Jeff R Sykes (12)
Click here to print: Protecting the Employer-Employee "At-Will" Employment Relationship
By Jeff R. Sykes
In Idaho, the employment relationship between the employer and the employee is presumed to be “at will.” “At will” means the employer may terminate the employment relationship at any time, for any reason, provided the reason is not an illegal reason (e.g., age, race, gender, etc.), without liability to the employee. Likewise, the employee may terminate the employment relationship at any time, for any reason, without liability to the employer.
The “at will” relationship can, however, be changed if there is an agreement between the employer and employee for the employment relationship to last for a certain duration of time or there is an agreement that the employment relationship will only be terminated for specific reasons or cause. Such an agreement can be oral or in writing.
Take, for example, the case of Stuart MacKay v. Four Rivers Packing Co., which was decided by the Idaho Supreme Court on July 28, 2011 (2011 Opinion No. 86, Boise, April 2011 Term). In that case, MacKay alleged that his employer offered him a long-term employment contract. MacKay alleged that he and his employer orally agreed that his employment was to continue until MacKay “chose to retire.” MacKay further alleged that he informed the employer he might not retire for as long as ten years. MacKay alleged that his employer breached the employment contract by terminating his employment before he retired.
The employer denied the conversations with MacKay. The employer asserted that the employment relationship was “at will” and it had no liability to MacKay. In the end, after hearing all of the testimony, the jury believed that the most credible evidence presented was that the employer had offered MacKay employment until he retired, that the employer breached the contract, and that the employer was liable for damages and attorneys’ fees for terminating MacKay’s employment before he retired.
Notably, the employer had no employee handbook or other documentation specifying that the employment relationship was “at will.” The employer had given MacKay a written employment contract, which specified the relationship was “at will,” but the contract was never signed by either party.
There is a lesson contractors can learn from MacKay. If it is the contractor’s intent to have an “at will” relationship with its employees, it is incumbent upon the contractor to make sure the employment “at will” status is maintained and protected so that alleged oral agreements do not change that relationship.
The contractor should not rely on the presumption of an “at will” employment relationship. One easy way for the contractor to maintain the “at will” status is to provide all employees with an employee handbook which documents that the employment relationship is “at will.” The employee handbook should affirmatively state that the “at will” relationship cannot be changed by an oral agreement, and that it can only be changed through a written agreement signed by both parties.
The employee handbook should be provided to all employees and the employee should acknowledge receipt of the handbook and that his/her employment is “at will.” Employees should be required to acknowledge receipt of all subsequent changes to the handbook. Alternatively, the contractor can insist upon an employment contract signed by the employee which documents that the employment relationship is “at will.”
A contractor’s failure to protect the “at will” status of the employment relationship may give rise to an unintentional claim based upon an alleged oral agreement between the parties. Has your company done all it can to preserve its rights? If not, you may want to contact your attorney or employment law consultant for advice.
By Jeff Sykes
Meuleman Mollerup LLP Employment Law Practice Group
Over the coming months and years as the United States shifts its military focus from Iraq to Afghanistan, more of America’s employees will be involved in active military service or returning home from military service.
Employers must be aware of certain federal laws which protect an active service member’s employment while in active service and upon returning to work. One such law is the Uniform Services Employment and Reemployment Rights Act of 1994, otherwise known as “USERRA.” USERRA was passed by Congress and signed into law by President Clinton in 1994.
Under USERRA, an employer may not discriminate against a covered individual who is a member of a “uniformed service,” applies to be a member of a “uniformed service,” performs or applies to perform, or has obligations to perform services in a “uniformed service.”
Under its terms, USERRA prohibits discrimination in employment decisions, reemployment decisions, retention decisions, employment, promotion or any benefit of employment. If the employee’s involvement in military service is found to be the “motivating factor” behind the employer’s adverse employment decision, the employer is guilty of violating USERRA and subject to a claim for damages.
An employer may avoid liability under USERRA if the employer can prove that he would have taken the same action in the absence of service, application for service or obligation for service. USERRA applies to all employers, regardless of size, including federal and state governments and their political subdivisions. USERRA applies to individuals who miss work because of “service in the uniformed services” or who have been separated from service under honorable conditions.
“Uniformed services” includes the Armed Forces, the Army and Air National Guard, the commissioned corps of the Public Health Service and any other category of individual designated by the President in a time of war or emergency. “Service” includes voluntary and involuntary duties, active duty, active training, initial active duty training, inactivity duty training, full time National Guard duty or absence from work for physical examinations for performance of duties.
USERRA also prohibits the employer from retaliating against any individual who exercises his or her rights under USERRA, who testifies or makes a statement in connection with any proceeding under USERRA or has participated in any investigation. The anti-retaliation provisions of USERRA also apply to individuals who have not actually served in the uniformed services.
USERRA also has several timing provisions under which the employer must reemploy the service person within a given period of time, depending on their length of military service. USERRA also mandates that the service member may only be terminated from his or her employment for cause once reemployed during a certain period of time based upon the service member’s length of service.
If an employer is found guilty of violating USERRA, the employer may be required to provide compensation for lost wages and benefits suffered by the employee and, in the case of willful violations, liquidated damages in an equal amount to the actual damages. In addition, the successful litigant may be awarded reasonable attorneys’ fees, expert witness fees and other litigation expenses. USERRA specifically provides that no fees or court costs may be taxed against the plaintiff.
In summary, USERRA is a broad employment protection act designed to encourage individuals to participate in military service. An employer must not take any adverse employment action against an employee because of his or her military service. Employers must be aware of USERRA and its provisions when dealing with employees engaged in military service.
Meuleman Mollerup LLP attorneys have served the construction, real estate, and business communities for over 29 years. They can be contacted via telephone at 208.342.6066. More information is available at www.lawidaho.com.
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(Published in the Idaho Business Review, January 2010)
Many employment law attorneys and human resource professionals believe that under the Obama Administration wage and hour claims under the Fair Labor Standards Act ("FLSA") will receive more attention and will be pursued more aggressively than under the Bush Administration. The same professionals believe that the Obama Administration will place a greater emphasis on claims involving employers incorrectly classifying employees as exempt under FLSA; "exempt" meaning the employer is not required to pay the employee minimum wage or overtime. To reduce liability, a prudent employer should review its employment classifications to ensure compliance with FLSA.
As a general rule, all employees and employers are subject to the requirements of FLSA (i.e., an employee entitled to minimum wage and overtime) unless exempt from FLSA requirements. It is the employer's burden to prove that a specific exemption applies under FLSA. Generally, job titles and job descriptions are insufficient to exempt an employee from FLSA. Paying an employee a salary alone is insufficient to exempt an employee from FLSA. Industry practice and customs do not make an employee exempt from FLSA. Only executive, administrative and professional employees (along with other specifically designated employees set forth in FLSA) are exempt from FLSA. If the employee does not meet the specific requirements of an executive, administrative or professional employee, or some other exemption, the employee is not exempt under FLSA and the employer is required to pay minimum wage and overtime. Obviously, a failure to correctly classify an employee or group of employees could result in a claim in excess of thousands, if not hundreds of thousands, of dollars.
Determining whether an employee meets the executive exception, professional exception or administrative exception to FLSA can be tricky. To meet the executive exception, the employee must be paid a salary of at least $455.00 per week; the employee's primary duty is management of the enterprise or recognized department or subdivision of the enterprise; the employee customarily and regularly directs the work of two or more other fulltime employees or their equivalent; and, the employee must have the authority to hire and fire other employees or the suggestions or recommendations as to hiring, firing, advancing or promoting, and other change of employment status that is given particular weight.
To determine if an employee meets the administrative exception, the employee must be paid a minimum salary of at least $455.00 per week; the employee's primary duty is the performance of office or non‑manual work directly related to the management or general business operations of the employer or its customers; and, the employee's particular duties include the exercise or discretion and independent judgment with respect to matters of significance. Management or general business operations means that the work is directly related to assisting or running or servicing of the business and does not include working on a manufacturing or production line, or selling products in retail or service establishment.
Discretion and independent judgment means the comparison and evaluation of possible courses of conduct and acting or making a decision after the possibilities have been considered. Matters of significance refers to levels of importance of the work performed. Independent judgment and discretion generally means authority to formulate, effect or interpret management policies or operating procedures; carrying-out major assignments and conducting operations; performing work affecting the business operations to a substantial degree; and authority to commit the employer in matters that have significant financial impact.
To determine if an employee meets the professional exemption requirements, the employee must be paid a salary of at least $455.00 per week; the primary duty is the performance of work which requires advance knowledge in a field of science or learning customarily acquired by prolonged, specialized, intellectual instruction or requiring innovation, imagination, originality or talent in a recognized field of artistic or creative endeavor.
The failure to correctly categorize employees under FLSA can result in claims for unpaid wages and/or overtime by an employee, a group of employees or by the Department of Labor. Such claims can quickly escalate into hundreds of thousands of dollars, in addition to legal costs incurred by the employee and legal costs incurred by the employer in defense of the claim, not to mention interest owed on amounts found owing to an employee. Because the risk with misclassifying employees under FLSA is high, employers should use special care to make sure that their employees are correctly categorized under FLSA and being paid a minimum wage and overtime if not exempt from the requirements of FLSA.
Jeff R. Sykes is a partner with the law firm Meuleman Mollerup LLP. He represents businesses and individuals with legal problems and concerns involving contracts, construction, insurance, employment, and real property matters. Mr. Sykes can be contacted at 208.342.6066, or via email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . More information is available at the firm's website www.lawidaho.com .
In light of the current Swine Flu outbreak, employers should reevaluate employee health practices to minimize the contagion and spread of infectious diseases.
Although some of the media hype surrounding the novel H1N1 Flu, or "Swine Flu", has died down, the virus continues to infect more and more people each day. In fact, according to the Center for Disease Control's May 28, 2009, press briefing, influenza-like illnesses are increasing in Region 10, which includes Alaska, Oregon, Washington and Idaho. Idaho's Department of Health and Welfare reports that as of Friday, May 29, Idaho has had 17 confirmed cases of Swine Flu, 466 negative reports, and 5 reports currently under investigation.
Last week, an employer-client called with an interesting question related to Swine Flu. An employee wanted time off from work because the employee was concerned that the employee would be exposed to Swine Flu. The employee did not have any flu-like symptoms, but rather wanted time off because of the possibility of contracting the virus.
What are an employer's obligations when it comes to Swine Flu or other outbreaks or pandemics? Certainly if the employee exhibited flu-like symptoms the employee should not come to work. But does an employer have an obligation to protect its employees from Swine Flu?
Under the Occupational Safety and Health Act of 1970 (OSHA), an employer does have an obligation to provide a workplace free from serious hazards and to comply with OSHA rules, regulations and standards. An employer, however, does not guarantee the safety of its employees. Although the legal obligations of an employer with respect to Swine Flu may be limited, practical concerns such as absenteeism and workplace productivity should motivate an employer to take certain steps to ensure its employee health policies meet or exceed federal guidelines.
In order to balance the employer's obligations under OSHA with the practical difficulties of dealing with a viral outbreak or pandemic, an employer should review its employee health "best practices" and ensure that they comply with federal health recommendations. An employer should review not only its literature regarding hygiene and sick leave policies, but also its facilities and supplies (such as bathrooms, tissues, hand sanitizers, etc.). The Center for Disease Control (CDC) has information about Swine Flu on its website specifically designed for employers (http://www.cdc.gov/h1n1flu/business). For example, the CDC recommends that sick employees stay home for 7 days after symptoms begin or until the employee is symptom-free, whichever is longer, in order to prevent infection. The CDC also publishes posters regarding hand-washing and covering your cough that employers can post in employee workspaces.
Along with updating employee health best practices, an employer should also educate its employees about the best practices. The Center for Disease Control provides a PowerPoint presentation for employers on its website that includes general information about Swine Flu, symptoms, and everyday steps that can be taken to protect employee health. A meeting or presentation for employees regarding health best practices can decrease the risk of employees contracting and spreading Swine Flu and other viruses.
The best approach for an employer to take regarding Swine Flu or other viruses is to update employee health "best practices" information and educate employees about those best practices. Check the CDC's and the Idaho Department of Health and Welfare's website weekly for updates on Swine Flu and other viruses and for valuable information specifically targeted to employers.
Jeff R. Sykes is a partner with the law firm Meuleman Mollerup LLP. He represents businesses and individuals with legal problems and concerns involving contracts, construction, insurance, employment, and real property matters. Maureen Ryan is an Associate with Meuleman Mollerup. She focuses her practice in the areas of employment law, contracts, construction law, and real property matters. They can be contacted at 208.342.6066, or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or This e-mail address is being protected from spambots. You need JavaScript enabled to view it . More information is available on the web at http://www.lawidaho.com.
In the current economic climate, employers should be aware of the potential consequences of taking adverse employment action against older employees. When former employees have trouble finding the next job after being laid off or terminated, they may start investigating whether or not there are grounds for an employment discrimination claim. Age discrimination is just one of the types of discrimination that is prohibited under federal and state law.
Employees over the age of 40 are protected from discrimination under both the federal Age Discrimination in Employment Act of 1967 and Idaho's human rights statutes. Employees over 40 are protected from age discrimination in various aspects of the employment relationship, including the advertisement of positions, hiring, termination, promotions and benefits.
In order for an employee to prevail on an age discrimination claim, he or she must prove that age motivated the adverse employment action. As described by the Idaho Supreme Court, the employee's age must have "actually played a role in that process and had a determinative influence on the outcome." In other words, age must have been a motivating factor behind the adverse employment action.
An employee believing he or she was the victim of age discrimination must file an administrative complaint with the Idaho Human Rights Commission (IHRC) within one year of the alleged discrimination. An employee must file a complaint with the IHRC before filing a lawsuit in state or federal court against an employer.
Upon an employee's filing a complaint, the IHRC may try to resolve the dispute between the employee and the employer through informal action, such as meetings, letters, etc. If the matter is not resolved through the preliminary informal processes, the IHRC will conduct an investigation to determine whether or not there are reasonable grounds to believe that unlawful discrimination has occurred.
If the IHRC finds no reasonable grounds to believe that unlawful discrimination has occurred, the IHRC enters an order to that effect and the proceeding is dismissed. If, on the other hand, the IHRC does find reasonable grounds to believe unlawful discrimination has occurred, the IRHC first attempts to resolve the matter through informal means, such as mediation. If the matter is not resolved informally, the IHRC may dismiss its proceeding, enabling the employee to move forward with its claims in a lawsuit in state or federal court. In addition, the IHRC may determine to initiate its own legal proceedings against the employer.
On its website the IHRC notes that "down-sizing" is currently of particular concern to the IHRC. Many older employees are finding their positions eliminated as company's struggle to cut costs. A few years ago, an experienced employee who had been laid off may have had an easier time finding a new job at a different company. When an employee finds that new job, he or she is less likely to worry about the underlying reasons for the adverse employment action at the previous job. However, in the current economy many people are not finding new jobs, particularly the more highly compensated older employees.
Employers should be aware of the fact that employees over the age of 40 have heightened protection under the age discrimination laws. An employer with questions about whether or not adverse employment action against an older employee will result in a claim of age discrimination should contact their attorney for advice.
Jeff R. Sykes is a partner with the law firm Meuleman Mollerup LLP. He represents businesses and individuals with legal problems and concerns involving contracts, construction, insurance, employment, and real property matters. Maureen Ryan is an Associate with Meuleman Mollerup. She focuses her practice in the areas of employment law, contracts, construction law, and real property matters. They can be contacted at 208.342.6066, or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or This e-mail address is being protected from spambots. You need JavaScript enabled to view it . More information is available on the web at http://www.lawidaho.com
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So You Want To Record Your Employees’ Phone Calls…
By Jeff Sykes & Maureen Ryan
Whether the purpose is to monitor customer satisfaction or to investigate an employee’s suspicious behavior, employers need to be mindful of federal and state laws applicable to recording phone calls.
Every so often we are contacted by an employer who wants to record its employees’ phone calls. The employer’s reason for recording employee phone calls may be to make sure its employees are following the company script. Or, the employer may suspect an employee of behavior that violates company policies and wants to record that employee’s phone calls as part of its investigation. Regardless of the purpose for recording, employers must comply with both federal and state laws (including states other than Idaho) in order to lawfully record its employees’ phone calls.
Idaho’s law applicable to recording phone calls is the Idaho Communications Security Act. Enacted in 1980, this law is based on the federal Omnibus Crime Control and Safe Streets Act of 1968, which criminalizes the interception of certain communications. Idaho’s Communications Security Act makes it unlawful to intercept a phone call. Idaho has adopted the two federal exceptions to this general rule. A phone call may be lawfully recorded when: 1) at least one party to the call has given his or her prior consent to the interception; and 2) the interception was made in the “ordinary course of business.”
With respect to the second exception, federal courts have interpreted “ordinary course of business” to mean that an employer can record a phone call only so long as is necessary to determine whether the call is business or personal. Business calls may be recorded. If the call is personal, the recording must stop as soon as possible. Thus, the “ordinary course of business” exception does not permit an employer to record all employee phone calls. The ordinary course of business exception does, however, permit an employer to record calls without obtaining any party’s prior consent.
The consent exception is broader with respect to the content of conversations that may be recorded. An employer can record an employee phone call, regardless of whether it is business or personal, if at least one party to the phone call consents to the recording. Consent, however, cannot be implied, such as by a general “threat” from an employer that it may record employee phone calls. Nor can consent from an employee be found where an employee should have expected its employer to record his or her phone calls. The best practice is for an employer to obtain the actual consent of its employees to the recording of phone calls, such as with an employee handbook provision creating a general policy of recording phone calls that the employee must sign.
Not all states permit recording when only one party to the call consents. California and Michigan, for example, require ALL parties to a conversation to consent to recording. The fact that only some of the parties to the call are present in a two-party consent state does not change the requirement that all parties must consent to recording. In fact, California courts have explicitly applied their two-party consent law to out-of-state companies recording phone calls with California residents in that state at the time of the call. California’s law may be satisfied with a disclaimer at the beginning of a phone call, such as “This call may be recorded for quality assurance.”
The actual consent of the Idaho employees to the recording of phone calls may be sufficient to permit the recording of calls with Idaho residents, but all parties to a call must consent to recording in certain states. Thus, Idaho companies that conduct business in other states should be aware of those states’ laws regarding recording phone calls. Consult with your attorneys before initiating a program to record your employees’ phone calls to ensure your compliance with all applicable laws.
Jeff R. Sykes is a partner with the law firm Meuleman Mollerup LLP. He represents businesses and individuals with legal problems and concerns involving contracts, construction, insurance, employment, and real property matters. Maureen Ryan is an Associate with Meuleman Mollerup. She focuses her practice in the areas of employment law, contracts, construction law, and real property matters. They can be contacted at 208.342.6066, or at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . or This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; more information at www.lawidaho.com.
Note: The information containted in this newsletter is not intended and should not be relied upon as legal advice. If you have questions concerning specific situtations or a particular legal issue, the services of counsel should be sought.
By Jeff Sykes and Maureen Ryan
(Published in the Idaho Business Review, January 2009)
The Department of Labor’s new regulations for the FMLA become effective on January 16, 2009. These are the first significant revisions to the FMLA regulations since the law was enacted 15 years ago. The new regulations will impact all employers subject to the FMLA. The new FMLA regulations also incorporate new military family leave provisions enacted as part of the National Defense Authorization Act for Fiscal Year 2008.
Under the FMLA, covered employers must grant an eligible employee up to a total of 12 workweeks of unpaid leave during any 12-month period for one or more of the following reasons: (i) the birth and care of the newborn child of the employee; (ii) the placement with the employee of a son or daughter for adoption or foster care; (iii) to care for an immediate family member (spouse, child, or parent) with a serious health condition; or (iv) to take medical leave when the employee is unable to work because of a serious health condition.
A “covered employer” under the FMLA is any person employing 50 or more employees within 75 miles of the worksite. An “eligible employee” must have been employed for at least 12 months by the covered employer and for at least 1,250 hours of service with the employer for the 12-month period preceding the leave.
The military-specific provisions of the new FMLA regulations provide additional qualifying leave rights to eligible employees. Eligible employees working for covered employers may take FMLA leave for up to 12 weeks in the event certain circumstances arise out of a relative being called to active duty in the National Guard and Reserves. Also, under the new regulations, an eligible employee who is the spouse, son, daughter, parent or next of kin of a covered servicemember is entitled to a total of 26 weeks of FMLA-protected leave during a single 12-month period to care for the servicemember.
The more notable changes to the FMLA regulations impacting all employers include:
Serious Health Conditions: An employee meets the definition of a serious health condition if, in connection with a period of incapacity of more than three consecutive calendar days, the employee or family member is treated by a health care provider at least twice within 30 days of the first day of the incapacity. In addition, a chronic serious health condition under the act is clarified to mean that the employee has visited a health care provider at least twice per year for the same condition.
Pregnancy: The new FMLA regulations clarify that a husband is entitled to FMLA-protected leave to care for his wife who is incapacitated due to her pregnancy. The regulations clarify that leave to care for a pregnant woman is available only to a spouse, and not a boyfriend or fiancé who is the father of the unborn child.
“Perfect Attendance” and Similar Awards: The new FMLA regulations permit employers to disqualify employees from bonuses or other special payments based on a specific job-related performance goal when the employee did not meet that goal due to FMLA leave, so long as the employer does not discriminate in the disqualification of employees.
General Notice: The new FMLA regulations retain the current requirement that covered employers must post the general FMLA notice, even if no employees are eligible for leave. The required posting may now be made electronically.
Eligibility Notice: The new FMLA regulations continue to require the employer to communicate FMLA eligibility status to an employee, but extends the timeframe for an employer to respond to an employee’s request for leave from 2 days to 5 days. If an employer determines that an employee is not eligible for FMLA leave, the employer must inform the employee and list the potential reasons why the employee is ineligible.
Employees Notifying Their Employers of the Need for Leave: The new FMLA regulations require employees to comply with the employer’s usual procedures for calling in and requesting leave, except where unusual circumstances exist.
Medical Certifications: An employer now has 5 days within which to request medical certification of an employee’s need for FMLA leave due to a serious health condition. In a departure from the proposed regulations, one new provision prohibits direct supervisors from contacting an employee’s health care provider when additional information regarding medical certification is needed, apparently to protect the employee’s privacy. An employer may seek recertification of an employee’s medical condition every 30 days in connection with an absence.
Certifications for Fitness-For-Duty: The new FMLA regulations provide that an employer may in certain circumstances require a fitness-for-duty certification that addresses the employee’s ability to perform the essential functions of the employee’s job.
This is a brief summary of just some of the changes to the FMLA regulations. Employers are encouraged to review the new regulations in connection with an employee’s specific request for leave. Consult with your attorneys regarding your compliance with the new regulations, and the FMLA as a whole.
Jeff R. Sykes is a partner with the law firm Meuleman Mollerup LLP. He represents businesses and individuals with legal problems and concerns involving contracts, construction, insurance, employment, and real property matters. Maureen Ryan is an Associate with Meuleman Mollerup. She focuses her practice in the areas of employment law, contracts, construction law, and real property matters. They can be contacted at 208.342.6066, or at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . or This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; more information at www.lawidaho.com.
(Published in the Idaho Business Review, June 2008)
There is no debate that abuse of drugs and alcohol by employees, whether on or off the job, is a problem for employers. According to the Drug-Free Workplace website of the Office of National Drug Control Policy, “By industry, significantly higher rates of current drug use were reported by those employed in construction and mining [than in other job groups] (12.3%); wholesale and retail (10.8%); service—business and repairs (9%); and finance, insurance, real estate and other services (7.7%). The construction and mining industries have the dubious distinction of the highest percentage of full-time workers with “past month heavy alcohol use.” (www.whitehousedrugpolicy.gov/prevent/workplace/demog.html).
In addition to safety concerns, employee drug and alcohol abuse affects job performance and attendance. The U.S. Department of Health & Human Services states that “[w]orkers who reported past month illicit drug use were more likely than those who did not report such use to say that: they had more than three employers in the past year (5.7 percent vs. 2.3 percent), they had missed work for more than two days in the past month due to illness or injury (11.6 percent vs. 6.5 percent), and they had skipped work more than two days in the past month (4.4 percent vs. 1.6 percent).” The Office of National Drug Control Policy states that many employers believe that “. . . drug testing reduces injuries and workers' compensation claims in the workplace.” A 1995 study referred to by the Office of National Drug Control Policy found that “. . . companies engaged in random drug testing in combination with pre-employment testing reduced their mean workers' compensation claims per 100 employees per year by 63.7% over a 4-year period while the ‘control group’ of employers (employers not conducting drug testing), experienced a 19% increase during that same time period.”
In many industries, workplace drug testing is a no-brainer decision for employers wanting to maintain a safe working environment. There are many resources available to employers where they can find good, basic information concerning workplace drug testing. Initially, an interested employer should review The Idaho Employer Alcohol and Drug-Free Workplace Act, Idaho Code §§ 72-1701, et. seq. The Act establishes voluntary drug and alcohol testing guidelines for employers. If the employer complies with the Act, an employee who tests positive for drug or alcohol will be deemed to have engaged in misconduct under unemployment security laws, resulting in denial of unemployment benefits.
Some highlights of the Act include:
I. COST OF TESTING
A. The cost of testing must be borne by the employer.
B. Time spent for drug testing is compensable.
C. Re-testing is paid for by employee. [§ 72‑1706]
II. DETAILED REQUIREMENTS
Detailed requirements for sample collection and testing. [§72‑1704]
A detailed, written drug testing policy is required and must be communicated to all employees. [§72-1705]
Employee has a right to dispute and explain positive test result. [§72-1706]
Good faith reliance by employer is a defense. [§72-1711(2)]
VI. CONFIDENTIALITY
Confidentiality is required. [§72-1712]
VII. WORKER’S COMPENSATION
Possible reduction in worker’s compensation premium. [§72-716]
If an employer is going to institute a workplace drug testing policy, here are some things to be considered.
In the case of a post-incident drug test, does the employer have a policy outlining a designated person to drive the employee to the drug testing facility? A worker involved in a jobsite accident should be taken by a supervisor to the site of a post-incident drug testing facility – do not let the worker drive himself there!
If the employer is collecting random samples, does the employer have a well-established “chain of evidence” procedure set up so that the testing results cannot be disputed later because the evidence was tampered with or mishandled. Use of a reputable, certified testing company may be the best option.
(Published in the Idaho Business Review, June 2007)
Every so often we receive a call from an employer seeking advice on how to deal with an all too common problem: Embezzlement. Typically, the employer discovers that one of its employees, usually one working in the accounting department, is stealing from the company and it needs to know how to deal with the situation and prevent further thefts. Construction companies are not immune to employee embezzlement.
Consider the story reported in the Boston Globe on January 23, 2007, of a 43-year old employee of J & J Materials, a construction materials firm in Rhode Island, who, from 1999 to 2006, allegedly embezzled at least $6.9 Million from the company. The employee was an accountant and had control over the company’s expense accounts. Over a seven year period she began writing herself weekly expense checks in the amount of $2,000.00, which grew to $50,000.00 by the time she was caught. The employee would deposit the checks in her personal bank account. The employee maintained a modest home near the business; however, in neighboring locations she owned a 104-acre ranch in West Haven, Vermont, a 4-bedroom, Colonial style house in Rhode Island, beach property in Maine, and timeshares at Disney World and in the Bahamas. The employee also engaged in lavish spending that apparently went unquestioned. To cover her crime and explain her wealth, she told friends and co-workers that her husband had won the lottery. The employee’s alleged embezzlement made the company president believe the company was failing which led to layoffs and store closings.
While the Boston Globe story is extreme, it is nonetheless a problem faced by many employers. What could J & J have done to prevent or at least reduce the risk of embezzlement? The first line of defense to prevent embezzlement from happening is to make embezzlement difficult. The classic embezzlement case involves someone in the accounting department with access to business checks and who maintains the business records. Typically, the employee has little oversight and is trusted. An employer should separate accounting functions among multiple employees so there are checks on each employee’s work. The same individual should not be dealing with accounts receivable, writing checks and balancing bank accounts.
Second, random audits should be conducted. The audit should not be performed by the employees involved with finances. The audit should be conducted by an outside professional.
Third, employees should be required to take vacation so that other people must perform the absent employee’s job functions. Not surprisingly, many cases of embezzlement are discovered while an offender is out of the office. Finally, an employer should be suspicious of extravagant spending and radical changes in job performance. In the Rhode Island case, the employee was engaged in extravagant spending, throwing lavish parties and flaunting her wealth, despite a modest $40,000.00 a year salary. An employer should talk to its financial advisor about other possible preventative measures.
If your business is faced with possible employee embezzlement, an audit should immediately be performed by an outside professional to determine if embezzlement is taking place and to assess the extent of the loss. The suspected employee should not be part of the investigation. Legal advice should be obtained and a plan prepared so that an employer can maximize a recovery from the offending employee or a financial institution. In many cases, the employee has spent the embezzled money on personal items and property which can be recovered by the employer; however, if the employee is informed too early, they may liquidate or hide assets.
If the embezzlement involves forged checks or bank deposits, it is extremely important to make a claim against the banking institution immediately. There are many laws in place which limit a bank’s liability after relatively short periods of time once the bank has sent a statement to the employer. There are also short time periods in which a lawsuit can be filed against a financial institution for wrongfully processing checks or bank deposits. Finally, it is in all likelihood appropriate to take the matter to the local prosecutor so that the offending employee can be prosecuted for their crime.
Protecting confidential information, "trade secrets," may be vital to a construction company, especially if the company has a competitive advantage by using methods of construction or manufacturing processes that are not generally known by others. For many businesses, the most valuable assets it owns are the information and processes it has acquired or developed.
A trade secret can be a method, formula, device, or information that is not generally known outside of the business. It gives the business an advantage over its competitors. A trade secret is not a patent. A trade secret is protected without any formal filing, so long as the secrecy of the information is protected. The formula for a well-known beverage manufactured by the Coca-Cola Company is an example of a trade secret protected for over 100 years!
Because of the competitive advantage that is gained by keeping confidential information secret, employers typically do not want their employees divulging their confidential information to competitors. Sometimes, however, despite the most prudent steps taken by an employer, confidential information is divulged or there is a great threat that confidential information may be divulged. For example, if a key employee leaves on bad terms, there may be a threat that confidential information will be divulged.
So what should a business owner do? One tool to protect confidential information is to file suit under the Idaho Trade Secrets Act ("ITSA") (Idaho Code Section 48-801, et seq.) seeking a court order prohibiting disclosure, use or further disclosure of the information, or damages. In one case, Basic American, Inc. v. Mounir A. Shatila/Idaho Fresh-Pak, Inc., the Court awarded a $3.26 million judgment in favor of Basic American against a former employee and his new employer, Idaho Fresh-Pac, Inc., for misappropriation of trade secrets under the ITSA.
A business that seeks relief under the ITSA must establish that the information that was or may be disclosed is a "trade secret" and that the business was or will be damaged by disclosure. Under ITSA, a "trade secret" cannot be "generally known," cannot be "readily ascertainable" through proper means, and its secrecy must have been protected through reasonable efforts. Courts have held that information such as food recipes, customer lists, software codes, manufacturing processes, plans for drilling equipment, genetic information, marketing strategies, numeric equations, statistical analyses, price lists, customer information, product design information, a process to treat metal, and strategic business plans can be "trade secrets."
Three questions a business should consider to help determine if it has a protectable trade secret are:
1. Is the "trade secret" valuable to your business?
2. Has the business protected the secrecy of the information?
3. How much access to the information do employees and others involved in the business have?
To protect its "trade secrets," an employer should limit access to them. Only employees who absolutely need the confidential information should be given access. Those employees should be required to sign enforceable confidentiality agreements.
Employees with access to confidential information should be made aware of the confidential nature of the information, the importance of the information to the employer, and that the information is not to be disclosed to others and is not to be used by the employee for purposes other than to further the employerÕs business interests. If individuals outside the business are made privy to a "trade secret," they should be required to sign enforceable confidentiality agreements.
When employment ends, the employer should insist that all confidential information in the employee's possession be returned. The employer should insist upon an exit interview. During the interview the employee should be reminded of the confidentiality agreement entered into with the employer, and the employer should consider having the employee sign a document acknowledging that the employee is subject to a confidentiality agreement, has returned all confidential information, and will not disclose or use the confidential information.
An employer must consistently and uniformly enforce the rules and procedures developed to protect the confidentiality of its trade secrets. Rules and procedures that are intended to protect trade secrets are useless if not followed or are applied only selectively.
An employer should consult its attorney if it has questions about what constitutes a trade secret, or how to protect the confidentiality of the information with its employees and vendors.
Jeff R. Sykes is a partner with the law firm Meuleman Mollerup LLP. He represents businesses with legal problems and concerns involving contracts, insurance, employment, and real property matters. Mr. Sykes can be reached at 208.342.6066 or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . more information at www.lawidaho.com.