5 terms that can cause legal problems

February 13, 2014
in Employment Law,Featured Article

Layoff or firing? Probationary or “permanent” employee? Using the wrong employment-related terminology with an employee can expose your company to costly lawsuits.

Here’s a look at five of the most common examples:

1. Permanent employee

“Employment at-will” is the rule in most states. That means you can fire an employee at any time, for any lawful reason—as long as you don’t promise a job for a specific period of time. Labeling someone a “permanent employee” essentially promises a job for life, destroying at-will status.

Advice: Use “regular employee.”

2. Layoff

Use “layoff” only when you end an employment relationship due to lack of work. If employment ends for any other reason, call it a “discharge.”

The difference matters. If the unemployment office is told the employee was “laid off,” even though you fired him for theft, the employee could be deemed eligible for unemployment benefits … a part of which you will have to pay. Even more costly is misusing the term when dealing with a government agency investigating a discrimination charge.

3. Independent contractor

Misclassifying an employee as an independent contractor can cost you back-pay awards, workers’ compensation, tax liabilities—and employment discrimination rulings.

Determining a worker’s status as an “independent contractor” or “employee” hinges on various factors. Most important: degree of control. The more control you exert over someone’s schedule and duties, the more likely he’s an employee.

4. Exempt employee

Exempt workers are not eligible for overtime pay, nonexempts are. The government has rules, albeit confusing ones, that try to help you decide which bucket to put each worker in.

When determining exempt or nonexempt status, look at the actual work performed, not the job title.  Nor does it matter that you pay someone a salary. Receiving a salary does not define an employee’s exempt status.

5. Disability

Is an employee who qualifies for short-term disability insurance or workers’ compensation benefits considered “disabled”? Is an employee who has frequent migraine headaches disabled? Depending on the facts, the answer could be yes.

Unfortunately, there is no laundry list of medical conditions that qualify as disabilities under the federal ADA. If an employee qualifies as disabled, your company must make “reasonable accommodations” for that disability, which may include anything from new furniture to a new schedule.

Don’t guess at whether an employee has a disability. And never informally refer to a worker as “disabled.”

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