Employee Discipline: Federal
- When used appropriately, employee discipline can improve communication with employees and foster positive outcomes. See Treat Discipline as an Opportunity.
- Failure to adequately discipline employees leads to low overall morale and to a greater risk of liability. See Treat Discipline as an Opportunity.
- Employers should explore alternatives to discipline in order to improve performance or curtail unacceptable employee behavior. See Alternatives to Discipline.
- Employers should implement policies and procedures that enforce rules of conduct, communicate those policies to employees and apply disciplinary procedures uniformly. See The Process of Discipline.
- Employers should communicate their expectations for conduct while employees are on duty, off duty and on the premises. See Communicating Expectations for Workplace Conduct.
- Common discipline problems include poor attendance, substance abuse and workplace theft. See Specific Discipline Situations.
- Attendance policies can be enforced through a system of excused and unexcused absences or no fault policies in which all absences are counted against the employee. See Attendance Policies.
- An adequate attendance policy should require employees to notify their employers of absences, designate a person to receive absence notification, provide disciplinary consequences for failure to comply with policy and address absence during special events outside of work, including training programs. See Attendance Policies.
- Employers should promptly discipline instances of workplace theft, which include unauthorized taking of employer property, sabotage, embezzlement, trade secret theft and cyber slacking. See Specific Discipline Situations; Workplace Theft.
- When disciplining employees with substance abuse problems, employers should explore alternatives to discipline. In addition, employers should consider any privacy protections or antidiscrimination prohibitions when implementing an employee drug testing program. See Specific Discipline Situations; Disciplining Employees With Substance Abuse Problems.
- Whistleblowing occurs when an employee in a government agency or a private company discloses information or makes a complaint of mismanagement, corruption or wrongdoing. Employers should use extreme caution when disciplining employee whistleblowers. See Specific Discipline Situations; Whistleblower Protections.
Treat Employee Discipline as an Opportunity
While may be a challenging experience for either the supervisor or the employee involved, discipline may improve communication with employees and foster positive outcomes. Avoiding discipline because it is unpleasant or difficult can be risky, because performance issues and behavior problems will continue unchecked. Leaving performance or conduct problems unresolved may lead to low productivity and low morale among employees, as well as a lack of trust in management.
In many circumstances, failing to discipline when discipline is warranted leads to legal risk. Employers who follow the practices described in this section will find themselves in a better position to discipline employees appropriately if and when the need arises.
Investigating Employee Behavior
Employers should investigate employee behavior when they are put on notice of:
- Employee misconduct;
- A violation of a work rule or policy;
- A violation of law;
- A violation where the employer has a duty to investigate or would be negligent in not investigating, e.g., an OSHA violation, violation of drug-free workplace laws or discrimination; or
- The filing of a formal complaint with the Equal Employment Opportunity Commission (EEOC), or other enforcement agency or court.
An employer is ordinarily put on notice when a supervisor or someone in a management capacity learns or has reason to know of a potential infraction. This knowledge can come in any form, including written, verbal, visual or virtual. The employer may learn about the situation directly or indirectly.
Even a "hypothetical" situation posed by an employee to a supervisor or HR professional may constitute adequate notice, if sufficient specific information indicates the scenario could actually be true. A duty to investigate arises even when the employee says he or she does not want the employer to address the problem or asks the manager or HR professional to keep the information confidential.
Workplace investigations flesh out workplace problems, remedy them and prevent their recurrence. When conducted promptly and thoroughly, investigations into employee misconduct and other problems promote a culture of integrity in the workplace. Effective workplace investigations show employees that inappropriate behavior is unacceptable and will not be tolerated. See Investigations and Litigation > Internal Investigations.
The investigative process, like all other processes related to employees, must be fair and consistently applied. See Investigations and Litigation > Internal Investigations. While legal "due process" does not apply to private employers, the concept of due process, with its emphasis on fairness and an opportunity to be heard, is important to workplace harmony.
Employers should give employees on both sides of an issue the opportunity to fully respond to the alleged facts. Employers should avoid approaching an investigation with predetermined assumptions regarding the facts or the employees involved.
One person should coordinate the investigation, preferably an HR professional who has been trained in conducting investigations.
Interplay Among Departments
Because most investigations involve sensitive matters that could result in discipline, interdepartmental cooperation within the organization may be required. Depending on the nature of the infraction, immediate supervisors, HR professionals, internal or outside counsel, and the compliance department (for larger corporate organizations) may need to participate. If the investigation calls for the review of computer usage or emails, the Information Technology (IT) department may also play a role in the process.
Employers should carefully select internal investigators. Regardless of who they choose, employers should select investigators who will be objective, who lend credibility to the process, and who have been trained on how to properly conduct a workplace investigation. Employers should ensure that at least two individuals participate in the investigative meetings, in addition to the employee being interviewed, to verify what was said.
In some cases, having an immediate supervisor involved in the investigation could inhibit employees from participating as witnesses. However, in other instances, employees may feel comfortable having their direct supervisor involved.
Degree of Investigation Required
The degree of investigation required varies from case to case. The nature of the infraction at issue will determine the scope of the investigation. For example, allegations of sexual harassment or discrimination may involve several layers of supervisors, HR, counsel, Compliance and several witnesses. In contrast, the investigation into a charge that one employee falsified time records might be limited to the employee accused, his or her supervisor, and an employee from the payroll department. Each person with personal knowledge of the facts should be interviewed. See Investigations and Litigation > Internal Investigations.
Keeping Investigations Confidential
Employers should keep internal disciplinary investigations confidential to the extent possible. The existence, extent and result of an investigation should only be shared among those with a need to know. Confidentiality promotes confidence among employees that their complaints or participation as witnesses in an investigation will not result in retaliation. Confidentiality also ensures the integrity of the process. Maintaining the confidentiality of an investigation reduces workplace gossip and co-worker distractions.
However, employers may not be able to maintain strict confidentiality during an investigative process, especially in cases which require multiple witness accounts. In addition, employees involved in the investigation may not have the same constraints regarding discretion and confidentiality that a supervisor may have.
Confidentiality Policies and NLRA Concerns
Depending on the nature of the investigation and the conduct involved, employees may not have the same obligations of confidentiality with respect to investigations as the employer does. The National Labor Relations Board (NLRB) has consistently held that employers may not restrict employees' ability to communicate their conditions of employment with co-workers or third parties. See Kinder-Care Learning Ctrs., Inc., +299 N.L.R.B. 1171 (1990); Labor Relations > Unfair Labor Practices. Therefore, employers may not be able to enforce confidentiality policies if they restrict employees' right to engage in "protected concerted activity" under the NLRA.
For example, an employer investigating a claim of pay discrimination may not restrict the employees from discussing pay disparities, or the status of the pay discrimination investigation, with their co-workers. On the other hand, if the investigation involves a charge that an employee deals illegal drugs in the workplace, the employer may require that employees keep the investigation confidential. See Desert Palace, Inc., +336 N.L.R.B. 271 (2001).
Employees enjoy the right to engage in protected concerted activity whether working in a unionized, partially unionized or union-free workplace. See Labor Relations > Unfair Labor Practices. Employers should consult legal counsel for more information.
Fair Credit Reporting Act Concerns
The Fair Credit Reporting Act of 1970 (FCRA) protects individuals by requiring that consumer reporting agencies adopt procedures that promote the confidentiality, accuracy and proper use of information attained through background checks, reference checks or employee investigations. An individual's consent is usually required prior to conducting a check. However, the Fair and Accurate Credit Transactions Act (the "FACT Act"), provides a FCRA exception for employee misconduct investigations: agencies may investigate suspected employee misconduct, such as fraud or harassment, without having to obtain an employee's prior consent. +108 P.L. 159.
When interviewing the complaining employee, the employer should ask him or her to identify other witnesses or individuals with personal knowledge of the facts. The employers should consider which of the individuals named should be interviewed and in which order, depending on the information they may possess.
All interviews should be conducted as promptly as possible and as close in time to each other as possible. This ensures that each witness has an opportunity to tell what he or she knows, without undue influence by other witnesses who may be discussing the investigation with other employees. Employers need not interview everyone with personal knowledge of the event because:
- Additional witness statements may be duplicative; or
- All necessary facts may have already been corroborated by others.
Employers conducting a thorough investigation should review all relevant documents. Often, a complaining employee will have copies of emails or other documents supporting his or her complaint and may identify more documents the investigator should review. The investigator should request copies of any documents from the complaining employee or other witnesses that could shed light on the facts at issue. Many of these documents are likely to include emails, which the employer should be able to access with the help of an IT professional.
Documentation collected during an investigation should be kept in a separate investigation file to preserve the integrity of the investigation as well as the privacy of the employees involved. Disciplinary documents should not be included in an employee's personnel file.
Employer Searches and Employee Privacy
Employers need to guard against disclosure of private facts or other intimate or embarrassing information, which could give rise to a claim for invasion of privacy. See Employee Management > Employee Privacy. In some cases, and particularly in the case of sexual harassment claims, an investigation may reveal potentially embarrassing or intimate facts about the individuals involved.
The legality and propriety of a workplace search depends on whether employees have a reasonable expectation of privacy in the object or area to be searched. In general, employees have a reasonable expectation of privacy if they have not been informed or otherwise have no reason to know that certain objects or areas are subject to search.
Employers should have in place a clear and well publicized policy on searches of personal items and work areas. Having an employee search policy in place removes a legitimate expectation of privacy in the items and areas identified, which enables an investigator to conduct a search if necessary during the course of an investigation.
Lie Detector Tests
The Employee Polygraph Protection Act of 1988 (EPPA) governs the use of lie detector tests and polygraph tests. 29 U.S.C. §§ 2001 - 2009; 29 C.F.R. Part 801. The EPPA generally prevents private sector employers from using lie detector tests either for preemployment screening or during the course of employment, with certain exemptions. Employers are required to post notices summarizing the protections of the EPPA in their places of work. The EPPA does not preempt any provision of any state or local law or any collective bargaining agreement that is more restrictive with respect to lie detector tests. See Department of Labor's Employment Law Guide, Other Workplace Standards: Lie Detector Tests.
Those exempt or excluded from EPPA coverage include:
- Federal, state and local governments;
- Federal contractors engaged in national security, intelligence or counterintelligence functions; and
- Limited exemptions where polygraph tests, but no other lie detector tests, may be administered in the private sector, subject to certain restrictions.
Under the EPPA, polygraph tests, but no other lie detector tests, may be administered to:
- Employees who are reasonably suspected of involvement in a workplace incident that results in economic loss to the employer and who had access to the property that is the subject of an investigation;
- Prospective employees of armored car, security alarm and security guard firms who protect facilities, materials or operations affecting health or safety, national security or currency; and
- Prospective employees of pharmaceutical and other firms authorized to manufacture, distribute or dispense controlled substances who will have direct access to such controlled substances, as well as current employees who had access to persons or property that are the subject of an ongoing investigation. See Department of Labor's Employment Law Guide, Other Workplace Standards: Lie Detector Tests.
Employee Rights Under the EPPA. Before giving a polygraph or other lie detector test, the EPPA requires employers to notify employees who will be tested a written notice explaining their rights and the limitations imposed, such as prohibited areas of questioning and restrictions on the use of the test results. An employee may:
- Refuse to take a test;
- End a test at any time;
- Decline to take a test if he or she suffers from a medical condition; or
- Withhold consent for disclosure of results to anyone other than the employer, unless required by a court order, a court, government agency, arbitrator or mediator.
In cases involving economic loss to the employer, the employee is entitled to receive a written or verbal statement prior to the polygraph test which explains the specific incident or activity being investigated and the basis for the employer's reasonable suspicion that the employee was involved in the incident or activity.
Whenever polygraph tests are used, employers should be cognizant of the strict standards concerning the conduct of the test, including the pre-test, testing and post-test phases of the examination.
Many employers turn to honesty tests to circumvent the strict provisions of the EPPA. However, some states regulate the use of these tests in employment or ban them altogether. Some employers use honesty testing during an investigation of a crime or other serious workplace misconduct.
Using honesty tests on current employees could encourage future legal claims. Employers should consult with counsel before using honesty tests.
Employers often use drug and alcohol testing with respect to employee discipline situations. Employers are required to follow strict guidelines when using drug testing, and employees have several important rights in this area that employers must respect. See Specific Discipline Situations; Disciplining Employees With Drug and Alcohol Addictions.
Employers should ensure that records from an internal disciplinary investigation are:
- Accessible; and
- Kept in a separate, confidential investigation file. Do not keep it as part of a complaining employee's and witnesses' personnel files, because notes and other documents relating to an investigation may contain private, embarrassing or confidential information.
Confidentiality of documents and records relating to an investigation helps prevent and defend against claims of retaliation, because it limits the number of individuals with knowledge of the investigation who could potentially retaliate against a complaining employee or witness. See Whistleblower Protections. Maintaining confidentiality of investigation records also lends credibility to the investigation process and encourages witnesses to be more forthcoming with pertinent information, since they can legitimately be assured that any provided information will be kept confidential to the extent possible. For these reasons, only those with a legitimate business need to review the investigation records should be permitted to do so.
Resolving Disciplinary Issues Informally
The question of how and when to resolve disciplinary issues informally turns on several factors:
- The nature of the infraction at issue and the scenario involved;
- Any guidelines or guidance provided by the employer's discipline policy;
- How other employees have been treated for committing the same or similar infractions; and
- Whether the employee has a history of other infractions so that formal discipline is warranted.
If these considerations objectively support informal discipline, the employer should consider the alternatives to formal discipline that are available. These alternatives may include leniency, amnesty, providing additional training opportunities, counseling, oral warnings and others. See Alternatives to Discipline.
Alternatives to Discipline
Employers enforce disciplinary policies in order to achieve an employee's improved performance or to deter unacceptable behavior. If an employer can achieve these goals without resorting to traditional methods of discipline, then alternative methods of rule enforcement or performance improvement should be explored. Alternative forms of discipline have the greatest chance of succeeding in cases where the offending employee freely admits and understands that the conduct was wrong and has a sincere desire to improve.
However, as with any departure from standard procedure, employers need to ensure that alternative methods are:
- Warranted by the objective facts of the situation;
- Made available to employees based on legitimate criteria;
- Made available to employees regardless of protected class status;
- Available consistently and applied uniformly. Employers should document the reasons for any disparate treatment of employees. For example, if two employees engage in the same misconduct and one is suspended while the other is given leniency, the employer may have to justify the reasons for its decision to treat the two employees differently.
Leniency or Amnesty Plans
A leniency or amnesty plan constitutes a formal departure from traditional forms of discipline. Under a leniency or amnesty plan, the employee avoids discipline for certain infractions if the employee meets specific conditions. For example, an employer may agree not to penalize a long-term employee without any prior discipline record for violating a minor safety rule, as long as the employee attends a training session on safety. See Additional Training Opportunities; Training and Development.
Employer plans may provide a list of criteria that enable leniency or amnesty to be considered, such as:
- Seniority or a long employment history;
- Few or no other disciplines;
- Good performance; and
- Type of infraction. Certain kinds of infractions may be ineligible for leniency.
The plan may provide that discipline will be withheld as long as the employee's performance or behavior meets certain agreed-upon standards. Ramifications for failing to meet these standards should be stated. Often, the employer and employee sign a written agreement on these terms.
Additional Training Opportunities
Some disciplinary infractions or performance problems reveal a need for additional training that could achieve a greater improvement in conduct or performance than traditional discipline alone. For example, employers may provide supervisor training in order to better address scenarios involving a supervisor's communications problems or anger management issues. See Training and Development > Recommended Training for Supervisors and Managers.
Training may also be more effective than discipline in cases where an employee is accused of inappropriate conduct that does not rise to the level of illegal discrimination or harassment. Sensitizing employees to their own inappropriate behavior through training may do more to help them improve their conduct on the job than a written warning or other traditional discipline. In addition, it may minimize employer liability in defending a future claim.
Employers often use counseling as a common form of alternative discipline. A supervisor or HR professional may counsel an employee about a specific problem and work to identify ways the employee can improve his or her behavior or performance. In most cases involving first time infractions of minor work rules or new hires, a simple conversation with the employee about the problem will be enough for him or her to begin meeting the supervisor's expectations.
Accommodations and Alternate Work Arrangements
Employers may find that certain underperforming employees may be in need of some form of accommodation or alternative work arrangement in order to meet expectations. In these instances, traditional discipline may be counterproductive to the employer's overall goals of productivity and inclusion.
Reasonable accommodations may be required under the ADA if the employee is a "covered individual with a disability."
Accommodations can range from providing a quiet, clean workspace for employees with Attentive Deficit Disorder to allowing an employee to take a leave of absence for treatment for substance abuse or clinical depression.
If an employee is covered by the ADA, employers are required to engage in an interactive dialogue with the employee to determine if accommodations are necessary and to identify potential reasonable accommodations that would enable the employee to perform the essential functions of the job.
Employers may choose to seek legal counsel if an employee's performance or discipline problems may be related to a covered disability.
Many employees have discipline or performance issues that are not related to any disability. For example, typical employee problems such as tardiness or an inability to meet deadlines could be due to outside commitments such as caregiver responsibilities, a second job or additional schooling, or may be due to a long commute to work.
In these cases, the employer should consider providing alternate work arrangements to the employee by offering a flexible work schedule, telecommuting, a home computer or other accommodations that could enable the employee to meet expectations, rather than imposing traditional discipline which may not really address the underlying reasons for the problem. See Employee Management > Managing Employees in Special Situations. To avoid claims of unfairness, any such accommodation should be reviewed for consistency with the treatment of other employees.
Referrals to Employee Assistance Program (EAP)
Employers can suggest that an employee go to its EAP in lieu of, or in addition to, traditional discipline. Employers should consider referring employees to an EAP if the employee has engaged in misconduct or is struggling to meet performance expectations due to:
- The use of illegal drugs; or
- The abuse of prescription drugs. See Disciplining Employees With Drug and Alcohol Addictions; Alternatives to Disciplining Employees with Substance Abuse Problems.
Employees who are currently abusing alcohol or drugs may always be disciplined, in addition to any other assistance the employer wishes to provide. See EEOC's Questions and Answers About Health Care Workers and the Americans with Disabilities Act. However, the costs of rehabilitating an employee with drug and alcohol issues may be substantially less than the cost of firing the employee.
Employees with anger management issues, emotional issues or personal problems that have an impact on the employee's behavior or performance should also be referred to an EAP, in lieu of or in addition to other forms of discipline.
The Process of Discipline
When considering how to set up a process of discipline, employers should consider the following factors:
- What rules of conduct should apply to the workplace and workforce?
- How will these rules be communicated?
- How will behavior be assessed?
- How will inappropriate behavior be identified?
- What approaches will be followed when inappropriate behavior needs to be changed or improved?
Establishing Rules of Conduct
Employers should have a list of work rules or a series of policies that describe the type of conduct that is expected of employees. See Employee Management > Employee Handbooks - Work Rules - Employee Conduct. These work rules and policies should reflect and promote the organization's business goals, industry needs and work culture. For example, a hospital with a large unionized workforce will have different work rules and policies than a small computer software company, because the nature of these two businesses and their workforces are quite different.
Common work rules include:
- Time and attendance requirements;
- Safety requirements;
- Conflict of interest requirements;
- Professional conduct requirements;
- Rules on the use and disclosure of confidential information; and
- Rules on the use of social media and external websites.
Common policies include:
- Substance abuse;
- Workplace violence;
- Personal use of employer resources;
- Outside employment; and
- Ethics code, which requires employees to refrain from misuse of employer funds and information, and to report unethical employee behavior.
Each organization should consider which behaviors to promote and which to discourage when compiling its work rules and policies. Employers should also update and revise these rules and policies regularly. Updated policies and work rules account for changes in the nature of business or industry, as well as include developments in technology that may create a need to focus on different behaviors.
Policies that relate to workplace conduct should be clear as to when and where they apply. For example, many employees believe that workplace rules and policies do not apply while they are on business travel or during after hours entertainment with co-workers or clients. Employers need to be clear in their policies that after hours work events and work travel are still considered work, and constitute the work environment to which all policies apply.
Employers should also consider including work rules or policies that impact off-duty conduct to the extent it:
- Reflects poorly on the organization;
- Interferes with client relationships; or
- Creates difficulties in the workplace.
Rules and policies regarding off-duty conduct should be clear about the connection between such conduct and the actual or potential damage to the organization or its reputation. See Lawful Behaviors Outside of Work.
Work rules and policies should be clear and understandable to employees, and they should be consistently applied and enforced by supervisors. See Employee Management > Employee Communications. Consistency will lend credibility to the process of discipline that follows an infraction of work rules or conduct policies and will help avoid claims of unfair treatment by employees with respect to conduct and discipline. See Employee Management > Employee Handbooks - Work Rules - Employee Conduct.
Compliance With the National Labor Relations Act
The National Labor Relations Board (NLRB) has reminded employers that a work rule may violate the NLRA if it has a "chilling" effect on an employee's protected activity. Rules may be found unlawful if they would be reasonably construed to prohibit or restrict employees from engaging in concerted activities protected under Section 7 of the National Labor Relations Act (NLRA), such as discussions of terms and conditions of employment and union organizing.
Examples of rules and policies frequently at issue include:
- Confidentiality rules;
- Employee conduct/professionalism rules;
- Third party/media communications rules;
- Logos, copyrights and trademark rules;
- Photography and recording rules;
- Rules restricting employees from leaving work; and
- Conflict of interest rules.
Establishing Discipline Policies
Employers should have a discipline policy that clearly describes the type of discipline that could be implemented when work rules are violated. See Progressive Discipline. The discipline policy should communicate the objectives of workplace discipline, which generally includes providing a safe and effective work environment for all employees, as well as providing opportunities for employee development to those individuals who are in need of guidance.
An effective discipline policy should also include a list of behaviors that may result in immediate termination of employment without any form of prior discipline. See Organizational Exit > Involuntary Terminations. This list often includes infractions such as:
- Dishonesty or misrepresentation;
- Falsification of employer records;
- Gross negligence;
- Deliberate nonperformance of work;
- Substance abuse;
- Unauthorized use of an employer-issued credit card;
- Willful damage or destruction of employer property;
- Engaging in sex or sexual conduct;
- Violence in the workplace; and
- Unexcused absence for more than three business days (job abandonment).
When applying discipline, especially disciplinary actions that result in terminations, employers should treat employees consistently. In order to avoid claims of unfairness, employers should apply uniform standards of conduct and work rules in the same manner to all employees to the extent possible.
Employers should remember to approach discipline from a due process standpoint, and give the employee to be disciplined an opportunity to respond to the policy violation or breach of work rule at issue before any decision on discipline is made and before any discipline is imposed. See Training and Development.
Communicating Expectations for Workplace Conduct
Most workplace conduct policies, discipline policies and related information are communicated to employees through the Employee Handbook. See Employee Management > Employee Handbooks - Work Rules - Employee Conduct. Employees, supervisors and HR professionals should first consult the handbook when questions arise relating to an employee's potential violation of work rules, inappropriate conduct or poor performance.
Copies of applicable conduct and discipline policies should be provided to employees at the time of hire, when changes or updates are made and during discipline and counseling meetings to remind employees of their obligations to maintain appropriate conduct and good performance in the workplace. See Recruiting and Hiring > Onboarding and Orientation.
Employers should include a statement in their handbook that conduct and discipline policies do not alter the nature of an employee's at will employment.
Employers should also be wary of statements regarding conduct and discipline in those jurisdictions where handbook materials may constitute a contract of employment or may create an "implied contract" of employment.
Expectations for Conduct Outside of Work
Workplace conduct and discipline policies generally apply when employees are engaging in some form of work, including after hours entertainment for business purposes and business travel. However, when it comes to behavior that is truly "outside of work," employers are restricted in their ability to manage, prohibit or discipline employees for off-duty conduct. Having a policy in place regarding off-duty conduct will allow the employer some latitude in disciplining certain conduct that occurs outside of work. See Lawful Behaviors Outside of Work; Establishing Rules of Conduct. Yet even with a policy on off-duty conduct, employers should tread carefully when addressing how employees conduct themselves outside of work.
Disciplining Employees With Criminal Histories or Pending Proceedings
The EEOC takes the position that an employer may not base an employment decision on the conviction record of an employee without "business necessity." SeeEEOC's Preemployment Inquiries and Arrest & Conviction. Business necessity can be established if the employee engaged in egregious conduct or if the conduct is related to his or her job.
Olivia, a bank teller at Acme Savings Bank, is fired based on her recent conviction for armed robbery. Acme is justified in firing Olivia because armed robbery is both egregious and casts doubt on Olivia's suitability for a job handling money and interacting with the public.
Same facts as above, but Acme fires Olivia because of her recent conviction for reckless driving. Acme may be liable in this scenario, because reckless driving is not related to the work performed by a bank teller and, while serious, may not be considered egregious enough to justify discipline by the employer.
Arrest records are generally not a legitimate basis for disciplining employees. Arrests alone may not be reliable evidence that a person actually committed a crime. According to the EEOC, in order to justify the use of arrest records, employers must make additional inquiries. Even where the conduct alleged is job related, the employer must evaluate whether the arrest record reflects the applicant's conduct. The employer should:
- Examine the surrounding circumstances;
- Offer the employee an opportunity to explain; and
- Make any necessary inquiries to evaluate an employee's credibility if he or she denies engaging in the conduct.
Employers should also be wary of state statutes that restrict disciplinary actions while criminal matters are pending.
Disciplining Employees in Garnishment or Bankruptcy Proceedings
Employers should use caution in disciplining employees for their personal financial problems. Unless the conduct could be considered job related, as in the case of a bank employee or someone who runs the cash register, the employer may be liable under federal and state law.
Specifically, the federal Consumer Protection Act prohibits firing an employee for one or more garnishments related to a single debt. +15 U.S.C. § 1674. A number of states have enacted similar statutes.
The Fair Credit Reporting Act governs employers' access to employees' consumer credit reports, whether a consumer report or an investigative consumer report. +15 U.S.C. § 1681m. An employee should receive advance notice if an employer wishes to conduct a credit report. An employer must secure the employee's written authorization before conducting the credit check. See Preemployment Screening and Testing: Federal. Before disciplining an employee for these reasons, an employer must provide a copy of the credit report as well as the Summary of Consumer Rights. See also Fair Credit Reporting Concerns (relating to FCRA exception for employee misconduct investigations).
The Bankruptcy Act Amendments of 1984 include protections for employees who have filed for bankruptcy. +11 U.S.C. § 525(b). Under the Bankruptcy Act, employers may not discipline or fire an employee on the sole basisof being a debtor, being insolvent or not paying a debt that is dischargeable when filing for bankruptcy.
Lawful Behaviors Outside of Work
Several states prohibit or limit the extent to which employers can discipline or fire employees for engaging in lawful behaviors outside of work, even if the employer thinks the behavior is unethical, inappropriate or harmful. For example, it is illegal in some states for employers to discipline or fire employees for engaging in any legal activity while off duty and while off the employer's premises, unless certain circumstances exist. Such circumstances generally include:
- The activity relates to a bona fide occupational requirement of the employee's job;
- Refraining from the activity is necessary to avoid, or to avoid the appearance of, a conflict of interest by the employee; or
- Refraining from the activity is necessary to avoid harm to the employer's reputation.
Several states also prohibit employers from disciplining off-duty employees for smoking or using tobacco when the conduct occurs off the employer's premises. In addition, the employer may be liable for employee claims of invasion of privacy.
Employers should examine their state's laws on disciplining employees for legal behaviors outside of work and should consult legal counsel before taking any action on the basis of off-duty conduct.
Employers who are considering discipline for employee social media activity outside of work should consider whether the conduct could be deemed protected concerted action under the NLRA. See Employee Management > Employee Communications > Online Restrictions and Social Media Policies; How to Discipline Misconduct Related to Social Media. Employers should be especially wary when considering discipline for employees who may have engaged in online discussions regarding employment conditions with co-workers.
Progressive discipline involves a process of disciplining employees using three or four progressively serious forms of discipline in response to employee misconduct or failed performance. See Discipline an Employee Using Progressive Discipline Workflow. Employers that follow a progressive approach generally:
- Use counseling or a verbal warning as a first step;
- Follow the verbal warning with a written warning;
- Follow the written warning with a suspension;
- Follow the suspension with termination of employment;
- Fully document all steps in writing; and
- Provide a copy of the warning or any applicable forms to the employee. See Types of Discipline.
Many employers use progressively serious forms of discipline even if subsequent infractions are unrelated to prior infractions. Some employers excuse prior infractions for the purposes of administering progressive discipline if the prior infraction is removed in time, such as one that occurred more than 18 months earlier.
Employers can choose whether or not to have a formal written policy of progressive discipline. Both approaches have advantages and disadvantages.
Implementing a formal written progressive discipline policy provides a roadmap for supervisors and employees in disciplinary situations. Written policies manage supervisors' and employees' expectations, as well as encourage consistency and uniformity in procedure. However, employees may view each step of a formal written policy as a matter of right, and may challenge any deviation to the policy as unfair. This could lead to unwarranted claims of discrimination and retaliation.
Employers who choose not to have a formal written policy enjoy discretion when deciding how to handle employee discipline. In addition, employers with unwritten policies are not bound by a formal multistep disciplinary process. Employees generally do not develop a sense of entitlement with respect to any particular phase of discipline. However, employers must be vigilant that discipline is handled consistently among supervisors. Following a uniform procedure may be more difficult without a specific roadmap for supervisors and employees to follow. In addition, claims of unfairness may still result if an employee feels the disciplinary process as applied to him or her was unjust.
The question of who disciplines an employee can be just as important as deciding whether and how to discipline an employee. In order for the discipline to be effective, those in a position of authority with respect to the employee should participate in the disciplinary process. This will ordinarily be the employee's direct supervisor or second level supervisor.
In addition to the employee and supervisor, a third person should be present in the disciplinary meeting. This third party should:
- Maintain order if necessary;
- Take notes of what was said; and
- Facilitate the discussion of why and how the employee will be disciplined.
Generally, an employee's direct supervisor and an HR professional are the most appropriate individuals to participate in an employee disciplinary meeting.
Including HR in the Disciplinary Process
Including HR in the discipline process allows HR professionals to play alternative roles, depending on the stage of discipline and the needs of the situation. For example, if the supervisor participating in the disciplinary meetings is heavy handed, the HR professional can take the role of the employee's protector, to be sure all procedures are followed and the employee is treated consistently with other employees. Conversely, if the supervisor fails to take the situation seriously enough or fails to properly address the situation out of fear of offending the employee, the HR professional can step in to ensure use of the correct approach.
If the supervisor and employee disagree on the merits of the discipline, the HR professional can act as a mediator to facilitate the process. Also, if either the supervisor or the employee needs coaching on how to respond appropriately to the situation, or if the employee needs help with meeting the supervisor's requirements, the HR professional can serve in the role of coach to either or both parties. See HR Strategy, Management and the Law > HR Management.
Special Considerations in Labor Environments
In a unionized or partially unionized workplace, the applicable collective bargaining agreement (CBA) explicitly covers the discipline of and grievances by union employees.
Employers should read and thoroughly understand the discipline procedure in the CBA, and should follow the terms of the CBA when disciplining union employees.
The CBA will generally include specific provisions on conducting investigations into employee conduct and may identify specific union representatives who should be included in the disciplinary process. Both the CBA and the employee handbook should be clear on which policies apply to union employees and which do not.
Employers should be aware that union employees have a right to union representation at investigatory interviews or at any management inquiry that the employee reasonably believes may result in discipline. These are known as Weingarten Rights. See Labor Relations > Alternative Dispute Resolution; NLRB v. J. Weingarten, Inc., +420 U.S. 251 (1975). If the meeting's purpose is to dispense a warning or other discipline, and the employee is not subject to questioning, he or she has no right to have a union representative present.
In order to invoke Weingarten Rights, the employee must make a clear request for union representation before or during the interview. The employee cannot be punished for making this request. After the employee makes the request, the employer has the three following choices:
- Grant the request and delay questioning until the union representative arrives and has a chance to consult privately with the employee;
- Deny the request and end the interview immediately; or
- Give the employee a choice of having the interview without representation or ending the interview.
If the employer denies the request for union representation and continues to ask questions, it commits an unfair labor practice and the employee has a right to refuse to answer. See Unfair Labor Practices: Federal. Employers may not discipline employees for such a refusal.
Witness Statements. During the course of an investigation, an employer may collect witness statements from individuals with information surrounding the alleged misconduct. Under a new standard adopted by the National Labor Relations Board, an employer is no longer able to withhold witness statements from a union. Instead, the employer has to establish that it has "legitimate and substantial confidentiality interest" in order to deny a union's request for a witness statement. Piedmont Gardens and Service Employees International Union, United Healthcare Workers-West, +2015 NLRB LEXIS 500 (N.L.R.B. June 26, 2015). However, under NLRB General Counsel Memorandum GC 18-02, cases such as Piedmont Gardens will be submitted to the NLRB Division of Advice for reexamination.
As a result, an employer should weigh the risks of retaliation, harassment and coercion against the co-worker whose statement is at issue against the union's need for the information.
Consistent Discipline Process Among Supervisors
Employers should ensure that supervisors use the employee discipline process consistently in order to:
- Maintain the integrity of the employer's conduct and discipline policies;
- Achieve the goals of employee discipline; and
- Avoid claims of unfairness.
As with other employment actions, supervisors should understand the discipline process and be familiar with the employer's overall approach to discipline. Supervisors should also consider:
- How other employees in their workgroup have been disciplined; and
- Any comparable discipline situations.
Maintaining consistency in discipline does not require that all employees be treated exactly the same. If objective aggravating or mitigating factors require a different result, then a different process should be followed or a different form of discipline should be imposed. Disparate treatment of employees and the reasons supporting it should be documented thoroughly.
Disciplinary procedures generally start when a supervisor learns of the violation of a work rule or policy, or a performance failure. An investigation into the issue ordinarily follows, the extent of which will depend on the nature of the problem. See Investigating Employee Behavior; Investigations and Litigation > Internal Investigations.
Once the investigation is completed, a decision should be made regarding whether and what type of discipline is necessary. Employers should ensure that the affected employee has been given an opportunity to participate in the investigation or inquiry before any disciplinary decisions are made. Decisions should be made as promptly as possible.
Supervisors should follow the disciplinary procedures provided in the Employee Handbook when making decisions on discipline. If the policies provide little guidance or allow for discretion, supervisors should be guided by the practice that has developed with respect to other similarly situated employees. Consistency in practice and procedure is important to ensure the integrity of the disciplinary process and to avoid claims of unfairness.
Once a decision is made on the type of discipline that is necessary, the supervisor and HR professional should prepare to have a meeting with the employee to discuss the discipline.
Before conducting the disciplinary meeting, supervisors should ensure that all necessary documentation has been collected and reviewed. Documentation may include:
- Prior discipline as documented in counseling memos, written warnings or suspensions;
- Information from the employee's personnel file;
- Memoranda and emails to the employee about the problem; and
- Any information or materials provided by other employees.
Supervisors should review the documentation to ensure that it supports the disciplinary decision being made. The types of documents collected and relied upon in providing the discipline should be consistent with the types of information used in other similar situations.
Types of Discipline
Employers have several forms of discipline to choose from when deciding how to best address a disciplinary issue or performance problem. In general, employee discipline takes one or more of the following forms:
- Oral warning or reprimand;
- Written warning;
- Transfer; and
Since employee discipline seeks to result in an improvement in performance or a change in behavior, employers should keep these goals in mind when selecting the type(s) of discipline to apply.
Employers should also ensure that the discipline is appropriate for the situation at issue, and that the employee is treated consistently with other employees who have engaged in the same or similar conduct. See Consistent Discipline Process Among Managers.
Counseling may be used when:
- Performance problems are first identified;
- The infraction at issue is minor; or
- The conduct at issue is a first-time infraction.
Counseling can be informal, such as a discussion between the supervisor and employee about the issue, or an email pointing out deficiencies in conduct or performance. Counseling can also be formal, which may involve a meeting between the employee and supervisor with an HR professional present to facilitate the discussion. Formal counseling may involve a discussion of the infraction or performance problem at issue as well as a discussion of the policy that has been violated.
Counseling puts the employee on notice that his or her performance or behavior is not acceptable and must improve in order for further discipline to be avoided. The employer should keep a record of the counseling and provide a copy to the employee, in case the problem is not resolved and further discipline is necessary.
An oral warning is used:
- After counseling has failed to resolve the problem; or
- When an infraction is serious enough that counseling alone is unlikely to have any impact.
An oral warning is intended to be just that - a warning that the behavior or performance is not acceptable and must change, or further discipline may be imposed.
During an oral warning, the employee should be informed of the infraction at issue and the expectation for change or improvement. Employers should provide a copy of the work rule or policy that was violated to ensure he or she understands the employer's expectations. The meeting should take place in a location that will allow for some privacy, away from co-workers and the general work area. An oral warning generally takes place in the supervisor's office or in human resources, with an HR professional present. See Conducting the Disciplinary Meeting.
The employer should make a record of the oral warning and provide a copy to the employee, in case the problem is not resolved and further discipline is necessary.
A written reprimand generally comprises the first stage of formal discipline. Employers use a written reprimand:
- After an oral warning has failed to resolve the problem; or
- When an infraction is serious enough to warrant a written reprimand.
During a written reprimand, the supervisor should inform the employee of the infraction at issue and the expectation for change or improvement. A copy of the work rule or policy that was violated should be provided to ensure the employee understands employer expectations.
If the written reprimand is for performance reasons, the supervisor should clearly explain the performance expectations and provide specific information on how and why the employee has not met them.
As with all disciplinary matters, the employee should be given an opportunity to respond to the reprimand.
The meeting should take place in a location that will allow for some privacy, away from co-workers and the general work area. See Conducting the Disciplinary Meeting.
The employer should make a record of the written reprimand and provide a copy to the employee, in case the problem is not resolved and further discipline is necessary. The record should clearly state that a failure to make immediate and lasting improvements will result in further discipline, up to and including termination of employment.
Demotion comprises a serious form of discipline that involves reducing an employee's job level to a lower level due to performance problems. Demotion is generally used only when the performance problems relate to a failure in meeting the legitimate expectations of the job.
Before demoting an employee, employers should determine whether changing the employee's job level is likely to solve the performance problems, based on the employee's demonstrated skills and abilities. If not, another form of discipline should be considered.
Employers may suspend employees for several reasons, including:
- The need to conduct an investigation into alleged misconduct;
- As a reprimand for violations of work rules or policies;
- To remove an employee who poses a safety threat; or
- To give a poorly performing employee an opportunity to decide whether or not to stay with the organization.
A suspension may be short term or long term, depending on the needs of the situation. In addition, a suspension may be with or without pay, depending on:
- The nature of the infraction at issue;
- The business needs of the situation;
- Any applicable policies; and
- A review of how other employees have been treated.
An exempt employee may be suspended without pay only in full day increments and only if he or she violated a generally applicable written policy and committed serious misconduct, such as sexual harassment or workplace violence. +29 C.F.R. 541.602(b) (5).
Termination of employment is the most severe form of discipline. Ordinarily, employers fire an employee when:
- All forms of prior discipline have failed; or
- The employee commits an infraction that is severe enough to require immediate termination. See Establishing Discipline Policies.
Before making a decision to fire an employee, the employer should review:
- The employee's personnel file;
- The supervisor's file; and
- Any other documentation that bears on the infraction or performance at issue to ensure that the documentation supports a decision to fire.
Once the employer determines that the documentation supports a decision to fire the employee, the employer should review the treatment of other employees in similar situations for consistency. See Consistent Discipline Process Among Managers. The employer should also consider whether any other information could affect the firing decision, such as:
- Recent medical leave;
- Recent protected activity;
- A close relationship to someone who has engaged in protected activity; or
- Protected class status. See Discipline of Employees in Protected Classes.
If the decision is made to go forward with the termination after all of these factors have been taken into account, the employer should consider whether to provide:
- Any notice period;
- Any severance pay;
- Pay in lieu of notice (generally two weeks' pay), depending on the severity of the situation.
If severance is provided, the employer should require the employee to execute a release of claims against the organization in exchange for severance pay. Employers should review their policies and practices on notice and severance pay, so the employee is treated consistently with other employees. See Payroll > Taxation of Employee Compensation > Severance Pay.
The Performance Improvement Plan (PIP)
A performance improvement plan (PIP) is a strategic tool designed to help low performing employees set measured goals for improvement, often over a specified period of time. See Performance Improvement Plan Form. PIPs are most effective when the supervisor involved is committed to supporting the employee in his or her efforts to improve. A consistent format should be used for implementing a PIP, which should include the following points:
- A statement of the specific performance problems, with examples;
- A statement of the specific expectations for improvement and the metrics to be used in evaluating the employee's progress, including a statement that the improvements must begin immediately and must be sustained on a prolonged and consistent basis;
- A description of the support or resources the supervisor will contribute to help the employee improve;
- Specific meeting dates and times for providing feedback to the employee - Weekly or monthly meetings are common, depending on the needs of the situation;
- A statement that a failure to meet the expectations on a prolonged and consistent basis may lead to further discipline, up to and including termination of employment; and
- A copy of the employee's job description and any applicable policies or other documentation.
When used appropriately, a PIP can also minimize the risk of further discipline, should it be necessary.
Conducting the Disciplinary Meeting
As with all other employment actions, disciplinary meetings should be conducted consistently to the extent possible with the treatment of other employees in the same position or workgroup who have committed the same or a similar infraction. Consistency should apply to the:
- Timing of the meeting;
- Location of the meeting;
- Persons present;
- Individual who provides the discipline; and
- Form of discipline.
Disciplinary meetings should be held in a location away from the employee's workgroup, as well as away from common areas. This provides the employee with an opportunity to digest the information without his or her co-workers overhearing the conversation.
Supervisors should prepare for the meeting by reviewing applicable documentation as well as internal disciplinary policies and practices. Supervisors should be concise, focus on facts and allow the employee a chance to respond. Supervisors should avoid propagating rumors or enforcing office gossip in the context of a disciplinary meeting.
What should an employer do if an employee or supervisor secretly records a disciplinary meeting? The answer may depend on a combination of applicable state law and federal labor law.
- Some states make it illegal to record conversations without the consent of all the other individuals who are participating. This rule is known as the "two party" rule. Employees, including supervisors, who secretly record a disciplinary meeting in "two party" consent states may be in violation of state law.
- Other states have a "one party" consent law, which permits recording by any one party to the conversation without the consent of any other party. In "one party" consent states, secret recordings by an employee or supervisor are permissible. Employers who are in "one party" consent states may want to consider establishing a work rule or policy against secret recordings of disciplinary meetings.
- Employers may not discipline employees who engaged in "protected concerted activity." The NLRB has held that an employer committed an unfair labor practice when it fired an employee for secretly recording a disciplinary meeting. The Board found that the employee had engaged in "protected concerted activity" under the NLRA when he recorded the meeting, after discussing whether to secretly record it with other employees. Because the employer was located in a "one party" consent state, and the employer did not have a policy disallowing secret recordings, the employee's conduct was protected under the NLRA. See Stephens Media, LLC, +2011 NLRB LEXIS 40 (2011).
Considering the potentially conflicting law that could apply to the secret recording of disciplinary meetings, employers should proceed with caution when dealing with this issue. In the event an employer learns that an employee secretly recorded a disciplinary meeting, it should weigh the risks involved before taking further disciplinary action.
In addition, the employer should ensure that any internal policies or procedures that restrict recording in compliance with state law do not have the effect of chilling employees in the exercise of their Section 7 rights under the NLRA (i.e., protected, concerted activity or acting in concert for their mutual aid and protection). For example, the NLRB has issued a decision striking down as unlawful a policy that prohibits the recording of workplace conversations, phone calls, images or company meetings with a camera or recording device without prior approval by management. See Whole Foods Market, Inc., +363 NLRB No. 87 (2015). However, under NLRB General Counsel Memorandum GC 18-02, cases such as Whole Foods will be submitted to the NLRB Division of Advice for reexamination.
If the disciplinary meeting was conducted consistently with the employer's policies, practices and procedures, and the disciplined employee was treated fairly, the employer has little to fear from a recording of the disciplinary meeting. In order to maintain the trust of its employees, employers and supervisors should avoid secretly recording disciplinary meetings.
Exceptions to Progressive Discipline
Employers are bound to encounter situations that require immediate termination of employment without any form of prior or progressive discipline.Some examples of conduct leading to immediate termination include theft, dishonesty, insubordination and workplace violence. See Establishing Discipline Policies.
Employers should include a list of behaviors in their discipline policies that may result in immediate termination of employment. Employers should also reserve the right, at the employer's discretion, to make exceptions to traditional progressive discipline depending on the nature and severity of the offense. See Employment At-Will.
Discipline of Probationary Employees
Employers often designate new employees as probationary employees for a specified period of time, in order to avoid formal discipline processes. Probationary employees can be tested for culture fit and overall competency. See Employee Management > Managing Employees in Special Situations > Employees on Probationary Periods. Probationary periods may be imposed on:
- New hires;
- Transfers; or
- Rehired employees.
Unionized or partially unionized employers often use probationary periods as employee management tools in conjunction with the applicable collective bargaining agreement (CBA). See Labor Relations > Collective Bargaining Process.
Ideally, employer discipline of probationary employees should be more streamlined than with other employees. Similar to any at will employee, immediate discharge of a new hire is allowed if the discharge is otherwise legal, e.g., nondiscriminatory or nonretaliatory.
Employers should be clear in their wording of employment terms, especially with regard to a probationary period. See Recruiting and Hiring > Terms of Employment. Employees should understand that, in the event they are retained after the probationary period has ended, the provision of a probationary period may not result in employers being limited to fire them only for cause.
Discipline of Employees in Protected Classes
Employers may not take into account an employee's membership in any protected class when making decisions about discipline, including termination. See Employee Management > EEO - Discrimination. For example, if two employees commit similar offenses, the employer may not discipline them differently because of their:
- Sex, including pregnancy;
- National origin;
- Age (40 or older);
- Disability; or
- Genetic information.
Many state laws provide protected class status on the basis of additional factors, such as sexual orientation and marital status, which are not covered by federal nondiscrimination laws. Employers are prohibited from making disciplinary and other employment decisions on the basis of these additional factors, depending on the state in which they are located.
Employers should base all decisions relating to discipline only on the:
- Objective facts at issue; which should be
- Well supported by reliable documentation; and which should be
- Corroborated by witnesses if they are available.
Employees being disciplined should be treated consistently with respect to employees who commit a similar offense and who are not in the same protected class.
Employees in protected classes are not entitled to more lenient discipline because they are in a protected class. In addition, employees in protected classes cannot be subject to greater discipline because of membership in a protected class.
Employers may avoid discriminatory acts by engaging in a thorough review of the available documentation and witness statements, and by conducting a comparison with other employees in similar situations to ensure fair and consistent treatment.
Employers should use caution when requiring certain actions that may be discriminatory under federal law, such as using medical or psychiatric testing in conjunction with a disciplinary action. The Americans with Disabilities Act restricts postemployment examinations and medical inquiries.
+42 U.S.C. § 12112(d)(4);
Employers should also use caution when implementing attendance policies. Employers should ensure that workers are not disciplined for absences related to protected leaves. Certain laws, such as USERRA, prohibit discrimination based on an individual's service or affiliation with the uniformed services. See Employee Leaves > USERRA.
Disciplining Employees Who Have Engaged in Protected Activities
Employers should exercise caution when disciplining employees who have engaged in protected activities in order to avoid retaliation or the appearance of retaliation. Retaliation claims are one of the fastest growing claims under federal law. See Employee Management > Employer Liability. Even in cases where the underlying discrimination claim has no merit, employees can prevail or at least state a plausible claim if the employer took an adverse action against the employee that was close in time to the employee's engagement in protected activity, or if the supervisor who was the subject of an employee's complaint is the individual imposing the discipline.
Protected activity generally includes:
- Filing a charge of discrimination;
- Participating in a discrimination proceeding;
- Otherwise opposing discrimination;
- Requesting accommodations related to employment discrimination;
- Requesting a reasonable accommodation based on religion or disability; and
- Whistleblowing conduct, e.g., raising ethical, financial or other concerns protected by statutes including anti-retaliation provisions, including the Family and Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA) and the Sarbanes-Oxley Act (SOX). See Whistleblower Protections.
Individuals who have a close association with someone who has engaged in protected activity, such as a spouse, are also protected against retaliation. See Thompson v. N. Am. Stainless, LP, +131 S. Ct. 863 (2011).
Retaliation occurs when an employer, employment agency or labor organization takes an adverse action against an employee who has engaged in protected activity because he or she has done so. In the context of discipline, adverse actions may include disciplinary measures such as:
- Terminations or layoffs,
- Denying overtime opportunities;
- Denying promotions;
- Denying benefits;
- Reducing pay or hours;
- Failing to hire or rehire;
- Reassignment affecting promotion prospects; or
- Unjustified poor performance reviews.
However, employees are not excused from performing their jobs up to legitimate expectations or from following legitimate workplace rules just because they filed a complaint with the EEOC or engaged in other protected activity.
Employers that need to discipline employees who have engaged in protected activity should determine those individuals with information about the employee's complaint or other protected activity. If possible, those individuals should be removed from the decision-making process with respect to the discipline to be imposed, to avoid the appearance of a retaliatory motive. See Employee Management > Employer Liability. Employers should also consider the source of the information leading to the discipline to ensure no retaliatory motive. See Employee Management > Employer Liability > Avoiding "Cat's Paw" Claims.
Once the employer determines that all decision-makers are impartial, the employer should review the objective facts of the situation, including all relevant documentation and witness statements, to be sure the decision to impose discipline is well-supported by legitimate, nondiscriminatory and nonretaliatory business reasons.
If the discipline closely follows the protected activity, the employer should be prepared to explain how and why there is no causal connection between the protected activity and the discipline imposed. Employers should ensure that documents are retained in order to adequately defend a claim. See Employee Management > Recordkeeping > What to Destroy - and When.
Defamation claims by employees relate to oral or written statements by the employer to a third party about the employee. Defamation claims are governed by state law, but generally require the complaining employee to show that the statement at issue was false and injured his or her reputation.
Employers may avoid defamation claims by restricting the disclosure of negative information about employees to those with a legitimate business need to know, including information revealed during an investigation or disciplinary meeting. See Employee Management > Employee Communications > Communicating Sensitive Information.
Employers should also be sure that negative statements about employees in performance reviews or other scenarios are true and are based on a thorough review of the objective facts of the situation. See Employee Management > Performance Appraisals > Employer Liability Regarding Performance Appraisals. Several states protect employers against legal liability, including defamation, for providing truthful references on former employees to prospective employers.
False imprisonment claims may arise when an employee is detained by the employer for questioning related to alleged misconduct, if the employee feels he or she is not free to leave. Threats of confinement or force, or the failure to let the employee leave the meeting, can give rise to claims of false imprisonment.
Employers can avoid claims of false imprisonment by conducting investigations and disciplinary meetings in a location that is accessible by employees, while still allowing for some privacy. Locations that are ordinarily used for such meetings, including the HR department or supervisor's office, should be sufficient.
Employers should also avoid putting the employee in a position where he or she feels "cornered," such as where the employee's exit is blocked by the investigator or supervisor. Properly training investigators and supervisors on appropriate behavior in investigations and disciplinary meetings is the best way to avoid claims of false imprisonment. See Training and Development.
Computer Fraud and Abuse Act
The Computer Fraud and Abuse Act (CFAA) has been used by some employers against employees who steal, interfere with or misuse company computer files. See Employee Management > Employee Communications > Minimizing Communications Theft; Specific Discipline Situations; Workplace Theft.
Courts in different jurisdictions have interpreted employer rights under the CFAA differently. In some federal jurisdictions, courts have held that employers may sue employees under the CFAA for stealing and misusing employer computer files. However, other court have held that employers may not sue employees under the CFAA for stealing or misusing internal computer files, if the employee had authorized access to the computers for business purposes. See Employee Management > Employee Communications > Minimizing Communications Theft; Eagle v. Morgan, No. 11-4303, +2011 U.S. Dist. LEXIS 147247 (E.D. Pa. Dec. 22, 2011).
Employers should consult with legal counsel to determine the application of the CFAA in their location.
Specific Discipline Situations
Because regular attendance is a requirement and necessity for most employment, employee absence can become a common and costly problem for employers. Recent surveys show the total costs of absences may average 35 percent of base payroll. The costs are similar for different classifications of employees: exempt, nonexempt, nonunion and union hourly.
In most cases, employees have legitimate family, medical or personal reasons for an absence. However, in certain situations employees abuse or are suspected of abusing employer leave policies.
Regardless of the cause, excessive employee absences decrease employer productivity and raise costs due to:
- Overtime payments for employees;
- Payment of temporary workers; and
- Paying the absent employee if paid leave was taken.
Tracking Employee Attendance
The most common attendance systems used in the workplace are paid time off (PTO) and no-fault. See Employee Management > Employee Handbook - Work Rules - Employee Conduct.
In a PTO system, employees accrue a certain number of hours each pay period that they may use for time off. Most employers require employees to request the use of their accrued paid time off several days prior to the day that leave is needed. In addition, employers may require that the employee's PTO request be subject to approval by a supervisor.
Even if an employee has accrued sufficient PTO, employers must monitor employees:
- With frequent overall absences; or
- With frequent absences prior to, during or immediately after weekends or holidays on which they were scheduled to work.
In implementing a no-fault system, employers make no distinction between excused and unexcused absences. Employees are penalized for all absences or lateness, except for scheduled vacations and leave as provided by law. Employers usually implement a method of tracking absence or lateness occurrences, such as a point system.
In a no-fault system, employers usually mete out discipline progressively as a result of absences. If an employer uses a point system to track absences, an employee's punishment will become more severe as that employee accumulates points.
A written attendance policy that is consistently enforced will help to prevent abuse by outlining clear standards for employees. See Employee Management > Employee Handbook - Work Rules - Employee Conduct. An effective policy will address:
- Work Schedules. The policy should establish what constitutes start and stop time of work and break times and how to check in and out at work.
- Excused and Unexcused Absences. If a PTO system is used, the policy should inform employees of the circumstances in which PTO would be denied. PTO is usually denied if an employee provides insufficient notice or the absence would result in a severe shortage of employees.
- Reporting Requirements. The policy should establish a designee to whom employees must report when the employee will be tardy or absent. This section should also establish the minimum amount of time before starting time that the employee must report the absence.
- Events Outside of Work:
- Generally, an absence should be excused if an employee is attending a job related training program or some other event outside of work. However, the employer should approve an employee's attendance at any outside event and also verify that the employee actually attended the training session or event.
- If the employee is absent during a required training program, the employer may still discipline the employee as if the employee was absent during a regular workday. If the training was required for an employee to be able to perform a certain job function, the employer may prevent the employee from performing the function and impose any discipline related to the employee's inability to perform the function.
Any attendance policy should be carefully drafted in order to further an employer's interests and also to respect an employee's rights under federal laws, such as the National Labor Relations Act or the Americans with Disabilities Act.
No matter which attendance policy an employer implements, employers should have a uniform process of enforcing the policy and disciplining employees with attendance or lateness issues. The following practices will help employers to effectively enforce their policy:
- Preemployment Education. When a new employee is hired, review the attendance policy with the employee and request the employee sign a statement verifying that he or she was presented with the policy. See Recruiting and Hiring > Onboarding and Orientation.
- Meetings. Whenever possible, a supervisor or HR representative should meet with an employee when providing discipline. During these meetings, inform the employee of which occurrence led to the discipline, identify the relevant section of the policy, and review the attendance policy with the employee. As soon as possible after the meeting, draft a summary of the meeting showing the discipline applied. See The Process of Discipline; Conducting the Disciplinary Meeting.
- Documentation. Document all conversations, written correspondence and discipline related to each occurrence. If possible, have the employee sign a copy of the documentation to provide evidence that the employee was fully informed of all actions taken. See The Process of Discipline; Documentation.
Acme Corporation has a written attendance policy that is enforced through progressive discipline. Under the policy, an employee will receive a point for each unexcused absence. An employee receives a verbal counseling after the second point, a written warning after the fourth point, suspension after the sixth point and possible termination after the eighth point.
Joe, Mary, and Jane are hourly employees in the sales department at Acme Corporation. Joe is frequently late or absent from work for various reasons. Joe has accumulated five points and will be suspended without pay after one more absence.
Mary and Jane are frequently absent but their supervisor does not discipline them consistently. Last month, Mary received her fourth point; her supervisor declined to give her a written warning, but spoke to her about her attendance. Jane received her eighth point recently after missing work without notice, but her supervisor removed the eighth point when Michelle returned to work the next day and claimed that she was ill.
Joe missed work yesterday for personal reasons, received his eighth point, and was promptly terminated. Joe visits a lawyer and complains that his termination was unfair because Mary and Jane are frequently absent without any consequences. The lawyer explains that even though Joe violated the attendance policy, he has a strong claim of sexual discrimination against Acme.
Inclement Weather, Disasters and Business Interruptions
Employers may still discipline employees who violate the attendance policy during inclement weather, disasters or business interruptions. However, it is important that employers have a clearly outlined policy on absence during these events and have a method of communicating the policy to employees on the day that a disruptive event arises. See Risk Management - Health, Safety, Security > Workplace Security.
Employers will need to balance the necessity of remaining open and the safety of its employees when deciding whether to alter the attendance policy during inclement weather or a business interruption.
Prior to a business interruption, employers should establish a general policy of when the business would remain open or closed during an interruption. For example, a hospital would generally remain open at any time, while a private high school's policy may follow the local public school district's opening and closing schedule.
Businesses that remain open should consider a more flexible attendance schedule during inclement weather or a business interruption. For example, the business may remain open, but employees may arrive up to one hour later than the regular start of their shifts without discipline.
An employer that employs individuals in various departments and professions may also need to implement different attendance policies for each job classification during a business interruption. Telecommuting and flexible work schedules may assist in increasing productivity during times of business interruptions, and decrease the need for employee discipline. See Employee Management > Managing Employees in Special Situations.
Attendance and Military Leave
The Uniformed Services Employment and Reemployent Rights Act (USERRA) protects the employment rights of individuals serving in the uniformed services. An employee cannot be denied employment or benefits because of his or her performance in the uniformed services. See Employee Leaves > USERRA. Part-time and probationary employees are also protected by USERRA.
Employers may not discipline an employee solely based on the employee's membership in the uniformed service or because of absence from work while performing military obligations. Employers must also reemploy employees who have returned from active military duty. See Discipline of Employees in Protected Classes; Employee Leaves > USERRA > Prohibited Actions.
An employee must notify the employer orally or in writing once he or she has been summoned to active duty. +20 C.F.R. 1002.5(g). An employer may discipline a employee who fails to comply with USERRA's notice requirement or who commits an act that would be grounds to fire any employee regardless of military status.
Joe, a customer service representative at Acme Call Center, was a member of the United States Army Reserve. The customer service representatives at Acme rotate working a weekend shift. Joe is required to attend reserve training one weekend per month. However, Joe does not enjoy working the weekend shift at Acme. Joe has skipped his last three weekend shifts, despite his not being scheduled to attend reserve training. Acme may discipline Joe because his absence during his shift is not related to his military service, and because any other employee would be disciplined for missing a scheduled work shift without providing notice.
Attendance and the Family and Medical Leave Act
The Family and Medical Leave Act (FMLA) provides employees working for covered employers with up to twelve weeks of unpaid, protected leave to attend to:
- The serious medical condition of the employee or the employee's parent, spouse, or minor child;
- The birth and care of the newborn child of an employee; or
- For placement with the employee of a child for adoption or foster care.
Employers should implement FMLA policies that inform employees, managers, and HR professionals of their obligations under the FMLA. These policies should include requirements for employees to notify their managers of their need to use FMLA leave and procedures for the employer to review the request.
An employer may still discipline an employee for violations of an attendance policy (or any other lawful workplace policy) unrelated to FMLA leave as long as the employer would have sufficient grounds for discipline if no leave was taken.
Jeff's employer, Acme Corporation, provides paid FMLA leave to employees. Acme's FMLA policy required employees on paid FMLA leave to either provide a doctor's note stating when they would return to work, or call Acme every day with an update.
Jeff called in sick from work one morning and requested FMLA leave. His supervisor reminded him about Acme's FMLA leave policy and requested that he submit a doctor's note.
Jeff never submitted the note, did not call anyone at Acme and was absent from work for over a week. On the tenth consecutive day of absence, Acme fired Jeff.
Jeff sued Acme alleging that it had violated his FMLA rights. The court ruled that Acme did not violate Jeff's right to FMLA leave, because Acme provided a generous FMLA leave to employees, and Acme's requests were reasonable. See Allen v. Butler County Comm'rs, +331 Fed. Appx. 389 (6th Cir. 2009).
Attendance and Disability
Employees with disabilities may be entitled to leave from work under a variety of legally required or employer-provided benefits. For example, an employee may be entitled to leave from work under the Americans with Disabilities Act (ADA), workers' compensation laws, and employer-provided disability benefits.
Under the ADA, an employer must provide a reasonable accommodation of an employee's disability unless the accommodation would cause substantial difficulty for the employer. Modifying an attendance policy by allowing an employee to miss work may be used as an accommodation. However, an employer may not be required to allow an employee with a disability to miss work for an extended period if regular attendance is essential for the performance of job duties.
Workers' compensation is primarily a state benefit specifically for employees who are injured on the job. See Risk Management - Health, Safety, Security > Workers' Compensation. In addition, the Department of Labor's Office of Workers' Compensation Programs (OWCP) administers disability compensation programs to federal workers or their dependents. Unless abuse occurs, most states prohibit employers from disciplining an employee who misses work due to receiving worker's compensation benefits.
Many employers choose to provide short-term and long-term disability benefits to employees who become disabled outside of the workplace.
Jacob is a registered nurse at Acme Hospital. Jacob suffered severe injuries in a car accident. He recently exhausted his FMLA leave, and is scheduled to return to work shortly. Jacob has still not recovered from his injuries, and is requesting that he be given six more months of leave as a reasonable accommodation under the ADA.
Based on the costs associated with Jacob's FMLA leave, Acme properly determines that it cannot provide the leave accommodation. However, Acme and Jacob agree to decrease Jacob's schedule from 40 hours per week to 25 hours per week as an accommodation.
During the next few weeks, Jacob repeatedly arrives late to his shifts. In addition, Jacob misses several shifts. Jacob may be disciplined for his attendance despite his disability as long as other employees are similarly disciplined for lateness and no-shows.
In general, workplace theft includes the unauthorized:
- Removal of employer goods from the employer's premises;
- Use of employer goods or resources for personal gain; or
- Use of work time to perform outside activities that are unrelated to the employee's job.
There are many forms of employee theft, some of which are discussed in more detail below. Specific examples of workplace theft include:
- Removing pens and paper from the workplace;
- Using an employer vehicle for non-work purposes;
- "Cyber slacking";
- Taking retail merchandise without paying for it; or
- Embezzling hundreds of thousands of dollars from the employer's bank accounts.
Nearly every employer is affected, on some level, by employee theft. Cost estimates on employee theft for American businesses run as high as the tens of billions of dollars on an annual basis. In addition, employee theft may contribute to a large percentage of small business failure.
Due to the serious impact of employee theft, employers should include theft on the list of behaviors that can result in immediate termination, without resorting to progressive disciplinary measures. See Exceptions to Progressive Discipline.
Employee Theft of Intellectual Property
Workplace theft also includes misappropriation or misuse of the employer's proprietary materials, intellectual property (IP) and trade secrets. With the increasing use of technology and the dissemination of so much business information by email, the risks of employee theft of an employer's IP is on the rise. However, employers have some important tools available to help combat employee IP theft.
Policy on Confidential Information and Trade Secrets
Employers should have a handbook policy on the use and misuse of the organization's confidential information, trade secrets and other IP.
These types of policies educate employees on their responsibilities with respect to the employer's confidential information and help protect against employee theft of critical resources. This policy should specifically state that:
- Employees are responsible for maintaining their duty of confidentiality with respect to the organization's IP;
- Employees are prohibited from directly or indirectly disclosing IP to other employees who do not have a business need to know the information, and any persons outside the organization, without prior written consent;
- Employees are prohibited from making any use of the IP on behalf of themselves or any entity other than the employer;
- Employees may not access or view any IP except to the extent necessary to perform their jobs;
- The employer will take steps to protect its IP; and
- Discipline will be applied in the event employees are found to be in violation of the policy.
Employers should draft the policy so as not to restrict the fair use or lawful, noncommercial use of IP, such as the use of a logo in picket signs, leaflets or other protest materials in activities protected by the National Labor Relations Act (NLRA).
In addition, the Defend Trade Secrets Act (DTSA) includes a whistleblower immunity provision that protects individuals from liability for disclosing a trade secret if it:
- Is made in confidence to a government official or to an attorney for the purpose of reporting a violation of law; or
- Is disclosed to an attorney or used in court (subject to certain limitations) by an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law.
The DTSA requires an employer to include a whistleblower immunity provision in any agreement with an employee that governs the use of trade secret or confidential information. For specific templates, see Nondisclosure Agreement Form; Nondisclosure Agreement With Return of Materials Provisions and Nondisclosure of Confidential Employer Information Contract Clause.
Employees should be reminded in the policy that their duty of confidentiality with respect to employer IP is perpetual and continues indefinitely, even after they have left the organization.
Employees should be given a copy of this policy at the time of hire and at termination, to ensure they remember and understand their obligations with respect to maintaining confidentiality of the employer's IP during and after their employment with the organization. See Employee Communications > Restrictions on Employee Communications.
Employers should be aware that not all information related to their business is protectable as confidential or proprietary business information. In general, the following information is not protected:
- Information the employee already possessed prior to his or her engagement or employment by the organization;
- Information which is in the public domain; and
- Information which is disclosed by a third party who is under no obligation of confidentiality.
Employers should keep in mind that failing to enforce a breach of confidentiality may result in a waiver of the employer's ability to protect the information at a later date, because inaction shows that the information does not really need to be protected against disclosure.
Policy on Employer Ownership of Intellectual Property
Employers should also have a separate policy stating that all IP created by employees within the scope of their employment belongs to the organization as a "work made for hire." A separate policy on employer ownership of IP is important, so employees understand that the work they create on the job is not their own and cannot be taken with them to another entity when they leave. See How to Handle Employee Inventions, Patents and Copyrights.
- Places employees on notice that the IP belongs to the employer;
- Describes the steps the employer will take to protect its IP; and
- Helps guard against intentional and inadvertent theft of the employer's IP.
Employees should be given a copy of this policy at the time of hire and at termination, to ensure they remember and understand:
- The employer's ownership rights; and
- Their obligations as employees to maintain confidentiality of the employer's IP during and after their employment with the organization.
Nondisclosure Agreements (NDAs)
Employers should consider using nondisclosure agreements (NDAs) with employees and consultants to ensure confidentiality of their proprietary and confidential information and to help protect against theft of their IP. See Employee Communications > Nondisclosure Agreements (NDAs) and Confidentiality Agreements.
NDAs are agreements between the employer and the individual signing the NDA, which generally provide:
- The employer will share confidential and proprietary information with the individual in exchange for the individual's agreement not to disclose the information to third parties without the employer's written consent;
- A description of the remedies the employer may pursue in the event the individual discloses the protected information; and
- Length of time the NDA will be in force, often continuing for a term of years, depending on the nature of the information disclosed.
NDAs should be used in conjunction with, not in place of, employer policies on confidentiality and employer ownership of intellectual property. In addition to disciplining the employee for a work rule violation, the employer also has a potential claim against the employee.
Many employers use noncompetition agreements, or noncompetes, to protect against theft of IP and the unauthorized disclosure of confidential and proprietary information to competitors. See Employee Management > Employee Communications > Noncompete Agreements. In general, noncompete agreements prohibit employees from:
- Leaving the organization to work for the competition;
- Using or disclosing the organization's IP for the benefit of the competitor; and
- Starting their own companies with the intention of competing with the employer by using the employer's confidential and proprietary information such as client lists, product development plans and pricing structure.
Noncompete agreements typically include a definition of confidential and proprietary business information as well as a definition of what constitutes "the competition." Many noncompetes also include restrictions on:
- The geographic region in which the employee is prohibited from competing with the employer;
- Restrictions on soliciting existing customers of the employer; and
- Time frame between six months and two years during which these restrictions are in effect.
In order for the noncompete to be valid and enforceable, these restrictions must be "reasonable" in scope. State law governs the reasonableness and validity of noncompetes. Employers should review their existing noncompetes periodically for compliance with state law, because the law in this area continues to evolve. Employers with employees in several different states should tailor their noncompetes for compliance with local state laws and should not use a standard form for all employees regardless of location.
Employers should consider including a provision in their employment agreements or noncompetes that restricts former employees from luring current employees away from the former employer. See Employee Communications > Nonsolicitation Agreements. This type of provision is referred to as a nonsolicitation agreement.
Nonsolicitation agreements should include a prohibition on "directly or indirectly":
- Hiring; or
- Engaging a former employer's current employees for a defined period of time.
The time limit may vary depending on the needs and nature of the employer's business and generally ranges between six months and two years following the employee's termination of employment. Few, if any, states regulate nonsolicitation agreements.
Public employers have different requirements of their employees with respect to ownership of work product and other intellectual property, nonsolicitation of employees and nondisclosure requirements. Government employers should consult their employee manuals and other internal information for details on employee obligations in this regard, as well as adequate disciplinary procedures.
Duty of Loyalty
Even without written contracts or express agreements, employees may have a duty of loyalty to their employers. See Employee Communications > Restrictions on Employee Communications. State law largely governs an employee's duty of loyalty.
Under this duty, employees are obligated to act only in the interests of the employer and not to compete with the employer, even when employees are on their own time, using their own computers and other resources.
An employee would be in violation of his or her duty of loyalty for setting up a competing business while still employed. The duty of loyalty changes as an employee moves up the corporate ladder, with executives having greater duties of loyalty than lower level employees.
Employers should include a policy describing the employees' duty of loyalty in the employee handbook, because many employees are not aware of their responsibilities in this regard. Employers should enforce this duty through discipline, as well as by filing any claims allowed under state law.
Code of Ethics
Employers may combat employee theft by creating an ethical work environment. In addition to hiring ethical people, employers can help create an ethical work environment by establishing an ethics policy that is well published and that has the support of senior managers and supervisors. See Employee Management > Employee Handbook - Work Rules - Employee Conduct.
An ethics policy should include:
- A statement that the employer:
- Is knowledgeable of and complies with all applicable laws and regulations; and
- Intends to conduct itself in an ethical and fair manner; and
- A statement of the employer's expectation that all employees will conduct themselves in an ethical manner and will abide by all applicable laws.
Employers should establish an anonymous hotline for employees to call with questions or complaints regarding potential ethics violations. The organization should also appoint someone in authority to be the ethics officer. The ethics officer would be responsible for:
- Reviewing and responding to complaints from the hotline; and
- Advising employees and supervisors about the terms and requirements of the ethics policy.
Providing ethics training on the ethics policy and on ethical expectations for employees also helps promote an ethical work environment. See Training and Development.
There are specific legal requirements that apply to codes of ethics and codes of conduct for publicly traded companies. Employers should seek guidance from legal counsel in this regard.
Employee Surveillance Considerations
Employers may use surveillance cameras or other forms of employee surveillance in the workplace to help combat employee theft.
Employers may choose from a number of surveillance methods available, including:
- Monitoring computer use;
- Recording phone calls; and
- Video surveillance.
Employers that intend to use surveillance to combat employee theft should have a well-published workplace monitoring policy which states that the employer may monitor any work area or work-related communications, including electronic communications and computer usage, in order to investigate or combat employee misconduct. Having a monitoring policy in place puts employees on notice that they should have no reasonable expectations of privacy with respect to their:
- Work area;
- Mobile devices; and
- Other employer tools and resources.
However, there are limits as to where an employer may conduct surveillance of employees. For example, some states prohibit employers from monitoring employees in the following ways:
- One-way surveillance mirrors;
- While in a restroom, shower, locker room and even the employee lounge; or
- Recording of phone calls or conversations at work.
Before conducting surveillance of employees, employers should consult legal counsel regarding the legality of the surveillance.
Employee sabotage comes in many forms, from a customer service representative who intentionally hangs up on a customer, to a departing employee who wipes her computer clean and destroys her colleagues' work product. With the continuing development of social media outlets, employees have more opportunities than ever to sabotage their employer's reputation, customers and trade secrets.
Employee sabotage is difficult to prevent, but employers can combat sabotage to some extent through existing policies and procedures. For example, employers should include "sabotage" on the list of offenses that could result in immediate termination of employment. See Establishing Discipline Policies. Employers should also describe sabotage as a breach of an employee's duty of loyalty and a violation of the organization's ethics policy, which could lead to discipline.
Employers that offer severance pay through the use of a separation agreement or severance policy should include a provision that sabotage voids the employer's obligation to pay any severance or entitles the employer to recover any severance paid if sabotage by the employee is discovered after the fact. See The Process of Discipline; Types of Discipline; Termination.
If sabotage greatly threatens the organization, employers should implement a separate antisabotage policy. An antisabotage policy should include the following statements:
- A definition of sabotage and a description of the potential damage to the organization and its employees from sabotage;
- That all employees have a duty to prevent and report sabotage by co-workers;
- That sabotage will lead to immediate termination; and
- That the employer reserves the right to involve local, state or federal law enforcement agencies, depending on the type and degree of sabotage involved.
Including a segment in an employee training or meeting on the sabotage policy will help educate employees about sabotage and recruit them as allies in protecting against sabotage by other employees.
Suspected Workplace Theft
Employers should take steps to safeguard their confidential information by:
- Destroying obsolete trade secrets and confidential business information;
- Monitoring employee behavior;
- Implementing policies and practices that encourage confidentiality, loyalty and integrity in the workplace;
- Enforce disciplinary policies; and
- Involve counsel, investigators and law enforcement agencies, if appropriate.
There are a number of applicable federal laws that address IP theft, including the Federal Economic Espionage Act. +18 U.S.C. § 1831; See Employee Communications > Minimizing Communications Theft. In seeking law enforcement assistance, employers should recognize that the employee may be subject to criminal penalties in addition to any civil remedies the employers themselves may seek. However, the employer will, in all likelihood, lose control of the investigation and have little say in the prosecution of the matter.
If an employer suspects IP theft by an employee, steps should be taken to secure employer property and collect information, such as:
- Identifying, securing, seizing or making a mirror image of the employee's computer or mobile devices;
- Securing the email database;
- Sending a demand letter to an employee for a return of all property, if applicable;
- Engaging a forensic computer or technology service;
- Holding and preserving all documentation for possible claims or investigations;
- Contacting a telecommunications carrier; and
- Collecting announcements or news releases of a suspected former employee, to discover whether the employee is working for a competitor.
Employers should not to engage in any activity that may subject them to claims of false imprisonment at a later date, such as cornering a suspected thief. See Discipline Considerations; False Imprisonment.
Disciplining Employees With Drug and Alcohol Addictions
The vast majority of drug users and alcohol abusers are employed, and when they arrive for work, they do not leave their problems at the door. Research indicates that between 10 and 20 percent of the nation's workers who die on the job test positive for alcohol or other drugs. In fact, industries with the highest rates of drug use are the same as those at a high risk for occupational injuries, such as construction, mining, manufacturing and wholesale.
Many employers have drug-free workplace policies or employee assistance programs to help employers and employees deal with substance abuse and other addictions in the workplace. See Drug-Free Workplace Act Requirements;Alternatives to Discipline; Referrals to Employee Assistance Program (EAP).
Alternatives to Disciplining Substance Abusers
Employee Assistance Program (EAP)
Since traditional forms of discipline may not address the underlying problems behind a substance abuser's failed performance or misconduct at work, employers should consider a referral to the employer's EAP in lieu of, or in addition to, other forms of discipline. See Alternatives to Discipline; Referrals to Employee Assistance Program (EAP). In fact, the EEOC lists referrals to an EAP as one of the possible ways employers can respond to a substance abuser's misconduct at work. See EEOC's The Americans With Disabilities Act: Applying Performance and Conduct Standards to Employees With Disabilities Fact Sheet.
Last Chance Agreement
Employers may consider offering a "firm choice" or "last chance agreement" instead of termination when addressing performance failures or misconduct of an employee with a substance abuse problem. Generally, under a "firm choice" or "last chance agreement," an employer agrees not to fire the employee in exchange for the employee's agreement to:
- Receive substance abuse treatment;
- Refrain from further use of alcohol or drugs; and
- Avoid further workplace problems.
A violation of such an agreement usually results in termination because the employee failed to meet the conditions for continued employment. Employers are under no obligation to offer a last chance agreement in place of traditional discipline. See EEOC's The Americans With Disabilities Act: Applying Performance and Conduct Standards to Employees With Disabilities Fact Sheet.
Drug-Free Workplace Act Requirements
The Drug-Free Workplace Act of 1988 establishes that any employer that receives federal grants or contracts must be drug-free or else the employer can lose federal funding. +41 U.S.C. § 8102; See Employee Management > Employee Handbook - Work Rules - Employee Conduct > Drug-Free Workplace.
Although the Drug-Free Workplace Act does not require comprehensive testing programs, it does include the following requirements:
- Promulgating a policy;
- Establishing a drug-free awareness program; and
- Notifying the federal contracting agency of any employee criminal convictions for drug-related activity, among other requirements.
Defense contractors who deal with classified information regarding national security have detailed requirements for policy implementation. +48 C.F.R. § 223.570-1.
The ADA and Employees With Substance Abuse Problems
The ADA specifically permits employers to implement policies and to impose discipline to ensure that the workplace is free from the illegal use of drugs and the abuse of alcohol, and to comply with other federal laws and regulations regarding drug and alcohol use. The ADA may protect a "qualified" alcoholic who can meet the definition of "disability." See Employee Management > Disabilities (ADA).
However, the ADA provides that any employee who is currently engaging in the illegal use of drugs is not a "qualified individual with a disability." Therefore, an employee who illegally uses drugs - whether the employee is a casual user or an addict - is not protected by the ADA. As a result, an employer does not violate the ADA by uniformly enforcing its rules prohibiting employees from illegally using drugs.
"Qualified individuals" under the ADA include those individuals who:
- Have been successfully rehabilitated and who are no longer engaged in the illegal use of drugs;
- Are currently participating in a rehabilitation program and are no longer engaging in the illegal use of drugs; and
- Are regarded, erroneously, as illegally using drugs.
A former drug addict may be protected under the ADA because the addiction may be considered a substantially limiting impairment. However, under the ADA, a former casual drug user is not protected; the employee must have been addicted to drugs.
Performance and Conduct Standards for Employees With Substance Abuse Problems
Employers may require an employee who is an alcoholic or who engages in the illegal use of drugs to meet the same standards of performance and behavior as other employees. See Employee Management > Performance Appraisals. Poor job performance or unsatisfactory behavior related to an employee's alcoholism or illegal use of drugs need not be tolerated if similar performance or conduct would not be acceptable for other employees. Examples include:
- Insubordination; or
- On-the-job accidents.
Testing Employees for Alcohol and Drug Use
If implementing drug testing of employees, employers should first promulgate a clear policy statement regarding the issue.
Work rules should be clearly communicated to employees regarding their use of alcohol and other drugs, with distinctions made as to on-duty, off-duty and on-premises behavior. See Work Rules Concerning Smoking, Alcohol and Drug Use.
Employers should be mindful of federal and state restrictions on employee drug tests. For example, employers may not use drug testing (or the threat of drug testing) as a form of adverse action against employees who report injuries or illnesses. For more information on post-accident testing, see HR and Workplace Safety (OSHA Compliance): Federal; see also Employee Privacy > Drug and Alcohol Testing of Applicants; Preemployment Screening and Testing; Employee Health.
The ADA does not prevent employers from testing applicants or employees for current illegal drug use, or from making employment decisions based on verifiable results. A test for the illegal use of drugs is not considered a medical examination under the ADA, although it is considered a medical exam under HIPAA. See Employee Benefits > Health Information and Privacy (HIPAA). However, the ADA does regulate a test to determine blood alcohol level. The ADA does not encourage, authorize or prohibit drug tests. See Employee Management > Disabilities (ADA).
A number of additional laws and regulations may apply to employee drug testing. See Employee Management > Employee Privacy > Legal Issues Surrounding Drug Testing. Some claims related to testing employees for alcohol and drug use include:
- Invasion of privacy;
- Breach of employment contract claims;
- Violations of equal employment opportunity laws in the implementation of the drug testing program;
- Violations of state drug testing regulations; and
- Labor-related arbitration claims in unionized and partially unionized workplaces.
Employers should ensure that their preferred policies and practices regarding employee drug testing are fair and that they are applied in a consistent manner. Employers may choose to allow employees who have tested positive to take additional tests prior to imposing discipline or discharge.
Disciplining Employees With Substance Abuse Problems
Employers may discipline or discharge employees who currently engage in the illegal use of drugs. An employer may not discriminatorily discipline a person who has a history of drug addiction but who is not currently using drugs and who has been rehabilitated. However, employers may discipline employees who violate a workplace policy that prohibits the use of alcohol or the illegal use of drugs in the workplace, as well as any other applicable work rule.
Whistleblowing occurs when an employee with a public or private employer discloses information or makes a complaint of the following acts within the organization:
- Violation of law; or
- Other forms of wrongdoing or misconduct.
There are many laws and regulations that provide avenues for whistleblowing communications and which protect whistleblowers from retaliation, depending on the nature of the business, industry or violation involved. See Employer Liability > Whistleblower Liability. Each of these laws strictly prohibits retaliation against whistleblowing employees from discipline or other forms of retaliation for making such a complaint in good faith.
From an HR perspective, the most important obligations related to whistleblowing are to:
- Provide adequate means for employees to make complaints internally; and
- Protect whistleblowers from retaliation.
The obligation to protect against retaliation presents difficult discipline issues, such as:
- Whether to discipline or terminate the wrongdoers;
- How to discipline or terminate the wrongdoers;
- How to protect the whistleblower and his or her team from retaliation;
- Whether to discipline a whistleblower for unrelated conduct; and
- How to discipline a whistleblower for unrelated conduct.
Employers should implement appropriate policies and practices related to whistleblowing, including providing adequate means for employees to make whistleblowing complaints internally. See How to Handle an Employee Who Has Blown the Whistle.
Protecting whistleblowers from retaliation is critical, not only because the whistleblowing laws require it, but because a fear of retaliation is likely to chill internal complaints and make it more likely that the unethical conduct will continue or be reported outside the organization. There are several internal strategies that employers should implement to help avoid retaliation and minimize risk associated with whistleblowing scenarios.
Role of Workplace Culture or Policies
Workplace culture and internal policies play an important role in whistleblowing. Employers that create a culture of integrity and loyalty set a positive tone that will enable whistleblower scenarios to be resolved more favorably. To create a culture of integrity and loyalty, employers should implement relevant policies and procedures that:
- Enjoy management support;
- Provide appropriate training to employees and supervisors on these policies; and
- Hold wrongdoers accountable for their misconduct.
Employer Attitude Toward Whistleblowers
In addition to the level of commitment on the part of senior management to promoting an ethical workplace, the organization's attitude toward whistleblowing employees will determine whether a potential for retaliation could turn into reality, exposing the employer to legal risk and potential penalties under laws with whistleblower protections.
Employers make their attitudes known to employees in several ways, including whether or not the organization:
- Implements and supports relevant policies and procedures; and
- Holds those who engage in wrongdoing accountable.
For example, employers who view whistleblowers as a threat to the organization could create an environment where retaliation is likely to occur. For example, when management does not implement or support ethics policies, the organization sends a message that wrongdoers are not likely to be held accountable for unsafe, illegal or unethical conduct. This in turn could create an environment where retaliation follows a whistleblowing complaint.
Acme Corporation conducted an investigation into complaints made by four employees who raised concerns about their supervisors' mishandling of toxic chemicals. Acme disciplined the supervisors who were responsible, but did not fire them.
The supervisors were then left in charge of the four whistleblowing employees. The supervisors retaliated against them by: firing one, placing another on indefinite administrative leave and giving the remaining two employees five-day suspensions.
Acme took no additional disciplinary action against the supervisors. Acme was subsequently investigated by the government for violations of the whistleblowing laws because of the retaliation.
Employers that view whistleblowers as an important tool in the organization's efforts to maintain a safe and ethical work environment are more likely to root out retaliatory misconduct. When employers encourage employee participation and hold wrongdoers accountable, retaliation is less likely to occur.
Acme Corporation holds annual training for supervisors and employees on workplace safety. The training includes an explanation of the internal complaint process on safety measures and appropriate workplace conduct, including a segment on protection against retaliation for employees complaining about safety measures or other misconduct. The training highlights a section of the company's code of ethics and antiharassment policies, which provides that supervisors who engage in misconduct will be severely disciplined, up to and including termination.
Acme later conducts an investigation into the complaints of four employees who raised concerns about mishandling of toxic chemicals. When disciplining the employees responsible, Acme took into account the fact that the wrongdoers were supervisors. Consistent with Acme's policies, the supervisors were fired. The safety issues were resolved and the complaining employees were never subjected to retaliation. No external complaints were ever filed.
Employers should reinforce ethics, loyalty and integrity policies and practices through workforce training sessions. See Training and Development. Training in this area minimizes employer liability with respect to external investigations and resulting costly penalties.
Handling Complaint Resolution
Employees handling whistleblowing complaints should be well trained in conducting internal investigations. See Investigations and Litigation > Internal Investigations. The training should address how to:
- Deal with employees who make complaints;
- Communicate and document confidential information; and
- Enforce nonretaliation obligations.
In most whistleblowing scenarios, employers should involve HR professionals early in the complaint process. HR professionals are often more highly trained in handling employee complaints, as well as in handling the potential confidentiality and retaliation issues involved.
Mistakes at an early stage of complaint resolution might hinder proper resolution of the situation and leave the door open for potential retaliation. Individuals designated to handle internal complaints and investigations should be identified in internal whistleblowing complaint procedures, and may include:
- HR professionals;
- Ethics officers;
- General counsels;
- Compliance departments;
- Presidents; or
Handling the Internal Complaint
In some cases, outside service providers may also play a role in handling internal complaints.
Follow Internal Policies and Procedures
When receiving whistleblower complaints, employers should follow the specific procedures outlined in the organization's relevant policies, which may be the code of conduct or ethics policy. In larger organizations, internal policies require that members of the audit committee of the board of directors or other officials of the organization be informed of a whistleblowing complaint.
Employers should also be knowledgeable about specific complaint-handling procedures required by the applicable whistleblowing statute. For example, some statutes mandate certain disclosure requirements related to the claim at issue. As with the receipt of complaints, any internal investigation into a whistleblowing complaint should follow the investigative procedures outlined in the relevant internal policy and applicable whistleblowing law.
Employers should also be aware of the extent to which retaliation must be prevented and the specific types of actions that constitute retaliation under the applicable statute. See Protecting Internal Whistleblowers from Retaliation; Handling External Investigations and Litigation.
Due to the potential sensitivity of whistleblowing complaints and the high risk of retaliation, employee complaints should be kept confidential to the extent possible. The following information should be disclosed only to those with a legitimate business need to know:
- The identity of the whistleblower;
- The identity of the alleged wrongdoer,
- Any witnesses; and
- The results of the investigation or the disposition of the complaint.
Those who receive information regarding the complaint should also be informed of their obligation to maintain confidentiality. Maintaining confidentiality to the extent possible:
- Provides the organization time to develop an appropriate response to the complaint;
- Minimizes the risk of retaliation against witnesses and whistleblowers; and
- Reduces the chances that employees will attempt to influence the statements of other witnesses.
Employers should safeguard documentation related to whistleblower complaints and investigations. See Employee Communications > Communicating Sensitive Information. This confidentiality obligation extends beyond the end of the investigative process, as well as beyond the resolution of any alleged wrongdoing.
Consult Outside Counsel
Due to the potential sensitivity of a whistleblower complaint and the risk for retaliation, employers should consider consulting with outside counsel whenever a whistleblowing complaint is received.
Bringing outside counsel into the process lends weight and credibility to the complaint process, and helps maintain confidentiality of the information. Specifically, using outside counsel helps preserve confidentiality of the information obtained in the investigation if the information is covered under the attorney-client privilege.
Obtaining outside counsel limits the exposure of the organization's insiders until an outside expert can provide guidance. Obtaining guidance early in the complaint process helps to avoid mistakes and to minimize potential retaliation risk.
Protecting Internal Whistleblowers from Retaliation
Employers have an obligation to protect from retaliation:
- The whistleblower;
- The whistleblower's co-workers who may be associated with his or her complaint, including his or her team; and
- Any other employees who participate in the investigative process.
Employers may implement a number of internal strategies to help prevent retaliation. Each of the following strategies should be evaluated in the context of the applicable whistleblowing statutes:
- Maintain confidentiality. Consistent with applicable law, the employer must maintain the details of the complaint and resulting investigation confidential, to the extent possible. This obligation continues beyond the resolution of any alleged wrongdoing. All documentation related to the complaint and investigation should be kept in a secure location.
- Restate obligations of nonretaliation and potential discipline for any violations. All those with knowledge of the complaint and the investigative process should be reminded of their obligation to not retaliate against witnesses and complaining employees, as well as the potential disciplinary measures for engaging in retaliation, up to and including termination. These individuals should be provided with a copy of the nonretaliation provisions of the relevant statute as well as a copy of all relevant internal policies.
- Any individuals engaging in retaliation should be immediately disciplined or fired, as appropriate.
- Employees who engaged in protected activity should be reminded of their right to nonretaliation, as well as their obligation to immediately report any suspected retaliation internally.
- Employers should check in with employees who have engaged in protected activityon a periodic basis to determine whether any retaliation has occurred.
- Determine whether offenders were disciplined appropriately. Employers should take into consideration the potential for retaliation when disciplining the offenders. For example, leaving the offenders in a supervisory position over the whistleblowers creates a potential for retaliation, or for perceived retaliation, that should be avoided. See Employer Attitude Toward Whistleblowers.Employers should ensure that any discipline is severe enough to show that employees will be held accountable for their misconduct and that such misconduct will not be tolerated. Employers who take appropriately severe disciplinary action also send the message that further misconduct, in the form of retaliation, will also be taken seriously.
Many employers include provisions in their whistleblower policies that provide for informing the whistleblower of the results of the investigation as well as any corrective steps that have been taken. Employers need not report the results of an internal investigation to the whistleblower. However, employers should consider doing so because:
- Communicating the results of the complaint and investigative process to the whistleblower sends a message that employees are a valued and trusted resource in the employer's efforts to maintain a safe and productive work environment;
- Sharing this information directly with the whistleblower ensures that the correct information on the employer's investigatory and remedial efforts is heard by employees; and
- Leaving the whistleblowing employee in the dark may give the impression that the employer neither seriously investigated the complaint nor addressed the underlying problem, leading to mistrust and the possibility of additional internal or external complaints.
Employers who choose to provide the whistleblower with information on the investigation and remedies should ensure that only accurate information is disclosed. Employers should be aware that, if an external complaint results in a governmental investigation, the complainant may be entitled to copies of the employer's internal documents.
For example, OSHA will provide a complainant with a redacted copy of all of the employer's submissions that are responsive to the employee's whistleblower complaint. See HR and Workplace Safety (OSHA Compliance): Federal. Employers should ensure that any information previously provided to the complaining employee will be accurate and consistent with any submissions to OSHA in the event of a subsequent investigation. Otherwise, the employer may face additional costs or liability.
Handling External Investigations and Litigation
Employees may forego making an internal complaint regarding legal violations, mismanagement, corruption or other wrongdoing. The employee may seek assistance from an external enforcement agency or file a claim through a private attorney.
A great number of statutes contain whistleblower protections. See Employer Liability > Whistleblower Liability. For example, OSHA enforces over 20 different laws with whistleblower protections. See OSHA Enforcement of Statutes; HR and Workplace Safety (OSHA Compliance): Federal; Employer Liability Concerns in Employee Management: Federal.
Not all employee complaints will be handled by an enforcement agency. For example, OSHA will not conduct an inspection based on an employee complaint if the employer provides documentation showing that the employer is:
- Aware of the hazard; and
- Correcting it.
Any individual can make a complaint to a government enforcement agency with respect to alleged illegal, unsafe or unethical conduct by an organization. However, not all individuals enjoy whistleblower protections against retaliation:
- Employees are covered as whistleblowers under every workplace enforcement law and regulation with relevant provisions; and
- Contractors, subcontractors and agents may also be entitled to whistleblower protection under specific laws.
The answer to the question of who is covered as a whistleblower depends on the law that governs the situation. For example, some statutes contain whistleblower immunity provisions, such as the Defend Trade Secrets Act (DTSA). The DTSA specifically protects individuals (including employees, contractors and consultants) from criminal or civil liability for disclosing a trade secret under certain circumstances. See Terms of Employment.
Employers should review the specific requirements of the whistleblower laws that apply to their industries and should seek legal counsel if necessary.
Only employees are entitled to file complaints and be covered by whistleblower protections under the following laws:
- Occupational Safety and Health Act (OSH Act);
- International Safe Container Act (ISCA);
- Energy Reorganization Act (ERA);
- Consumer Product Safety Improvement Act (CPSIA);
- Clean Air Act (CAA);
- Safe Drinking Water Act (SDWA);
- Federal Water Pollution Control Act (FWPCA);
- Toxic Substances Control Act (TSCA);
- Solid Waste Disposal Act (SWDA); and
- Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), employees of publicly traded companies, as well as subsidiary or affiliate employees of publicly traded companies, are protected as whistleblowers.
Employees, contractors, subcontractors or agents are covered as whistleblowers under the following laws:
- Surface Transportation Assistance Act (STAA);
- Asbestos Hazard Emergency Response Act (AHERA);
- Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR21);
- Corporate and Criminal Fraud Accountability Act, Title VIII of the Sarbanes-Oxley Act (SOX);
- Pipeline Safety Improvement Act (PSIA);
- Federal Rail Safety Act (FRSA); and the
- National Transit Systems Security Act (NTSSA).
Employers should check relevant statutes in order to determine who is entitled to file a complaint and who is protected against retaliation under the applicable provision for making a complaint. See Department of Labor's Whistleblower Protection Program website.
OSHA Enforcement of Statutes
The Occupational Safety and Health Administration (OSHA) of the Department of Labor (DOL) administers the employee protection provisions of 22 statutes, which are geared toward protecting whistleblowers against retaliation. For more information, see HR and Workplace Safety (OSHA Compliance): Federal and OSHA Enforced Whistleblower Statutes.
- The OSH Act. Under the OSH Act, employees may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for exercising any right afforded by the OSH Act, such as complaining to the employer union, OSHA or any other government agency about workplace safety, injuries or illnesses or health hazards; or for participating in OSHA inspection conferences, hearings or other OSHA-related activities. In addition, employers may not use drug testing (or the threat of drug testing) as a form of adverse action against employees who report injuries or illnesses.
- Environmental Statutes:
- Under the Asbestos Hazard Emergency Response Act (AHERA), employees may file complaints with OSHA if they believe they have experienced discrimination or retaliation for reporting alleged violations of environmental laws relating to asbestos in elementary and secondary school systems.
- Under the Clean Air Act (CAA), Safe Drinking Water Act (SDWA), Federal Water Pollution Control Act (FWPCA), Toxic Substances Control Act (TSCA), Solid Waste Disposal Act (SWDA) and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),employees may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for reporting alleged violations of certain environmental laws or regulations.
- Transportation-Sector Statutes:
- Under the Surface Transportation Assistance Act (STAA), employees and certain independent contractors in the trucking industry may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for:
- Reporting certain commercial motor vehicle (CMV) safety, health, or security concerns;
- Refusing to drive under dangerous circumstances or in violation of CMV safety, health, or security rules;
- Accurately reporting their hours on duty;
- Cooperating with safety or security investigations conducted by certain federal agencies; or
- Furnishing information to a government agency relating to any accident or incident resulting in injury or death or damage to property in connection with CMV transportation.
- Under the International Safe Container Act (ISCA), employees may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for reporting allegations of an unsafe cargo container.
- Under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR21), employees of air carriers and their contractors and subcontractors may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for reporting alleged violations of federal air carrier safety laws or regulations.
- Under the Federal Rail Safety Act (FRSA), employees of railroad carriers and their contractors and subcontractors may file complaints with OSHA for discrimination or retaliation in reporting an alleged violation of any federal law, rule or regulation relating to railroad safety or security, or for:
- Gross fraud, waste or abuse of federal grants or other public funds intended to be used for railroad safety or security;
- Reporting hazardous safety or security conditions;
- Refusing to violate or assist in the violation of any federal law, rule or regulation relating to railroad safety or security;
- Refusing to work when confronted by a hazardous safety or security condition related to the performance of the employee's duties (under imminent danger circumstances); or
- Requesting prompt medical or first aid treatment for employment-related injuries.
- Under the National Transit Systems Security Act (NTSSA), employees of public transportation agencies and their contractors and subcontractors may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for:
- Reporting an alleged violation of any federal law, rule or regulation relating to public transportation safety or security, or fraud, waste, or abuse of federal grants or other public funds intended to be used for public transportation safety or security;
- Reporting hazardous safety or security conditions;
- Refusing to violate or assist in the violation of any federal law, rule, or regulation relating to public transportation safety or security; or
- Refusing to work when confronted by a hazardous safety or security condition related to the performance of the employee's duties (under imminent danger circumstances).
- Under the Surface Transportation Assistance Act (STAA), employees and certain independent contractors in the trucking industry may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for:
- Energy Safety:
- Under the Energy Reorganization Act (ERA), certain employees in the nuclear power and nuclear medicine industries may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for reporting alleged violations of nuclear safety laws or regulations.
- Under the Pipeline Safety Improvement Act (PSIA), employees of owners or operators of pipeline facilities and their contractors and subcontractors may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for reporting alleged violations of federal law regarding pipeline safety or for refusing to violate such provisions.
- Corporate Fraud:
- Under the Corporate and Criminal Fraud Accountability Act, Title VIII of the Sarbanes-Oxley Act (SOX), employees of certain publicly traded companies, companies with certain reporting requirements with the Securities and Exchange Commission (SEC), and their contractors, subcontractors, and agents may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for reporting alleged violations of the federal mail, wire, bank or securities fraud statutes, any rule or regulation of the SEC or any other provision of federal law relating to fraud against shareholders. SOX's protections may extend outside of the US. See Blanchard v. Exelis Systems Corp., +2017 DOLSOX LEXIS 41 (ARB August 29, 2017).
- Employers beyond the financial industry are subject to expanded remedies and protections for whistleblowers, in addition to other requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). For example, Dodd-Frank expands protection to whistleblowers who report any violation of securities laws to the appropriate federal agency. See, e.g., Digital Realty Trust, Inc. v. Somers, +2018 U.S. Lexis 1377 (2018). Dodd-Frank also protects employees who report fraud relating to a consumer financial product or service. See Employer Liability > US Securities and Exchange Commission (SEC) Whistleblower Program.
- Consumer Product Safety Statutes. Under the Consumer Product Safety Improvement Act (CPSIA), employees of manufacturers, private labelers, distributors and retailers may file complaints with OSHA if they believe that they have experienced discrimination or retaliation for reporting alleged violations of any law or regulation within the jurisdiction of the Consumer Product Safety Commission (CPSC) to the employer, the federal government or a state attorney general. Employees may also file a complaint for refusing to perform assigned tasks that the employee reasonably believes would violate CPSC requirements.
Federal Whistleblower Laws Not Enforced by OSHA
A large number of federal laws protect from retaliation those who exercise their federal rights. These include:
- False Claims Act;
- Patient Protection and Affordable Care Act;
- Fair Labor Standards Act;
- Family and Medical Leave Act;
- Federal Employee Antidiscrimination and Retaliation Act of 2002 (No FEAR Act); and
- Taxpayer First Act.
Under the federal False Claims Act, individuals may file claims on behalf of the government for fraud against the government by employers. +31 USCS § 3730. As an incentive, these individuals - called "relators" - are entitled to a share of any monetary recovery. The FCA has a "first-to-file" bar - only the first relator to file a lawsuit may reap any percentage of a court's monetary award.
In Cochise Consultancy, Inc. v. US ex rel. Hunt, the Supreme Court held that private relators are not required to investigate or prosecute an FCA action. +2019 U.S. LEXIS 3400. Relators have six years after the statutory violation occurred in which to file a claim under the False Claims Act. However, if the government declines to intervene, a relator has three years after the federal government has knowledge of the case but declines to intervene, but not more than 10 years after the violation, to file the claim. +31 USCS § 3731(b)(2).
The Taxpayer First Act also includes retaliation protections for federal tax whistleblowers. Sec. 1405 of +116 H.R. 3151, amending +26 USCS § 6103 and +26 USCS § 7623. Effective July 1, 2019, the Act prohibits employers from discharging, demoting, suspending, threatening, harassing, or in any way discriminating against an employee in retaliation for an employee's:
- Providing information, causing information to be provided, or otherwise assisting in an investigation regarding tax underpayments or any conduct which the employee reasonably believes constitutes tax fraud or any other violation of the internal revenue laws, when the information or assistance is provided to:
- The Internal Revenue Service (IRS);
- The Secretary of the Treasury;
- The Treasury Inspector General for Tax Administration;
- The US Comptroller General;
- The Department of Justice;
- The US Congress;
- A person with supervisory authority over the employee; or
- Any other person working for the employer who has the authority to investigate, discover, or terminate misconduct; or
- Testifying, participating in or otherwise assisting in any administrative or judicial action taken by the IRS relating to an alleged underpayment of tax, any violation of the internal revenue laws or any provision relating to tax fraud.
An employee alleging retaliation may seek relief by:
- Filing a complaint with the US Secretary of Labor; or
- Filing a claim in the appropriate US District Court, if the Secretary of Labor has not issued a final decision within 180 days of the filing of the complaint.
- Any remedies necessary to make the employee whole; and
- Compensatory damages, including:
- Reinstatement with the same seniority status that the employee would have had, but for the retaliatory act;
- The sum of 200 percent of the amount of back pay and 100 percent of all lost benefits, with interest; and
- Compensation for any special damages sustained as a result of the retaliatory act, including litigation costs, expert witness fees and reasonable attorney fees.
The rights and remedies provided to employees with respect to retaliation protections may not be waived by any agreement, policy form or condition of employment. The Act specifically prohibits predispute arbitration agreements - any agreements requiring arbitration of a retaliation claim will be void and unenforceable.
In addition to any retaliation protections provided for in the Taxpayer First Act, an individual may participate in the IRS whistleblower awards program, which provides monetary awards for whistleblowers who provide information to the IRS that results in tax proceeds being collected.
In addition, a number of state statutes also protect whistleblowers, including state whistleblower acts and false claims acts. Federal equal employment opportunity laws contain discrimination and retaliation provisions as well. See EEO - Retaliation: Federal.
Other laws may interact with whistleblower protections with respect to the confidentiality of complainant information and the ability to state a claim. These include:
- The First Amendment to the Constitution. Public employee complainants have limited whistleblower protections under the First Amendment when their speech, i.e., the protected activity, is not made as part of their job duties.
- The Freedom of Information Act (FOIA). Members of the general public may make requests for information regarding federal whistleblower complaints under FOIA. However, complaints are generally redacted of certain personally identifiable information under the Privacy Act.
- State FOIA Counterparts or Sunshine Laws. State counterparts to FOIA may also affect the potential of confidentiality in making state whistleblower claims through public or governmental agencies. This may increase the complainant's exposure to liability.
Disciplining a Whistleblower: Retaliatory or Not?
Employers may face a challenging situation in which:
- An employee who has been disciplined for misconduct or performance reasons suddenly files a whistleblowing complaint; or
- A supervisor needs to discipline an employee who has made a recent whistleblowing complaint for reasons unrelated to the circumstances surrounding the complaint.
When disciplining any employee, employers should fairly implement their own internal policies and procedures on discipline to ensure that the:
- Discipline is warranted;
- Performance or conduct at issue is well documented;
- All disciplinary steps have been followed; and
- Discipline stands on its own, separate and independent from any circumstances relating to the complaint.
Employers should be aware of the specific anti-retaliation requirements of the applicable whistleblowing statues. For example, employers may be accused of violating the whistleblower protections in federal statutes if the following occurs:
- The complainant is subjected to an adverse action;
- After engaging in protected activity;
- The employer knew about the protected activity; and
- The protected activity motivated or contributed to the adverse action.
An adverse action is generally defined as any action that would dissuade a reasonable employee from engaging in protected activity. Depending upon the circumstances of the case and the applicable statute, adverse actions include the following:
- Firing or laying off;
- Denying overtime;
- Denying promotion;
- Denial of benefits;
- Failure to hire or rehire;
- Making threats;
- Reassignment affecting prospects for promotion; and
- Reducing pay or hours.
Protected activity encompasses the exercise of any rights, protections or obligations provided by federal laws. For example, protected activity under the Occupational Safety and Health Act (OSH Act) generally includes employee participation in safety and health activities such as:
- Complaining to the Occupational Safety and Health Administration (OSHA);
- Seeking an OSHA inspection;
- Participating in an OSHA inspection;
- Participating or testifying in any proceeding related to an OSHA inspection; and
- Reporting a work-related injury, illness or fatality.
Additional examples of protected activity are specifically defined by the particular statute at issue. See OSHA Enforcement of Statutes. Many whistleblowing statutes specifically protect an employee's internal complaints to his or her employer.
An employer must be able to apply the whistleblower protections to workplace policies. For example, OSHA states in guidance that a reasonable employee may be discouraged from reporting a work-related illness or injury if he or she would be subjected to the following actions for doing so:
- Terminated, demoted or otherwise disciplined;
- Assigned "points" that could lead to future consequences;
- Demeaned or embarrassed (e.g., required to wear a fluorescent orange vest for a week);
- Threatened; or
- Required to take a drug test without a legitimate business reason for doing so.
If a complaint is found to have merit, the complaining employee may be entitled to one or more of the following remedies under whistleblowing laws:
- Reinstatement and front pay;
- Back pay;
- Compensatory damages;
- Punitive damages;
- Attorney fees; and
- Interest. See Employee Management > Employer Liability Concerns in Employee Management > Occupational Safety and Health Administration (OSHA) Whistleblower Protection Program.
Employers may manage risks by consulting with outside counsel as soon as discipline against a whistleblower is considered.
There are no developments to report at this time. Continue to check XpertHR regularly for the latest information on this and other topics.
The following states have additional requirements for this topic under applicable state law.
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