Employee Time Theft – You Can’t Afford To Ignore It

Do you have an employee who is always late? One who makes or receives personal phone calls daily or one who sneaks out a couple of minutes early on a regular basis? What about an associate that is on their cell phone texting through out the day or who clicks off the computer screen as soon as you walk into their office? If you do you have an employee that is stealing time pure and simple.

Have you ever stopped to consider what these types of employee time theft are costing you? An employee who robs you of 5 minutes per day 5 days per week is stealing the equivalent of approximately 2.8 days per year assuming an 8 hour work day.

If you pay an employee $15 an hour and that employee is stealing 2.8 days per year, it’s costing you $396 per year considering a factor for payroll taxes and employee fringe benefits.

If your employee steals an hour a day 5 days per week the cost of the theft has just skyrocketed to 33 days per year and $4,680 again considering a factor for payroll taxes and employee fringe benefits.

How can you control expensive employee time theft? Clearly state policies in the personnel guide and have employees sign it to be sure they have read the guide and understand the policies. The guide should include policies on personal phone calls, cell phone use, internet use and working hours as well as policy relating to tardiness.

Let your employees know how much you are willing to tolerate—you can disallow personal phone calls except in the case of an emergency. Talk to “tardiness” offenders—tell them their pay will be docked or worse—remind them that everyone in the office is a professional, and professionals don’t punch a time clock. Make it clear that cell phone use of any sort or “surfing the net” will not be tolerated UNLESS it is business related.

The key is to be aware of the situation, bring it to the employee’s attention, specify the ramifications should they fail to modify their activities, and consistently enforce the penalty you have set. If it’s clearly a matter of policy, you take the emotion out of your reaction and simply make a good business decision.

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.

What You Need to Know About Severance Agreements

Contrary to popular belief, employers are not obligated to provide severance pay upon an employee’s termination of employment due to a layoff. If an employer does choose to provide severance pay, it should be accompanied by a severance agreement.

The most important provisions in a severance agreement are those regarding payment, non-competition, and the release of claims. In a severance agreement, the employee typically agrees to accept payment in exchange for agreeing to release employer from claims he or she may have against employer. It is also very typical for a severance agreement, like many employment agreements, to include a non-compete provision. An agreement not to compete should be reviewed for reasonableness, which will vary depending on the specifics of the situation.

It is recommended that employers offer the terminated employee a reasonable period of time to consider signing a severance agreement with a release. A release is unenforceable unless the employee voluntarily executes it, i.e., the execution is not the result of duress or coercion.

Employers should make sure to have legal counsel draft or review their severance agreement to ensure that the employer is adequately protected. Employees should consult legal counsel before signing a severance agreement to ensure that the agreement terms are fair and reasonable.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

The Impact of Reicher v SET on The Michigan Sales Representatives Commission Act

The Michigan Sales Representatives Commission Act (“SRCA”), MCLA 600.2961, (Click here to view) provides protection for sales representatives from the company he is selling for (“principal”).  The statute provides that representatives are to be paid what they are owed in a timely manner, and that intentional non-payment of commission by the principal will result in “an amount equal to 2 times the amount of commissions due” up to $100,000.00.  According to the statute, a sales representative cannot waive his or her rights under the SCRA by signing a contract.

A recent Michigan Court of Appeals ruling in the case Reicher v SET Enters, Inc (click here to view) decided that a settlement agreement between the representative and principal after the representative was terminated and had filed a lawsuit against the principal can negate the non-waiver rule.  In other words, when Reicher decided to settle his claims against the principal he signed away his rights to protection under the SCRA.  When the principal breached the settlement agreement, the statutory penalties under the SCRA did not apply.  Reicher was limited to the damages for breach of contract.

The non-waiver provision will still apply to a contract or agreement establishing or modifying the business relationship between the principal and the sales representative, but does not apply to post-termination agreements.

McNeil v Charlevoix County: An Exception to Michigan’s Employment At-Will Doctrine

On July 21, 2009, the Michigan Supreme Court ruled in McNeil v Charlevoix County, 2009 Mich. LEXIS 1572, that a local health agency had the authority to require employers to adhere to a more strict regulation regarding workplace smoking than was required under state law. In addition, the Court ruled that (a) the local regulation gave employees a private right of action to seek the regulation’s enforcement and prohibit employers from retaliating against the employee, and (b) the local regulation prohibited an employer from discharging, refusing to hire, or otherwise retaliating against an employee for exercising his or her rights under the regulation.

Among other arguments, the Plaintiffs contended that the regulation violated the common-law right of an employer to discharge an employee at will and, therefore, was void.  However, the Michigan Supreme Court rejected the argument, citing the well established case, Suchodolski v Michigan Consolidated Gas Co., and holding that an employer is not free to discharge an employee at will when the reason for the discharge contravenes public policy. 412 Mich 692, 695 (1982).

Michigan is an “employment-at-will” state.  This means that private sector employers can hire and fire employees for any reason, unless that reason is illegal.  Likewise, employees can quit for any reason.  Exceptions to this rule include when an employment contract exists or when the reason for discharge is against public policy, as was the case in McNeil v Charlevoix County.

Michigan is not one of the thirty states that has adopted smoker’s rights laws.  Therefore, while most Michigan private sector employers may be permitted to hire or fire an employee based on their smoking habits, a regulation like the one highlighted in this recent Michigan Supreme Court decision provide employees who smoke certain rights even in the at-will employment setting under the public policy exception to the Michigan at-will employment doctrine.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm. Click here to view her professional resume.

What You Need to Know About the Bullard Plawecki Employee Right to Know Act

Under the Bullard Plawecki Employee Right to Know Act, employees are entitled to review their personnel records, make copies of those records, and file written statements clarifying or protesting any documents contained in their file. An employer’s use and disclosure of employee records are regulated by this Act as well.

The following are some of the important provisions of the Employee Right to Know Act that every employer should be aware of:

(1) Employers must make the personnel records of both current and former employees available to those employees upon written request, but not more than 2 times per year.

(2) Not all records are considered “personnel records” available for review by the employee.  Only records kept and used by an employer in determining an employer’s qualifications for employment, promotions, transfers, additional compensation, or disciplinary action must be available to employee for review.  Records that are not required to be open for review include, but are not limited to:  employee references, employee medical records if available to employee by other means, personal information regarding a third party which could be an invasion of privacy, and documents related to employer staffing plans.

(3) Employers may charge that employee for reasonable copying charges.

(4) If an employee disputes any of the information contained in his or her personnel file, the employee is entitled to submit a written statement explaining his or her position.  If either employer or employee knowingly put false information in the personnel file, legal action may be taken to remove such false information.

(5) An employer is prohibited from using in a judicial proceeding any personnel record information which was intentionally not included in the personnel record, but should have been as required by the Act.

(6) Any violation of the Employee Right to Know Act by an employer is grounds for a civil lawsuit.  A court may order the employer to comply with the statute and award an employee damages, including reasonable attorney’s fees and costs.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm. Click here to view her professional resume.

The Basics of Worker’s Compensation

Workplace safety is a serious issue for all companies. For some jobs there are extreme risks involved everyday. This can be scary for employers because of potential liability.
Worker’s Compensation Laws have been in effect for nearly a century, but few employers fully understand them. In Michigan, Worker’s Compensation Laws have five major features: (1) Worker’s Compensation is mandatory for all employees; (2) Worker’s Compensation is a no-fault system; (3) Worker’s Compensation benefits are limited to workers injured on the job or because of the job; (4) Benefits available from the employer are limited to the statutory amounts; and (5) In general, Worker’s compensation is the only remedy available to an injured worker for workplace injury. This is the tradeoff for no-fault compensation to injured employees.
It is important to note that an employer cannot be sued for money damages in addition to Worker’s compensation benefits, except in situations where the employer does not have the required insurance or where the employer intentionally injures or kills the employee.
If an employer is uninsured, the injured employee is entitled to recover cash benefits in addition to any worker’s compensation benefits that the court provides.
Michigan Courts have stated that in order for injury to be deemed “intentional”, the employer must have either made a conscious decision and taken action to injure the employee based on that decision, or the employer must have had no doubts the employee would be injured by a certain activity and have done nothing to stop it. This is more than negligence or even recklessness. This high standard is seldom overcome to allow a lawsuit against an employer for tort damages.

Working Minors Must Be Supervised by an Adult, Or Serious Penalties can be Assessed

School is out and many minors are looking for summer jobs.  Employers should be aware that special rules apply when employing a minor (any person less 18 years of age).  For example, a minor may not be employed unless the employer or another employee 18 years of age or older provides supervision.  Supervision means being on the premises to direct and control the work of minors and to assist in case of an emergency.  Generally this requires the supervisor to be within sight and sound of the minor.   Even a very mature seventeen year old cannot be allowed to work without adult supervision.

Failure to properly supervise a minor in the workplace is a violation of both the Michigan Youth Employment Act and the Health and Safety (MIOSHA) standards.  A violation of the Michigan Youth Employment Act is a misdemeanor and punishable by imprisonment of not more than 1 year or a fine of not more than $500.00 or both.

Serious penalties also apply for employing minors in occupations involving cash transactions after sunset or 8:00 p.m., whichever is earlier, without the required supervision. A violation of this particular provision of the Michigan Youth Employment Act is a misdemeanor and punishable by imprisonment of not more than 1 year, or a fine of $2,000 or both.  Repeated violations may lead to imprisonment for up to 10 years and a fine of not more than $10,000, or both.

This violation of the law could also possibly lead to civil liability if a minor were injured as a result of the lack of supervision.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm. Click here to view her professional resume.

Shortening the Time Period for Discharged Employees to Bring Suit

Employees normally have three years to file a lawsuit for discrimination under Michigan law.  The Statute of Limitations for a breach of contract case is six years.  However, Michigan courts will uphold agreements to shorten the period of limitations for employment disputes.  A recent Michigan Supreme Court opinion held that an agreement to shorten the period of limitations will be enforced unless the agreement violates law or public policy.  Consequently, employers may wish to shorten their period of exposure to lawsuits by shortening the limitations period for disputes arising out of the employment context.  The Courts have approved shortening the Statute of Limitations period to as little as six months.

Employers should consider inserting a provision for a shortened limitations period in all employment agreements.  This can also be accomplished by adding the necessary language to the employment application or an employee handbook.  Employers will then be able to dismiss more claims as untimely at the pleading stage and ultimately save the business significant litigation expenses.