may prove to be very costly.  It's your responsibility to know the employment laws that apply to your organization, and take adequate precaution to assure these laws are not ignored or broken.

Significant increases in employment-related claims and litigation present a challenge for associations, professional societies, foundations, and other nonprofit groups, just like they do for their for-profit counterparts.  In an already litigious society, job applicants, employees and plaintiffs' attorneys are becoming increasingly aware of the rewards that can come their way when an employer overlooks or misapplies an applicable employment or civil rights law.  Being nonprofit is not a defense to discrimination suits.  As an association executive, you must acquaint yourself with the various employment discrimination laws which apply to your organization, and make sure your group is not exposed to unnecessary liability because of the way you deal with or treat your employees and job applicants.

There are three kinds of laws that generally govern treatment of employees in the workplace:

Although this booklet is primarily concerned with the kinds of laws that address specific types of discrimination, you need to be aware also that these other types of law may come into play.  For example, in most instances it is illegal to retaliate or discriminate against an employee who seeks compliance with a wage and hour, or health and safety law.  Likewise, it is not uncommon for a plaintiff to include a tort count in a discrimination suit in order to recover greater damages.  Many suits for sexual harassment also allege the inflection of emotional distress.

Laws Prohibiting Employment Discrimination

Little in the way of discriminatory conduct is not covered by some federal or state statute or regulation.  Being aware of the conduct prohibited by applicable federal law as well as the law of the state and municipality where your association is located is an essential first step to avoiding a discrimination claim.

There are a number of federal statutes which are aimed at prohibiting different types of discrimination in the workplace.  The most prominent of these are the following:

In addition to federal prohibitions, nearly all states and many counties and municipalities have enacted their own fair employment practices laws, sometimes referred to as human rights laws.  These state laws often extend protection to classes of individuals not provided for in comparable federal statutes, and often apply to smaller employers than those to which federal laws apply.  Statutes in Maryland, Virginia and the District of Columbia are illustrative of these types of laws:

Discriminatory Employment Practices

Any time you make a decision which can be viewed as adversely affecting the terms of an individual's employment, or which can be viewed as favoring one employee over another, you run the risk of being confronted with a claim of discrimination if the person affected is a member of a protected class.  You must be prepared to present sound business reasons for your decision, and you must be careful to make sure that what appears to be otherwise innocent practices do not have a disparate impact on any protected class of individuals.  Certain types of conduct are traditionally prohibited.

Perhaps the most commonly alleged employment claims today are wrongful termination, sexual harassment, and discrimination against the disabled.

Whenever you terminate an employee, you must expect careful scrutiny of what you did and why you did it, and be prepared for a charge of wrongful termination.  The majority of your work force will fall into some class of protected individuals, so you must be ready to explain your action in terms of valid nondiscriminatory reasons.  Furthermore, you must take care to assure that your action does not take place in an atmosphere or under circumstances that are contradictory to your stated reasons.  All too often an employee discharged for inadequate performance is found to have a personnel file stacked with "excellent" recommendations.  A slight discrepancy in your procedures or an ill-advised statement may open the door for a lawsuit, which may be very costly to defend even if you are not ultimately found liable.

Claims of sexual harassment are increasing in frequency and gaining considerable notoriety.  Sexual harassment claims include unwelcome sexual advances, requiring sexual favors in exchange for job benefits, and any other inappropriate and unwanted verbal or physical conduct of a sexual nature.  Sexual harassment also may include permitting a hostile or offensive workplace environment to exist.  it is important that inappropriate and unwanted sexual behavior be prohibited in the workplace, and that an effective procedure be available to deal with any such behavior that might occur.

The Americans with Disabilities Act prohibits discrimination in the workplace based on an individual's permanent disability or perceived disability.  The case law under this Act is still evolving.  You must be careful to make sure you do not base any adverse employment decision on an individual's physical or mental disability without first trying to find a reasonable accommodation for the individual's disability.

Employment Applications and Job Interviews

Screening job applicants is a process loaded with traps for the unwary or informed employer or personnel manager.  There are many questions that may not be asked, and there are other that may be inappropriate depending on the job in question and other circumstances.  As a general rule, no question should be asked unless it is relevant and necessary to filling the job at hand.  Additionally, it will be assumed that every question asked was used as a basis for evaluating the applicant.

Some matters that you should not solicit on job applications and that you should avoid discussing in pre-job interviews are:

The job application and pre-job interview should focus on the applicant's qualifications and potential to do the job.  other information may be obtained after the individual is hired.  When there is any doubt about a question, do not use it, or consult legal counsel before you use it.  If you have a written application, make sure it is reviewed by counsel.

How to Avoid the Risk of Employment Discrimination Claims

There are a number of tools and procedures which you may use to reduce the risk of employment liability claims.  Employment law is very complicated and there are numerous pitfalls. Two cases are seldom alike.  Therefore, no matter what tools and procedures you use, it is strongly urged that all your procedures and documents be reviewed by experienced legal counsel, and that no important employment decision be made without first consulting your legal counsel.  A little time spend up front can save you a whole lot of expenses and anxiety later on.

Handbooks.  Employee handbooks and manuals are a useful way to advise employees of their benefits, conditions of employment and your association's practices and procedures.  To make sure a handbook is not viewed as a contract, it should clearly state that it is not a contract and that the association reserves the right to make changes at any time.  To avoid putting limitations on your right to terminate an employee, you should clearly state that employment is "at will," and that an employee may be terminated at any time with our without cause.  Although a handbook may not be a contact, it is best not to put anything in a handbook or manual that you do not intend to follow, and do not ignore what you have written.  It is better not to have a handbook or manual than to have one that is ignored.  The manual should be distributed to all employees and reviewed and updated regularly.

Contracts.  Written employment contracts are usually used for senior staff.  The contract provides an excellent vehicle for defining job responsibilities, salary, termination procedures and compensation in the event of termination.  Written contracts are also useful when there is reason to have an agreement to to complete.

Releases.  Written separation agreements and releases should be used when an employee is terminated.  By signing a release, the employee may waive any claims against the employer arising out of his termination or for any other reason.  A valid release must be supported by consideration, which may be severance pay, continuation of insurance coverage, out-placement counseling, or some other benefit.  It may be necessary to give the employee an opportunity to have the release reviewed by a lawyer.  A release or separation agreement should be carefully drafted to make sure it is in compliance with legal requirements.

Evaluations.  Performance evaluations should be fair and accurate.  Employee weaknesses as well as strengths should be documented.  Employees should be given the opportunity to review their evaluations and address criticisms.  You should remember that performance evaluations will come to light if a disciplinary action against the employee is ever challenged.

Documentation.  All significant employment actions should be documented with a copy placed in the employee's personnel file.  If disciplinary action becomes necessary, having written records to support your action will reduce the likelihood of a claim and increase the chance of successfully defending a suit.  If you discharge an employee, call it a discharge; calling it a layoff or something else may only lead to problems.  Do not keep medical records in the employee's personnel file.  Under ADA, medical records must be kept separately.

References.  Have a procedure for responding to requests for references.  When an employee is terminated, designate one individual to respond to all requests for references, and if possible have a mutual understanding of what to say.  Take care not to say something which may be untrue.

Timely Action.  Do not delay taking corrective action on unsatisfactory employees.  If you hire someone and it turns out the person cannot adequately perform the job, do not delay doing what you have to do to get the person in line or terminated him.  Failing to act in a timely fashion may lead the employee to believe he is performing satisfactorily, and this inference may jeopardize or call into question your ultimate decision.

Supervision.  Do not condone inappropriate behavior and off-color remarks.  Kidding around, jokes demeaning to minorities and other groups, coarse language, sexual remarks and touching are all unacceptable in today's workplace, and if allowed to exist may cause significant problems.  Legitimate actions may be tainted by what will be perceived as a hostile work environment.  In some situations, it might even be necessary to settle a case rather than have such incidents brought to light.  One of your most important responsibilities is to make sure employees are not exposed to inappropriate behavior on the part of their supervisors and fellow employees.

Complaints.  Have procedures available to handle employee complaints, including complaints of sexual harassment.  Your association will be held responsible not only for the actions of its management personnel, but also for condoning inappropriate behavior by fellow employees.  Employees must have an effective way to have their legitimate complaints acted upon, which means being able to go to a higher authority if their immediate boss is part of the problem.  Failing to act on a complaint is one of the worst things you can do and will expose your organization to liability.

Insurance Coverage for Employment Related Claims

Like other types of claims that may be brought against your group, one of the first things you should do when an employment claim or discrimination charge is brought is look at you insurance coverage.  In most cases, a commercial general liability policy, or officers and directors liability policy, will not cover employment-related claims, but in some cases policy language may be broad enough to argue for inclusion.  For example, where defamatory conduct is alleged as part of or in addition to a wrongful discharge, it is possible that coverage could be secured under the personal injury provision of a general liability policy.

Where a claim names as association officer or director, coverage may exist under an officers and directors liability policy.  Although such coverage could protect the individual, it might not cover the association.

In recent years the insurance industry has developed a product which could be of value to association and nonprofit groups as well as for-profit businesses.  The product is an employment practices liability policy, sometimes referred to as EPL coverage.  Depending on the carrier and particular policy, an EPL policy may provide coverage for employment discrimination, sexual harassment, wrongful termination, failure to employ or promote, breach of employment contract, wrongful discipline, equal pay violations, employment-related defamation, and negligent evaluation.  It may cover both an organization and the decision makers within the organization.  Interested association executives should consult their insurance agent or broker and legal counsel about the availability of this coverage.

Do You Have Questions?

Employment discrimination law is very complicated, and the penalties for mistakes can be severe.  Your lawyer is an excellent resource to call upon to answer any questions you may have and to assist you in minimizing the risk of employee claims, charges, and lawsuits.  We will be happy to help you with additional information and assistance on employment law and compliance.