Rush on Business : Iowa Corporate Lawyer & Attorney : Rush Nigut of Brick Gentry Law Firm : Serving Des Moines, Cedar Rapids, Davenport, & Sioux City

 The U.S. Supreme Court recently handed down a decision in Gross v. FBL Financial Services. The Court ruled that a plaintiff bringing a claim under the Age Discrimination in Employment Act (ADEA) must show by a preponderance of the evidence that age was the "but for" cause of the employer's adverse employment decision, and that an employer need not show that it would have made the same decision regardless of age, even if the employee produces some evidence that age may have been a contributing factor in the decision. Accordingly, plaintiffs must now prove that age was a factor in a decision. The burden of proof no longer shifts.

The case is widely viewed as a big win for employers but some employment lawyers, like Daniel Schwartz, believe employers should largely ignore the decision. Daniel says that while it will be "technically" harder for plaintiffs to establish a claim, it is only marginally so, and he also expects "corrective" legislation at some point.  From a practical perspective he does not see a huge change in the way employers will defend age discrimination claims or the way in which plaintiffs will bring those claims.

Ross Runkel of Law Memo says it is the biggest employment law case of 2009 and considers it a big surprise because the issue decided by the Court was not briefed and argued. But, like Schwartz, he too expects action from Congress so the impact may be short lived.

Read the decision here.

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 According to the Wall Street Journal, Iowa-based Casey's General Stores agreed to pay $11.7 million to settle two class action wage lawsuits.  

According to the Department of Labor and industry experts, it is believed that 70 percent (or more) of businesses are out of compliance with wage and hour laws. How can your business help avoid wage and hour lawsuits? See my previous post on the topic here.

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I'll be speaking about the dangers and pitfalls of the electronic workplace this afternoon at the Iowa Employment, Training and Benefits Conference sponsored by HR-One Source. 

Matt Brick and Doug Fulton of Brick Gentry are also presenting at the conference.  Matt is providing the employment law update and Doug will present on FMLA basics. 

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A few weeks ago I attended a conference relating to venture capital in Iowa. During the talk several of the panelists commented that they would not sign a non-disclosure agreement prohibiting them from discussing a potential business idea they learned about from someone seeking capital. The venture capitalists did not want potential liability for ideas that they might hear several times in a week. Almost every single panelist indicated that sliding a non-disclosure agreement over the table at the beginning of the meeting was a deal killer.

That discussion led into a great discussion involving non-compete agreements and employee non-solicitation agreements. The participants had mixed feelings about non-compete agreements. It is often tough for entrepreneurial types to admit that restricting another person from competition is a good idea. However, all were committed in the importance of employee non-solicitation agreements. An employee non-solicitation agreement prevents one of your employees from hiring one or more of your employees for a set time period, generally about 1 year.

In the end the panelists believed that the human capital was critical to the success of the business, perhaps even more so than the clients themselves. An interesting take indeed. 

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This is a guest post from Mike Colwell, Executive Director of the Business Innovation Zone (BIZ).

Why bother doing a background check on a potential employee?  Well, not too long ago a friend of mine did not and ended up with a new credit card in his business’s name he knew nothing about.  By the time he found out, there were thousands of dollars in charges and a mess to deal with.  This day and age you need to check the background of the people you plan to hire.  At a minimum do a local criminal background check.  Consider asking the applicant to sign a form giving you permission to do the background check. Even if the information is public just asking permission may provide for an interesting discussion.  This is especially important when hiring someone for an accounting or other financial job.  In this case you may want to consider a national criminal background check.

How do you go about doing these types of checks? Here in Des Moines, I turn to my friend Katie Roth at Portico HR. Any good HR agency should be able to either directly assist you or provide you with an online or local resource that is reputable. Now more than ever, it is important to hire wisely and protect your business from fraudulent activity.

BIZ is a community sponsored non-profit business accelerator designed to provide economic growth in Central Iowa through the development and expansion of entrepreneurial enterprise. 

From Rush:  Interested in writing a guest post for Rush on Business? Please contact me at rush.nigut@brickgentrylaw.com.  

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A terrific post from employment attorney Ellen Simon discusses the potential liability and hazards when an employer accesses the personal emails of an employee. The actions of the employer described in the post were extreme but every employer should think twice before accessing an employee's personal email.

I have discussed the dangers of the electronic workplace in several presentations over the past several years including last year for the Central Iowa SHRM Chapter. I'll be giving a similar presentation at the upcoming Iowa Employment, Training and Benefits Conference on April 21, 2009. The conference is sponsored by HR-One Source. If you are an employer in Iowa, we hope to see you there.

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Read my post on IowaBiz for More on Twitter in the Workplace. Twitter is a micro-blogging application that is quickly becoming the new "thing" for business networking and marketing. Chances are you may already have an employee in your business on Twitter. Don't get left in the dark.

Don't believe it's a big deal? Then why are people like @ChuckGrassley and @LanceArmstrong using Twitter?

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 The State of Iowa recently announced that it intends to step up efforts to enforce independent contractor misclassification. It is anticipated these enforcement efforts could bring in millions to the state coffers.

For more information on this topic please see my recent post on IowaBiz and another post from August of 2007 warning about independent contractor misclassification.

See also this article on how to avoid misclassification of independent contractors. 

It is more important than ever for businesses in Iowa to understand the differences between employees and independent contractors.

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Twitter is one of the hottest social networking tools. President-elect Barack Obama even used it during his recent campaign. But is it a good idea to allow Twitter in the workplace?

Read my post on IowaBiz to learn more.

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Good article on IowaBiz regarding insurance for employee lawsuits.  Most businesses would be smart to explore this type of insurance coverage, especially in today's slumping economy.

I think many small businesses are under the mistaken believe that they are covered for employment lawsuits through their ordinary business liability coverage. This is usually not the case.  You will need to purchase a specific policy relating to employer practices in order to be covered. In addition, employer practices liability insurance policies vary greatly so be sure to carefully review the covered items with your insurance agent and lawyer.  Find a policy that provides comprehensive coverage.

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UCLA professor Samuel Culbert says to get rid of the employee performance review. But to protect your business I say you better not do that any time soon. Find out why in my post over on IowaBiz.com.

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It has taken longer than I had hoped but my November goal is to lauch the Interactive Learning Environment for clients and others interested in employment law compliance and training, franchising basics and starting up your business.  Our initial free program will include a Legal Guidebook on Starting Your Iowa Business.  Gradually, we will release more and more content on the important issues that impact your business. One of my partners, Matthew Brick, will be a major contributer on employment law issues.

My introductory video is complete so I need to get moving on the programs. Due to time constraints with work load and this project, followers should expect blogging to be very light over the remainder of the month. I appreciate your loyal support to this blog and I encourage you to give our ILE a try when its finished. 

A special thanks to the guys at createWOWmedia who have been so invaluable in getting the ILE project off the ground. Stay tuned for the finished product and I look forward to your comments once we are up and running.

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Congress recently passed the amendments to the Americans with Disabilities Act (ADA) that will go into effect January 1, 2009.  It is anticipated President Bush will sign the law soon.

Read all about the new ADA amendments on my blog post for IowaBiz.

Update:  President Bush has now signed the law. 

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The Midwest Small Business Conference is now set for October 10 & 11, 2008 at the Des Moines Marriott.  This event is rescheduled from the previous announcement on this blog because the original date conflicted with the Iowa-Iowa State football game. (Conference organizers learned that not even business gets in the way of football).  Fortunately the conference was able to pick up a new date and additional speakers.

I will be speaking on how to keep your business out of court.

Click here for a lineup of the conference speakers.  We hope to see you there!   

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Here is a quick look at the Obama and McCain platforms regarding workplace issues.

Hat tip to Mark Toth and hisManpower Employment Blawg for the link.

I hope to follow this up with a "no spin" look at candidates' platforms on small business issues.

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It's so simple.  Everybody knows you get agreements in writing, right?

Then tell me why so many people ignore this most important axiom in the business world.

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Twice a month I blog for IowaBiz which was acquired by the Des Moines Business Record this summer.  Since that time it appears the bloggers have stepped up their game.  The posts have been informative and entertaining.  I encourage you to take a look.

My post today for IowaBiz centers on the trend of hiring outside law firms on a non-billable hour basis.  It's a trend I embrace and use frequently in my law practice.  Similar to the law firms mentioned in my post, I have already provided outside general counsel services to certain business clients based upon a mutually agreeable fixed monthly fee.  These clients receive a fixed monthly bill and do not receive bills for phone calls and overhead costs such as copying and postage.  I also have performed certain projects such as incorporation and LLC formation on a fixed rate and have also done so with contract review and writing.  No, I have not completely eliminated the billable hour from my practice but would love to do so.

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Great post from Susan Reid on the Small Business Trends Web site on the 15 Ways the Olympics Exemplify Success for Small Business Owners.  In the comments of Reid's post, Anita Campbell has some terrific words about West Des Moines, Iowa's very own Shawn Johnson.  Johnson definitely made us all proud with her amazing attitude and fantastic performance.

But I'll add one to Reid's list:

Be Honest.  Although you may initially capture the gold it certainly won't be worth the consequences if you are caught being dishonest.  It includes your dealings with the IRS, customers, suppliers, employees and business partners.  The dishonest small business owner will likely get sued, or worse, end up being prosecuted.  And with the Internet it is very hard to keep your reputation quiet.

photo of Shawn Johnson in butter at the Iowa State Fair on Flickr by Iowaarcheryboy.

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The Ohio Employer's Law Blog earns a gold medal with its Olympic-themed Blawg Review #172.  Jon Hyman's review has some great blog posts from lawyers across the country,  both in and outside of employment law.  Be sure to read it.

Thanks to Jon for including my post on the real reason the Packers traded Brett Favre.   

photo on flickr by Marc van der Chijs

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"How could the Packers trade him?"

"What were the Packers thinking?"

"I just don't understand it?"

I am writing to shed some light on this decision.  Favre turns 39 in October.  That means next year Favre would have entered a protected class for the purposes of age discrimination when he turned 40.  Sure, Favre may have had a decent season with the Packers this coming year (although he most assuredly will not for the Jets), but what about the following year?  Seriously, how many years does this guy have left?  Eventually he would have been benched in favor of a younger quarterback.

So Aaron Rodgers (age 24) steps into the role of starting quarterback now.  Rodgers may be untested but it makes perfect sense.  Trade Favre now and avoid the unpleasantness of an age discrimination claim by the all-time passing leader later.

So quit blaming the Packers' president or general manager for this fiasco.  Everybody knows the lawyer is to blame.  

photo on flickr by *Jame*

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In this morning's paper I noticed that Dear Abby a/k/a Jeanne Phillips dispensed a little advice concerning the sexual harassment of "Millie". 

While I didn't have major problems with the advice in the column ("Dear Abby" thinks Millie should report the inappropriate behavior by one of the firm's clients to her boss), I wondered why "Dear Abby" wouldn't also mention that "Millie" should consult the advice of an employment lawyer.  Perhaps an employment lawyer would inform Millie about the need to follow the steps outlined in any employment handbook when reporting the harassment and her rights and responsibilities in the event that the employer does nothing to investigate or stop the harassment.  This includes the fact that Millie may need to file a civil rights claim if she intends to pursue any legal action. 

Just a thought but I always think it is important to get information and advice from someone that actually might be able to help you.  Many lawyers will provide a free consultation or work on a contingency in plaintiff's cases, so you shouldn't be afraid to seek the advice of a lawyer when the situation calls for it.

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Washington employment lawyer Donald Heyrich details some recent huge verdicts against employers.  The verdicts in his report range all the way up to a whopping $47 million.

Looking to avoid big verdicts?  I say treat employees with RESPECT and keep in mind the Golden Rule of Employee Relations:  Fairness.  Unfortunately too many employers forget these basic rules.

It is critical to remember that in a jury trial your jurors are likely to be employees rather than employers.  Being fair will not only reduce the employment claims against you but increase your chances of success if you are sued.

photo on flickr by benleto

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Many Iowa business owners think the new Iowa SmokeFree Air Act only applies to bars and restaurants.  Not so!

Check out my post today on the Des Moines Business Record's IowaBiz site for more details.

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Employment law guru Mark Toth has some very helpful "cheat sheets" covering the Family Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA) and the Age Discrimination in Employment Act (ADEA).

Mark says there are more cheat sheets to come.  Also, you would be smart to attend his free Webinar on July 30th for Every Employment Law in 60 Minutes or Less.

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Liz Overton recently discussed the latest blow suffered by Wal-Mart on wage and hour claims over on the Iowa Law Blog.

I predict It's only a matter of time before wage and hour class action claims impact more mid-sized and smaller companies.  It's the one area where plaintiff's attorneys are experiencing success.   

Read also my previous post on how to avoid wage and hour lawsuits including some great comments from top notch attorneys like Dan Schwartz, Anthony Zaller and Bill Grell.

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With the help of Doug Mitchell and Andy Brudtkuhl I will be going live with an Interactive Learning Environment to complement this blog very soon.   The Rush on Business Legal Wire will focus primarily on employment law, franchise due diligence  / investigation issues and business purchase or sale considerations.  I also hope to attract top speakers to participate in the process.  The online seminar presentations will include in-depth written materials, audio presentations, podcasts and possibly video.

Forums will also be available for you to share your insights and ask questions.  Similar to the blog format, I won't be able to answer questions regarding specific situations but we can discuss topics generally.

I welcome your comments and suggestions on topics you would like to hear more about.

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Don't forget that Iowa's smoking ban in public places starts July 1, 2008.  If you are a business interested in learning more about compliance with the new law please visit the Iowa Department of Public Heath site at www.iowasmokefreeair.gov.

An informative Q & A concerning the smoking ban is available here.

Bar owners in particular are upset about the new law.  Is a challenge in the works?

photo on flickr by greefus groinks

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Employers have an obligation to prevent sexual and other forms of harassment in the workplace.  Unfortunately some employers are under the mistaken belief that their sexual harassment policy adequately covers them.  Here are some common mistakes I have noticed while conducting employment compliance reviews:

• The written policy against harassment doesn't include an anti-retaliation provision for those employees who report harassment.
• The written policy does not provide and communicate in writing multiple channels for the complaint procedure. Employees should be able to report harassment to more than one person within the company. The complaint process should be clearly defined in your employment manual.
• Supervisors are not trained each year and supervisors are not required to report harassing conduct.  Consequently employers often miss out on a possible defense in any lawsuit.
• Once notified of harassing conduct  employers fail to take immediate action to investigate.  Employers have the attitude that the employee must "deal with it."  Complaints of harassment are often not taken seriously.
• Offenders are not disciplined or terminated as appropriate.

Commit these mistakes at your peril.

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Nascar has been sued by a former technical inspector in the Nationwide series.  The African-American woman seeks at least $225 million in her claims for sexual harassment, racial and gender discrimination and wrongful termination.  In the lawsuit, she alleged she was referred to as "Nappy Headed Mo" and "Queen Sheba," by co-workers, was often told she worked on "colored people time," and was frightened by one official who routinely made references to the Ku Klux Klan. In addition, she claims male co-workers made sexual advances, two of whom allegedly exposed themselves to her, and graphic and lewd jokes.

If true, those claims are indeed strong evidence of harassment and discrimination.  But what's worse is that her supervisor allegedly ignored her complaints and dismissed by saying that the guys were "former military guys" with a rough sense of humor and that she would just need to "deal with it".  Now, Nascar must "deal" with a huge lawsuit.  And in case they didn't notice, this predominately white and male sport is a fairly easy target in a case of this nature.

Nascar should have heeded several of my tips on how to avoid employment lawsuits.  Th two that quickly come to mind are to treat all employees with respect and to take action promptly to investigate when complaints occur.  If you are a supervisor in an organization where harassment or discrimination is suspected you had better not tell the employee to simply "deal with it".  That's going to get you sued every time. 

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In the film Evan Almighty everyone believes Evan has lost his mind when he begins building an ark next to his home to protect against an upcoming flood.  Right now, in Iowa, no one would proclaim him crazy.  Our recent flooding has once again wrecked havoc to homes and businesses throughout Iowa.  

So how do you build an ark to protect yourself from continually rising employment lawsuits?

1.  Treat Employees with Respect:  Seems like a basic philosophy but it is amazing how many employers forget to treat their employees with respect.  Employees that are humilated or treated in a disrespectful way are much more likely to sue your company. 

2.  Communicate with Your Employees:  First, make sure you have an effective employee handbook with up-to-date employment policies and publicize your policies to employees.  Make sure you follow your policies.  One of the easiest ways to land in an employee lawsuit is the failure to follow your employment policies.  Also make sure you have an open door policy where employees are allowed to voice their concerns or complaints.  Do not let complaints fester.  Deal with them right away.

3.  Implement an Effective Unlawful Discrimination and Harassment Policy:  Your harassment policy should include more than just sexual harassment.  There may be other forms of harassment based upon race, religion, age or disability.  It is also critical to consistently train employees and supervisors regarding unlawful harassment and discrimination.  You should consider training employees on harassment and discrimination issues at least once every year.

4.  Document, Document, Document:  The importance of good record keeping cannot be overstated.  If you don't have something in writing, chances are a jury or judge may not believe it happened.  Be sure to document even verbal warnings and maintain an appropriate personnel file in order to make sure the documentation is not lost. 

5.  Conduct Honest Employee Evaluations on a Regular Basis:  Unless your company is headquartered in Lake Wobegon every employee is probably not above average.  Evaluations can be valuable proof in an employment lawsuit.  Make sure poor performance is properly documented.  Otherwise, the judge or jury will not believe you when you say the employee performed poorly but all their evaluations are excellent.  You should conduct the evaluations on a regular basis, usually at least once per year.  I recently represented a client sued for discrimination.  A key in defending the case were the honest performance appraisals performed b management.

6. Do Not Retaliate:  Employers are often blindsided by retaliation claims.  There are a number of proactive measures you can take in order to avoid liability for retaliation claims.  It is important to avoid retaliation because recent cases have lowered the burden for plaintiffs to prove their retaliation claims and the number of retaliation claims from plaintiffs is continually on the rise.

7.  Take Action and Investigate Promptly: If a complaint arises, make sure you take the complaint seriously and investigate promptly.  A quick and thorough investigation may help eliminate problems before you have a real mess.  You will need to consider who should conduct the internal investigation.

8.  Compy with Wage and Hour Laws:  Ensure your exempt employees (i.e., salaried employees) are properly classified as exempt under the law.  Wage and hour claims are also on the rise and could result in a class action against your company.  This is a common area of the law that is ignored by many employers and could result in significant liability.

9.  Review and update your employee handbook and/or policies:  At least you should review your policies to incorporate any changes in the law or your manner of doing business.

These simple steps will go a long ways to reducing employee lawsuits.  To ensure that your company has done everything it can to avoid employee lawsuits, you should have your employment policies, training and practices reviewed by your employment lawyer.

*This post originally appeared as the Seven Ways to Avoid Employee Lawsuits from January of 2007 but this updated version is worth repeating.  It also includes some ideas from Anthony Zaller of the California Workforce Resource Blog who had commented on my original post. 

Photo on flickr by Whisper Photograhy.

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Glad to see my friend Mark Landa blogging over on the Iowa Law Blog.  Mark has an important reminder that the time for filing a civil rights complaint under Iowa law will be extended from 180 days to 300 days in order to conform to the federal timeline.

Iowa employment lawyer Victoria Herring points out on her blog that it is not a good idea to push deadlines but the extended time frame will allow complainants (and employers) and additional time to work out a resolution or gather evidence for claims.

The new Iowa law goes into effect July 1, 2008.

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This past January I posted on an Iowa immigration bill that targeted employers.  The bill sparked significant debate but was not passed.

Now in the wake of the raid at the AgriProcessors slaughterhouse and packing plant in Postville, Iowa, Iowa's legislative leaders are renewing promises to target employers.

This time legislative leaders will introduce legislation to prevent employers from hiring immigrant workers as independent contractors when they should be considered employees.  It is also anticipated the legislature will renew efforts to create sanctions on employers that knowingly hire undocumented workers.

I have written on the issues relating to employees and independent contractors on several occasions.  The issue of whether a worker is an employee or independent contractor is one of the most misunderstood (or should I say ignored) areas of the law.  The proposed legislation is likely to crack down on the use of illegal immigrants serving as independent contractors in the construction industry. 

In my experience a significant percentage of workers in the construction and other industries are misclassified as independent contractors rather than employees, not just illegal immigrants.  For most companies I would argue it's more about saving on payroll taxes and workers' compensation insurance than hiring undocumented illegal immigrants.    

As I have said in the past, the approach of misclassifying workers as independent contractors is not worth the risk.  The safest course is to treat workers as employees if the workers' status as an independent contractor could reasonably be questioned. 

If you have questions about whether to treat workers as employees or independent contractors be sure to consult with an employment lawyer.

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My most recent post on Love Contracts received some link love from the Wall St. Journal and Law.com's Legal Blog Watch.  It's nice to get a little recognition now and then from the heavyweights.

Be sure to check out employment lawyer Mark Toth's blog that was the source of my post.  He has one of the most informative and creative employment law blogs around.

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Mark Toth of the Manpower Employment Law Blog has an interesting post on "hooking up at work" and whether love contracts are a good idea.  This is where co-workers sign a contract in order to protect the company and the employees involved against sexual harassment or other discrimination charges.  Mark says he doesn't think the agreements are necessarily a good idea because it forces the company to become the love police and subordinates may claim that they were forced to sign such an agreements under duress when a superior is involved.

Other employment lawyers quoted in the Newsweek article featuring Mark believe the love contracts may be a good idea.  However, I tend to agree with Mark.  Sure certain office-romance relationships may start out consensual but it can quickly turn to harassment when one of the lovers calls it quits and the other won't give up the pursuit.  I tend to believe that the changed circumstances and conduct that occurred after the relationship broke off still opens the company up to liability - love contract or no love contract. 

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Former general counsel and small business owner, Anita Campbell, offers sage advice in her post on the Build a Solo Practice Blog about how to write a better contract .  What is the better contract in Anita's view?

1. First and foremost, the better contract protects the client.
2. The better contract is written in plain English.  (A novel concept indeed!)
3. The better contract is written for a 12th grade education or lower.
4. The better contract incorporates standardization.

A word of caution concerning standardization of contracts:  Clients will often take a standardized contract and fail to adapt it appropriately for the current business transaction.  Clients should be reminded that it is a good idea to have the business lawyer review the agreement to make sure it adequately protects the client in the current transaction, contains the actual terms of the current transaction and fulfills the goals of the current transaction.  I can't tell you how many times I have seen the embarassing situation where a business person took a standardized contract and failed to revise it appropriately for the situation.  It happens often when people pilfer agreements from the Internet and fail to modify the terms.  If litigation occurs, the result of this carelessness could be a verdict against the client.

Anita's solution involves providing a set of instructions to the client along with the standarized contract.  Included in the instruction sheet is the direction to have the business manager consult the corporate lawyer before signing or implementing the agreement.  This may work well with organizations that have in-house counsel but is probably less intuitive for businesses with outside counsel.  I offer the reminder to always have contracts reviewed by your business lawyer.

Hat tip to Susan Cartier Liebel and her Build a Solo Practice Blog.  Susan is passionately building one of the best blogs in the country.  Notice I didn't limit it to legal related blogs either.

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In a recent blog post, Daniel Schwartz of the Connecticut Employment Law Blog reminds employers just how important it is to notify insurers under their employment practices liability insurance.

This advice is not just critical in the employment context.  It is vital for every type of insurance your business may have.  If a claim occurs be sure to notify your insurer immediately.  The failure to do so may result in a denial of coverage.

Thanks to Daniel for the reminder.

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VIctor Aspengren on the IowaBiz site has a great article about  focusing on the behavior rather than the person in employee terminations. 

Super advice.  Be sure to read it.

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Come join Brick Gentry attorneys Matt Brick and Douglas Fulton for the 2008 Iowa Employment Law Conference sponsored by HR OneSource at Prairie Meadows on April 23rd.  There will also be speakers from the Department of Labor, Director of Veteran's Employment and Training Service, and a Committee Chair to the International Association of Chiefs of Police.

By the way, be sure to check out Matt Brick's new Iowa Lawyer blog.  He is off to a great start with some interesting topics.

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In last week's Tip of Week (yes, I am a little behind), John Phillips of the Word on Employment Law raises the interesting perspective that it is possible to overdocument in employment cases.

Some of John's warnings on overdocumentation include:

• Documentation on trivial matters.
• Creating a paper trail right before an employee is terminated.
• Documenting conduct or performance issues for an employee when you have not done the same for others.
• Summarizing in a document right before an employee is terminated all the things you wanted to document when the conduct occurred but didn't.
• Preparing documentation after the employee is terminated.

Granted, John's point is well taken.  It is important to be fair and consistent in the documentation of employee performance and conduct.  Employees should be treated in a consistent manner and it is best to document performance and conduct as it occurs. 

However, I am not sure I necessarily agree that it is best to go forward without any documentation at all when the documentation has not been done right away.  It depends on the circumstances.  There are times when a summary of events written after the fact may be helpful.  Much of this also depends on the way the document is written.  And of course I would never advocate that anyone fabricate evidence.  

Please consult your employment lawyer for advice in a particular situation.   

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Today I will present at the Central Iowa SHRM monthly meeting located at Copper Creek Golf Course on electronic workplace issues. The electronic workplace is all around us. Computers, voice mail, internet, intranet, e-mail, fax machines, laptops, PDAs, videoconferencing, social media, blogs and more are common features in the American workplace. The development of the electronic workplace has not come without legal implications. The same technology that allows us to perform work more efficiently creates several twists on several areas of employment law. We will explore many of the dangers and pitfalls in the electronic workplace:

I. Email

• Discovery in Litigation
• Record Retention
• Discrimination, harassment and other concerns

II. Internet

• Accessing Inappropriate Material
• Social Media and Blogs
• Copyright violations

III. Employee Privacy Rights

• Electronic Communications Privacy Act
• Handbooks - lower expectation of privacy
• Consistency

IV. Telecommuting

• ADA
• Workers' Compensation

V.  Employment Ads and Resume Posting on Internet

Program details:  Tuesday, April 8, 2008 at Copper Creek Golf Course, 4825 Copper Creek Drive, Pleasant Hill, Iowa.  Registration begins at 7:15 a.m. Business Meeting begins at 7:40 a.m. Program begins at 8:00 a.m.

1.0 General recertification credit has been pre-approved.

Thanks to the Central Iowa SHRM Chapter for the invitation.

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The Des Moines Register had an article about how support has poured in for a Pizza Hut Delivery driver that was suspended from work after he shot an alleged armed robber.  The employee had a valid handgun permit but a Pizza Hut human resources representative indicated that employees are not allowed to carry guns "because we (Pizza Hut) believe that is the safest for everybody."

I saw a clip where the delivery driver spoke with the TV media and he was obviously shaken by the incident.  He said he appreciated the fact his employer had given him the time off without automatically taking action against him. 

I know many readers on the Register blogs have been critical of Pizza Hut but they appear to be handling this difficult situation rather cautiously.  They have not terminated the driver at this time but rather have suspended the employee pending an investigation. 

Public opinion is definitely in favor of the driver.  Even a state senator has publicly stated his position that the company would be wrong to fire the driver and vows to stop buying Pizza Hut products if the driver is fired.  So this is a tough one for the company and there are no easy answers.  I don't envy the employer's position on this one. 

Ultimately I suspect the employer will enforce its policy but I will let you know as this unfolds.

photo on flickr by hashcakes.

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Pennsylvania employment lawyer Michael Moore has an excellent post on Five Things Every HR Generalist Should Know about Retaliation Claims.  Michael notes that the number of retaliation claims rose 18% in 2007 to a record high, doubling since 1992.  His post covers the following areas:

• What is unlawful retaliation?
• What is "Adverse Action" by an employer?
• What is "Protected Activity by an employee?
• Promptly investigate comments & complaints regarding discrimination.
• Monitor supervisors for adverse action following an employee complaint.

In my experience, employers are usually cognizant of discrimination and harassment claims. However, they are often blindsided by retaliation claims. The successful resolution of a discrimination or harassment complaint means you are only halfway home. Supervisors and employees must not retaliate against the employee who complained. This is especially important because of a United States Supreme Court decision lowering the burden for employees to show retaliation.

Here are some proactive measures employers can take in order to avoid retaliation claims:

1. Make sure your employee handbook includes a policy prohibiting retaliation.
2. Always have alternative reporting avenues.
3. Conduct supervisor and management training on harassment, discrimination and retaliation. 
4. Make sure supervisors and management have been asked the tough questions when it comes to employee discipline. Make sure the discipline has nothing to do with the complaints of harassment, discrimination or retaliation. 
5. Periodically talk with the complaining employee to determine if anyone has retaliated against them. If performance is an issue for the employee be sure to bring this to the attention of the employee and make sure to document your conversations. Document! Document! Document!

As always, be sure to consult your employment lawyer for advice in specific situations.

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I read a Des Moines Register article this past week on a young man who is starting a business while employed by another company.  According to the SBA deputy director in Iowa this happens frequently.  I must say that I greatly admire anyone who has the courage and desire to start their own business. But my question is whether this is good for employers?

This is not an easy question.  On the one hand it is important for an employee to grow and allowing an employee to create a business on his or her own time may in fact create a more productive and happy employee.  Particularly if the employee is starting a business that is different than the employer and they do it on their own time there may be no harm.

On the other hand, an employer pays an employee to do their job.  The employee's allegiance should be to the employer as long as that employee is receiving wages and other job benefits, right?

I must confess that I am not sure whether there is a right answer and it probably depends on the circumstances.  I am aware of many successful companies that draft policies that prohibit outside business activities while many other successful companies provide an environment that encourages employees to start their own companies.

One important risk in allowing employees to start businesses while on the employer's dime is the potential for the employer to start a similar business and steal clients.  This should be prevented.  One way to do this is with a non-compete agreement.  Other ways employers can protect themselves is through the use of confidentiality and non-solicitation agreements. 

But employers may want to read this article on what to do when an employee betrays you.  Unfortunately, many employees are not as upfront and honest as the young man in the Register article.  Employees have a legal obligation to act in the employer's best interests.  If an employee breaches this duty an employer may have an enforceable right.

Photo on flickr by Burpee Gardens.

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Today is my last day with the Sullivan & Ward law firm.  This coming Monday I am taking a hop, skip and a jump over to the law firm of Brick Gentry, P.C. in West Des Moines, Iowa.  This is actually almost literally true as the Brick Gentry law firm is located across the parking lot just to the west of my current office location. 

It is difficult to leave my friends at the Sullivan & Ward firm but I am excited by this new opportunity.  Brick Gentry is a growing law firm with an excellent reputation in the Des Moines legal community for over 40 years.  The firm now consists of approximately twenty-five lawyers practicing in a wide range of areas including business law, municipal law, health care law, employment law, litigation and real estate.   

I'll join the firm as a shareholder and continue to work with my current business law clients and litigation matters.  Rush on Business will also continue although you will notice some changes to the links and contact information on the blog in the next couple of days. 

My new contact information is:

Rush Nigut, Brick Gentry, P.C., 6701 Westown Parkway, Suite 100, West Des Moines, IA 50266.  Phone:  515-274-1450; Fax:  515-274-1488; email:  rush.nigut@brickgentrylaw.com

Thank you again to all of you that read this blog.  I appreciate your support and look forward to this next step in the journey.  Stay tuned for more because I have a few plans ahead to mix it up and enhance the blog.  I'll need to settled in but I am looking forward to working on some new challenges very soon. 

photo on flickr by phxpma

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As a blogger you may want to read this post from the Write Stuff on how to protect your online reputation. 

The post discusses how several employees have been fired from their jobs for writing controversial blog posts including a Web designer that shared stories and opinions about co-workers on a personal blog, an airline attendant who posted photos of herself in an empty jet, and the former CNN reporter who published opinionated entries on his blog.

As pointed out:

In each instance, the blogger’s justifications and legal arguments may be compelling. But that doesn’t change the fact that they all have one thing in common: Termination from lucrative positions that permanently clouds their employment histories.

The post goes on to give some great reminders including

• Blog as if your employer is watching and behave accordingly.
• Don't mix business and personal matters.
• Research company employee handbooks and/or consult HR before blogging.
• Consider what you stand to gain against what you stand to lose.
• If you are monetizing your blog check your company's conflict of interest policy.
• Blog truthfully and accurately.

Above all, whether you are blogging on a personal or business blog, you must be cognizant of whether your words and actions could damage and/or embarass your employer.  If so, you shouldn't be surprised when you receive your pink slip. 

And also always remember the shortest corporate blogging policy:  "Be professional".

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I don't know a single employer that can't use some good interview tips.  Fortunately for us Ohio Employer attorney Jon Hyman shares how to avoid hidden interview traps  and common stereotypes to avoid during job interviews.

These are great posts so be sure to check them out.

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The Electronic Discovery Blog of K & L Gates has an informative post on a recent electronic discovery decision out of the Northern District of Georgia. 

In the case the court found that deleted emails were not reasonably accessible and the defendant had no duty to search backup tapes for emails of a sexual nature.

Lessons from this decision:

1. DIscovery requests for emails should be relevent, specific and limited by time, sender and recipient.
2. Following a written document retention and destruction schedule can prevent spoilation sanctions.
3. Plaintiffs should request company-wide email perservation and not rely solely on the fact litigation has commenced.  Requests should also include the names of individuals from whom you want the emails.
4. If the costs of retrieving emails on backup tapes are too high, judges are reluctant to order production.

Read the entire decision here.

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Jon simply has one of most informative employment law blogs around.  Here are his highlights of the new regulations:

Except in emergency situations, employees will be required to follow the employer's policy for notification of FMLA leave, eliminating employees' ability under the old regulations to take up to 2 days after an absence begins to notify their employer that they intend to take FMLA leave. This change will greatly improve employers' ability to plan and schedule around employees' medical leaves.

• Employers will be able to directly contact employees' doctors when employers have questions about FMLA medical certification forms that the doctors have filled out. Employers will no longer have to go through the employee as an intermediary, or retain their own doctor to contact the employee's doctor. While this change may have some effect on employee privacy, it will greatly improve the flow of information and streamline the ability of employers to make proper decisions based on full and complete medical information. This rule will also eliminate the expense and burden of companies having to retain their own doctors simply to ensure that a form is properly filled out.
• To employers' dismay, the regulations do not change the time increments in which employees can take intermittent leave, but do require that an employee using intermittent leave use the employer's regular call in procedure except in emergencies. Thus, employees will still be able to take intermittent leave in very short increments, continuing for employers the administrative nightmare of intermittent leave, albeit with some additional notice.
• Employers will be entitled to require employees to obtain certification of FMLA-eligible medical conditions twice a year instead of annually.
• Currently, the clock under which employees accrue their 12 months of service for eligibility has no time limit, even after multiple breaks of service. Thus, if I work for 6 months for a company, and return 10 years later, I am eligible for FMLA leave after another 6 months. The new regulations place a 5-year cap on years of service for calculating eligibility, except for military or childrearing leaves, or where rehiring is covered by a collective bargaining agreement.

Please note that I often find many small employers mistakenly believe they are subject to the FMLA regulations.  Generally, the FMLA covers employers with 50 or more employees, and employees must have worked for the employer for 12 months and for 1,250 hours of service during the previous year to be eligible for FMLA leave.  So be sure not to create a situation where you are responsible for FMLA leave if you are not required to do so.

As always, seek the advice of an employment lawyer in your particular situation.

flickr photo by mahalie

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Welcome to a RAGBRAI inspired Blawg Review.  What is RAGBRAI?  The Register's Annual Great Bicycle Ride Across Iowa is an annual seven-day ride across the state.  Heading into its 36th year, RAGBRAI is the longest, largest and oldest touring bicycle ride in the world.  It's not a race.  It's an experience.   And since Blawg Review is a carnival, nothing says carnival in an uniquely Iowa way like bicycles, spandex, pork chops, pie, frivolity and 10,000 of your closest friends!

The weather in Iowa is frigid this winter.  As the weekend of this Blawg Review approaches Iowans brace for another heavy snow.  Our friend Charlie Longbrief looks at the floor below his stationary bike and dreams of summer.  A person can stand only so many YMCA spinning classes.  He thinks back to his first RAGBRAI as a twenty year old when law school hadn't yet entered his mind and the biggest celebrity on the ride was Oakland Raiders great and Miller Lite spokeman Ben Davidson.  Now it's nothing to see the likes of lawyer turned politician John Edwards or the bicycling legend himself, Lance Armstrong.  Armstrong may have participated in the famous New York City Marathon but his heart will always belong with RAGBRAI.  Listen for yourself:

Day 1:  Missouri Valley to Harlan  - 58 miles

This year's ride starts in the river town of Missouri Valley.  While performing the traditional dip of his back tire in the Missouri River, Charlie sees Liz Overton of the Iowa Law Blog who warns him that because of the $350,000 settlement in a 2004 RAGBRAI death bicyclers better beware of the new proposed legislation from the Iowa State Association of Counties.

Unfazed Charlie gets on his bike and sets out on his adventure.  But as he rides off he does ask himself whether Mad Kane is right.  Is it wise to travel with friends particularly where tents are involved?

About 15 miles down the road Charlie takes a break and starts getting an earful from New Yorker Eric Turkewitz about how State Farm has been hit with a RICO lawsuit over alleged sham medical exams.  That hasn't been reported elsewhere and Charlie worries whether State Farm might be doing the same thing in Iowa.  Charlie is so interested he and Eric ride the rest of the way to Harlan together.  Although its only the first day Turkewitz remarks that he agrees with Lance Armstrong . . . RAGBRAI is a hell of lot more fun than his beloved New York City Marathon.

As he pulls into Harlan, Charlie finds himself a little short on cash and heads off to find an ATM.  There he sees John Crenshaw who starts telling him about the biggest scams banks are pulling off everyday. Charlie just shakes his head in agreement as he pays the $2.00 charge to get the money out of the ATM.  After a little angel hair pasta its time to hit the sleeping bag.  There is a big week ahead and unfortunately Charlie isn't twenty any longer.

Day 2:  Harlan to Jefferson - 83 miles

The next morning Charlie wakes up bright and early and sets off for Jefferson.  He has some clients that are buying a business nearby and that reminds him he should heed Larry Staton Jr.'s advice to know what you are getting when you buy a trademark from an existing business.

About half way to Jefferson our city boy is a little mesmerized by the miles and miles of corn.  It makes him wonder whether Farmer David will be able to pay that large patent judgment he now owes Monsanto as reported by the Patent Baristas.

In Scranton, just short of Jefferson, Charlie sees a big group of people gathered in a park off the town's main drag.  There he sees Dan Slater of the WSJ Law Blog who explains that all the hoopla is because the M & M boys have turned their attention to the RAGBRAI water slides because the Naked Cowboy drove them outta of Dodge.  The revelers love it and the log jam causes a very slow ride into Jefferson that evening.

Day 3:  Jefferson to Ames - 56 miles

It's a big day for politicians on the way to Ames, home of Iowa State University.  Barack Obama and John McCain are expected to make appearances today.  Hillary Clinton is here too and keeps talking about how the Florida and Michigan delegates must count.  Obama shrugs it off by saying even his six year old knows it wouldn't be fair to count votes where there was no campaign.  But at least Florida has made significant strides in improving its jury system according to Juries.  While Diane Levin points out voters can learn a lot from the field of negotiation.  Eugene Volokh shares that John Mellencamp may be able to stop McCain from playing his songs after all.

All the political talk has people addressing serious issues on the road today.  Riding on a three person tandum, Leon Gettler of Sox First tells Charlie that Sarbanes-Oxley not only failed to stop the subprime meltdown, it contributed by giving investors the false confidence that they could rely on the law, and not prudence to protect their market holdings.  Scott Greenfield shares that Congress has a pending bill that may immunize banks from paying billions in dollars to a small Plano, Texas company.  Patently-O adds that although DataTreasury is not directly mentioned in the bill it is pretty clear that Section 14 is directed primarily at the company. 

As Charlie rides into Ames he sees Kevin O'Keefe and  Holden Oliver of What About Clients engaged in a heated discussion about whether corporate clients really want a lawyer that blogs.  O'Keefe says yes while Oliver says no.  It then gets a little personal when O'Keefe accuses Oliver of being someone else.  Charlie blames Teri Rasmussen who started the whole thing when she said every client should want a lawyer who blawgs.

Day 4:  Ames to Tama-Toledo - 75 miles

Charlie gets ready to head off to Iowa's version of the twin cities today.  In the pancake breakfast line he meets Connie Crosby who is kind enough to introduce him to David Bilinsky.  David tells Charlie all about how there is a great need for law firms to turn their senior partners into business leaders.  David Maister overhears them and chimes in that one-firm firms are often quite successful.

After an uneventful morning Charlie witnesses an accident on today's route where someone goes to the hospital.  It looks like the rider will be okay but David Harlow of HealthBlawg warns that hospital-acquired infections are a real problem.  Iowa estate lawyer Matt Gardner says that even if the rider makes it through he should still think about the disposition of his bodily remains.

 As he enters Tama (or is it Toledo), John Phillips of the Word on Employment Law almost runs smack into a little beagle that darts in front of him.  The incident causes John to conclude that beagles should no longer be excluded from the Animal Employment Protection Act (AEPA).  John is obviously a little excited about the near miss and starts rambling about how he handled the situation a whole lot better than Roger Clemens handled the accusations from Brian McNamee.

Day 5:  Tama-Toledo to North Liberty - 82 miles

Now that we have passed the mid-way point for this year's ride, everyone is a little loosey-goosey today.  Charlie's cadence starts to pick up as the wind blows with the sweet smell of pork chops.  That could only mean that Mr. Pork Chop is nearby.  As he pulls off the roadside to visit our pork chop hero, Charlie sees that Iowa legal blogger extraordinaire Brett Trout and his band of Iowa legal bloggers are engaging Mr. Pork Chop in a battle of wills to determine who has the loudest pork chop call.  Sadly, while Trout may be Iowa's toughest attorney he is no match for Mr. Pork Chop in this arena.  Hear why:

After a pork chop and a short nap Charlie rides along to catch up with Michael Moore who discusses risk management in employee terminations and explains sometimes the "How" is as important as the "Why".  Pretty soon both of them come across a big party along the roadside.  A crowd is gathered around Dennis Kennedy who apparently is still celebrating his blawgiversary and birthday.  During the party Tulane Law Professor Alan Childress wonders aloud whether any Iowa legal counselors had ever been in trouble like the lawyer that got into trouble with his state bar by trying to talk his way out of a ticket for deer hunting.

Still a little full from his banana cream pie, Charlie and his new friend Charles H. Green ride along at an easy pace discussing that as more and more banks and consumers walk away from loans--and contracts gone bad, we are reminded that legally binding contracts are often only as strong as the morality of those signing them.

That evening after dinner there is lots of entertainment in North Liberty.  At a concert Cathy Gellis proclaims, "I need a husband!"  The revelation causes Jon Hyman to explain what happens when office romances go bad.  But Cynthia Shapiro, who received her RAGBRAI pass from George's Employment Blawg, says you might be able to have that office romance if you know a few secrets.  When Jennifer Jaskolka-Brown overhears them she warns them that email has made it much easier to collect damaging evidence in divorce cases.

Day 6:  North Liberty to Tipton - 62 miles

Charlie decides to join the Lance Armstrong peloton this morning for some fun.  As you might expect with Armstrong the ride is a little faster paced today.  There are several others brave enough to join the pack this morning:

• Colin Samuels says he'll never say never when Charlie asks if he'll ride again but Colin sure didn't like it when he got lost on the road from Harlan to Jefferson.
• David Lat explains that the only reason he is on the ride is because his playstation didn't arrive on time.
• Daniel Solove says this is more fun than being interviewed by Money Magazine.
• Barry Barnett offers tips on how to make the ride easier when you are with him.
• Jackie Dowd contemplates what life would be like without a legal system which is maybe a little profound this late in the ride. 
• Carolyn Elefant is usually Solo by Choice but today she is content to ride with the group especially since she thinks Lance is so cute.
• Anne Reed says sometimes its better to walk this way but Charlie can't imagine a walk across Iowa. 

Day 7: Tipton to LeClaire - 55 miles

The last day!  On his ride to LeClaire, Charlie meets up with the anonymous Editor of Blawg Review to tell him the ride has been worth it.  Together they dip their front tires into the Mississippi River where Charlie quips that normally what happens on RAGBRAI stays on RAGRBRAI, but this year what happens on RAGBRAI ends up on Blawg Review!

 * Legal Disclaimer:  This Blawg Review is a work of fiction.  Names, characters, places, events and incidents either are the product of the author's imagination or are used fictitiously.  Any resemblance to actual persons, living or dead, events or locales is entirely coincidental.

Blawg Review has information about next week’s host, and instructions how to get your blawg posts reviewed in upcoming issues.  My dear friend and fellow Iowa legal blogger Brett Trout takes the helm next week.  We wish him well as he tries to best the excellence of his previous effort on Blawg Review #106.

--------------------------

 Flickr Photo Credits:  johnedwards2008, wade, blmurch, MNgilen, IaRuth, wade and artandscience

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A .300 batting average may get you into Major League Baseball's Hall of Fame but winning only 30 percent of your employment lawsuits won't do the trick.

See Mark Toth's Manpower blog for the results of the Question of the Week - What % of employment lawsuits are won by employers?  That's right, only 30 percent.

But fortunately there are things an employer can do to increase their chances to win and/or avoid lawsuits.  Jon Hyman offers several suggestions for the proactive employer:

1. Review and update handbooks, policy manuals and forms;
2. Implement a document retention and destruction policy;
3. Implement a harassment training program;
4. Audit job descriptions and employee classification for wage and hour compliance;
5. Properly document all performance problems.

photo on flickr by ewen and donabel

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Chris Moander of the Wisconsin Business Law and Litigation Blog shares his take on the timeless advice that business people can pay for it now . . . or pay for it later.  Chris points out that many business people sadly lump legal services into the "too costly" or "unnecessary" categories when it comes to starting or running a business.  And while good legal services are not cheap it may actually save you in the long run.  Here are some of the downsides for not seeking professional advice as described by Chris:

• Purchased form documents create a false sense of security as “boilerplate” terms are assumed by the entrepreneurs to be “safe,” which is hardly the case. Owners who are not getting along and decide to split may find themselves mired in extremely expensive litigation over a long period of time, all of which could have been avoided by spending a fraction of the litigation costs on quality document drafting by an attorney.
• Technical faults in any number of license or regulatory filings go unnoticed until the company is audited, a criminal investigation occurs, or some other form of litigation begins. The litigation costs dwarf up-front legal costs due to the belief that preventative legal advice was not necessary or worthwhile.
• Buyers and sellers throw together an amalgam of words, believing that the resulting document reflects a mutual understanding. Eventually, one party feels aggrieved and suddenly the so-called contract is revealed as imprecise and nebulous…and so costly litigation commences.

My favorite blogging CPA, Joe Kristan, also shares similar advice over on IowaBiz.com.  Joe's moral?

When you mess with the ownership of your business, it's a lot cheaper to call a business lawyer and a tax guy before you do the deal; it costs a lot more to repair a deal than to do it right in the first place. 

Focus on doing it right the first time.  You will never regret it.

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Terri Rasmussen of the Ohio Practical Business Law Counsel blog says that every client should want a lawyer that blogs.  As you might guess, I agree. 

Why is it important, you ask?  Terri shares her thoughts (with some comments by me):

1. Knowledgeable Entrepreneur.  The blogging lawyer thinks in broader terms about what they want to know and what they can offer to clients.
2. Communication 101.  Connecting in a simple, straight-forward manner is key.
3. Authenticy and Real Voice.  You get to see the personality of the lawyer. 
4. Quality and Competence.  There is some ability to assess the quality and competence of the lawyer you are thinking about hiring.  No way to do that with a yellow pages ad.  This is where Terri makes perhaps her best point.  Any lawyer that is willing to put themselves out there and open up to scrutiny ought to be high on the list of any client.
5. Commitment to the Law Made Practical.  Most clients want to deal with a lawyer that just isn't in it for the money.  Why not consider a blogging lawyer that not only spends their spares time writing but also GIVES AWAY practical information to help people?  Blogging lawyers care.

Like Terri, I strive to have fun and help people through my blog and there is no question it has made me a much more effective lawyer.  Blogging is an educational process.  Not just for the reader but especially for the writer.  Without blogging I would never get to learn from great lawyers like Terri.

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It's always nice when people say great things about you but I am particularly humbled by a recent post from What About Clients?  WAC? is one of the great blogs (and I do mean great as evidenced by their award as the Best All Business Blog for 2007 by the ABA).  I respect Dan Hull and his gang for their absolute passion to delivering superior customer service.  WAC? is really just an extension of that passion.  As a young lawyer it was drilled into me that you do whatever it takes to serve clients and even a little bit more.  It's apparent Dan Hull lives that motto every day - 24/7.

But now there is a little pressure for the Blawg Review on February 18th.  Between WAC? and the comments from the wildly popular Iowa patent attorney Brett Trout I better not disappoint.

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When our law firm started the Iowa Law Blog, I had high hopes despite the fact that I knew a firm-wide blog would not be easy.  But I saw what Stark and Stark had created with their New Jersey Law Blog and knew it could be done.

I don't know if you have noticed lately but Sullivan & Ward's Iowa Law Blog really seems to be catching its stride.  Three blogging faithfuls (Matt Gardner, Jennifer Jaskolka-Brown and Liz Overton) are creating a wealth of information in niche topics of Iowa law including weath and estate planning, family law and employment law.   Here are some of their great posts this past week:

• What is Probate for an Iowa Estate?
• Full Disclosure Required in Prenuptial Agreements
• You're Fired

Plus we officially (finally) made the I list.   Thanks to Chris Punke for that great widget.  Now I just need to get it on the blog.

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 I often tell clients it is important to establish relationships with at least four individuals when they start a business:

• Lawyer
• Accountant
• Banker
• Insurance Agent

But in order to have a starting five we need to add a fifth professional.  Who would I add?  How about a marketer? 

But the real reason I wrote this post was so I could shamelessly plug the best team in Iowa.  The Drake Bulldogs basketball team has now moved to 19-1 with a hard fought win over Creighton last night.  The 16th-ranked Bulldogs are clutch this year and have found ways to win at the end of the close games.  Excellent free throw shooting never hurts and last night was no different.  It was a great crowd and great fun.  If you get a chance be sure to catch a game this magical season.

It's been a long time Drake fans had this much to cheer about.  Go Bulldogs!

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Under a new Iowa immigration bill, employers that repeatedly employ illegal aliens would face civil penalties of up to $10,000 and up to a year in jail under legislation being proposed in the legislature.  Employers would be exempt from penalties if they seek verification of a worker's citizenship status through the Department of Homeland Security's verification system.  But many employers complain that system is dreadfully slow.

House File 2026 has sparked significant debate.  Democrats claim it is a human rights issue.  Republicans claim it is pure politics in an election year and intended to protect unions while harming non-unionized independent contractors.   The Hispanic community in particular has great fears that jobs will no longer be available in Iowa under the new law.

This bill may have the biggest impact on Iowa businesses this legislative season.  Read  House File 2026 here.

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Employee lawsuits are continually on the rise.  So how do you keep your employees happy and stay out of court?

While it is technically not a "legal requirement" I have long suggested that treating employees with respect is the best way to avoid employee lawsuits.  Building on this thought I recently saw a couple of excellent posts from employment lawyers John Phillips and Jon Hyman concerning fairness as the Golden Rule of Employee Relations.

Treating others as you want to be treated is a concept that even young children understand.  But while the concept is easily understandable employers still have a difficult time being fair.  To this end, Phillips offers five areas of fairness where employers should concentrate their efforts:

1. Appearance: does an employment action appear fair to an outside observer?
2. Counseling: except in the most egregious of cases, was the employee told of a deficiency and given a chance to correct it?
3. Consistency: are similar disciplinary problems handled similarly and to the same degree?
4. Documentation: can you point to a performance review, written warning, a note in a personnel file, or some other contemporaneous piece of paper that supports the personnel decision?
5. Rationale: was the employee given a reason for the decision, and was it the real reason?

As Hyman points out, juries are big on fairness.  It is critical to remember that in a jury trial your jurors are likely to be employees rather than employers.  Being fair will not only reduce the employment claims against you but increase your chances of success if you are sued.

So next time you deal with an employee disciplinary situation be sure to remember the Golden Rule of Employee Relations.  It will make a difference.

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Read this post from Indiana lawyer Sam Hasler to find out why it is so important to respond promptly and appropriately to sexual harassment complaints. 

In the case mentioned by Sam, Chili's Grill and Bar escaped liability even though the employee established a prima facie case of harassment in her lawsuit.

Sam also has some great advice:  "Having a harassment policy is not enough. Having a that policy in an employee handbook is not enough. Having the policy and enforcing the policy is the key to success."

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I've said it before (and also here) but it bears repeating that wage and hour class actions are booming.  Just this past week Iowa's Casey's General Stores was hit with a wage and hour lawsuit with allegedly more than $5 million at stake.  If that isn't enough to convince you to examine whether your company has vulnerabilities you better read this informative blog post from Mark Toth of Manpower.

The 4th Annual Workplace Class Action report from Seyfarth Shaw shows the volume of wage and hour class action continues to grow exponentially.  As the report's editor says, “identifying, addressing, and remediating class action vulnerabilities” should be at the top of every employer’s list of 2008 priorities. 

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The Pennsylvania Employment Law Blog posts on how Lockheed's failure to take discrimination complaints seriously led to liability. 

Want to know how to avoid employment lawsuits?  See one of my more popular posts: 

 Seven ways to avoid employment lawsuits. 

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The Iowa Caucus is approaching quickly.  If you attend campaign rallies for the candidates or listen to TV ads you will almost never hear anything about small business. 

But in reality, America's small businesses are the driver of our economy.  Consider these facts from the Small Business Administration (SBA) as outlined in February 2006:

10. Small businesses make up 99.7 percent of all United States employers.

9. Small businesses create more than 50 percent of the American nonfarm private gross domestic product (GDP).

8. Small patenting firms produce 13 to 14 times more patents per employee than large patenting firms.

7. The more than 24 million small businesses in the United States are located in every community and neighborhood.

6. Small businesses employ 50.1 percent of the United States’s non-farm private sector workers.

5. Home-based businesses account for 53 percent of all small businesses.

4. Small businesses are 97 percent of America’s exporters and produce 26 percent of all export value.

3. United States saw an estimated 580,865 new small firms with employees start-up in the last year measured.

2. There are approximately 4,115,900 minority-owned businesses and 6,492,795 women-owned businesses in the United States, and almost all of them are small businesses.

1. The latest figures show that small business creates 65 percent or more of America’s net new jobs.

I encourage you to find out where the candidates stand on America's small business issues.  It's an issue vital to our economy.  You are unlikely to find an express position regarding small business on any of the major candidates' Web sites, so you will need to ask them.  Seriously, can anyone tell me where their candidates stands on SPECIFIC small business issues? 

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A Des Moines Register article discusses how many bosses are unwilling to allow night shift workers to caucus.  Understandably this makes politically active employees a little upset.  The article quotes a Medicom employee who said,

"It made me so furious. I raised such a fit I'm surprised they didn't send me home."

It's true that Iowa law does not require employers to give employees time off so they can caucus.  But as I have pointed out before it is my view that treating employees with respect is one of the best ways to avoid employee lawsuits.  An employer should ask themselves whether a few hours away from work every four years would really hurt production?  But think of the goodwill that could occur by respecting the employees' desire to participate in the political process.  Do you think you might have more committed and loyal employees?

At least the Des Moines Police Department gets it because police officers working on the night shift will have the opportunity to caucus provided they have made the request in advance and calls for service allow them to do it.

Update:  The Des Moines Register reported in its Sunday edition that the Medicom worker described above will now be allowed to participate in the caucus. 

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An Iowa man who worked with Catfish Bend Casinos in Burlington was fired for posting a Dilbert cartoon on the office bulletin board.  Apparently the boss didn't appreciate the comparison to a drunken lemur.

Dilbert creater, Scott Adams, offers this advice:

If you intend to mock your boss with Dilbert comics, the trick is in knowing which comics to pick. Apparently there is a fine line between posting a comic that criticizes a particular policy decision, versus a comic that calls your boss an inebriated prosimian. (Thank you, Wikipedia.) 

It's important to remember that humor is in the eye of the beholder.   If humor is used too much or at the wrong time in the workplace bad things can happen.  A hostile work environment occurs when jokes, suggestive remarks, pictures, cartoons, or sexually, discriminatory or otherwise derogatory comments alter the circumstances of the workplace.

On the other hand, humor in the workplace is important to job satisfaction.  I really can't imagine working in a place without some humor here and there.  But at the very least it's best to still maintain professionalism and have a good sense of how people will react to your humor.  Calling your boss a drunken lemur?   Even Adams agrees that one was a little more cutting than the typical Dilbert strip.  In an interview with the Register reporter he said, "I can see how this one may have been a tad bit over the line."

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Abe Lincoln, Freedom Fighter (1978)
Abe: I don't know about this politician business.
Judge: What do you mean by that?
Abe: If I have to sacrifice my integrity for politics, I guess I'll just have to stay a lawyer! 

Up to this point I have avoided blogging on politics and the Iowa caucus.  It's a no win situation for me.  I have clients on both sides of the aisle and a policy not to debate politics with clients has served me well.    Besides, Iowa lawyers like Gordon Fischer and Ted Sporer do a tremendous job of covering politics with their blogs so I'll leave the debate to the experts.

But one campaign strategy surprised me.  Many of the candidates are lawyers.  But as Joe Kristan recently pointed out, lawyers are not exactly the apple of the public's eye.  It's probably part of the reason why lawyer candidates tend to rarely emphasize their legal careers.  But one candidate has decided to go against the grain.  Trial lawyer extraordinaire John Edwards is campaigning in Iowa today with his most famous client.

As detailed in his book, Four Trials, Edwards obtained a $25 million judgment on behalf of Valerie Lakey and her parents.  Valerie nearly lost her life when she was disemboweled by a swimming pool drain that was incorrectly attached.  He has sent out mailings featuring the Lakeys and is now campaigning with them.  He also unabashedly points to his career as a trial lawyer as an example of how he will stand up and fight against corporate and special interests.    It's a bold but risky move given the public opinion of trial lawyers in particular.  But I am proud of Edwards for not shying away from his tremendous career as a lawyer. 

While the image of lawyers could be improved, it should start with lawyers being proud of the profession they have chosen.  We offer society a valuable and important service.  My thanks goes to lawyers like Edwards who aren't afraid to talk about it.   

Photo on flickr by alexdecarvalho  

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The New York Knicks sexual harassment case provides some great lessons on employment law.  Previously I touched on the Knicks case in explaining how companies could avoid sexual harassment claims.  Now the case has been settled and there are additional lessons to learn.

Frank Steinberg of the New Jersey Employment Law Blog explains the importance of "fee-shifting" in employment law discrimination cases.  In these cases the loser pays the attorneys' fees of the other side.  This places a great deal of pressure on the defendants to consider settlement.  As Frank said,

It is quite possible that, depending on the cases, the fees could be greater than the damages awarded to the plaintiff.  Thus, a realistic evaluation of the likelihood of complete success should always be a part of the defense strategy and should be evaluated on a continuing basis. 

You should always consider business strategies for litigation.  I encourage you to approach litigation dispassionately and consider the best business approach to ending your dispute.  Sometimes the best business approach means litigation is necessary but only after you have carefully evaluated all aspects of your case to determine how to prevail, or at the very least, extract yourself from the litigation under the most favorable settlement terms.

Or, if you got your brains beat in like the Knicks did settlement is never a bad option.

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Recently I have been discussing the rise in wage and hour litigation.  See here and here. 

According to the Department of Labor approximately 70 percent of businesses are out of compliance with wage and hour laws.  That's right - 70 percent!  According to Shanti Atkins of the Compliance Training Blog, some experts believe this number is even higher.

But you might be asking yourself, "How could my business be out of compliance?  Everyone is salary.  I don't need to pay overtime.  Besides employees can volunteer their time."  As Mark Twain said,

It ain't what you don't know that gets you into trouble.  It's what you know for sure that just ain't so.

So what are some helpful tips to avoid wage and hour lawsuits?

• Conduct a Wage and Hour Review.  Your first step should be to get with an employment law attorney or other wage and hour/human resources specialist who can review your pay practices to determine whether you are in compliance with the law.  The cost spent for a review and developing a compliance program could save you tens of thousands of dollars in the long run or perhaps even millions if you run a large company. 
• Train Managers.  Making sure managers understand the rules is paramount.  Managers can avoid costly mistakes and spot problems before they become too costly.
• Think Exempt - Non-Exempt, Not Just Salary - Hourly.  Too many employers pay employees a salary and then believe that relieves them from any obligation to pay overtime.  Employees need to make sure those employees are properly classified as exempt (someone who is typically not paid overtime) or non-exempt (someone that is generally entitled to overtime).
• Take Complaints on Wage Issues Seriously.  You want to treat wage and hour complaints just as seriously as employment issues including harassment or discrimination.  In fact, these wage and hour lawsuits could be more costly to your business.
• Do Not Retaliate.  Never, never, never retaliate against someone that makes a complaint for wage and hour issues.
• Develop strong policies on pay practices and employee hours.  Make sure employees work those hours assigned and do not work off-the-clock.  Above all, properly document the number of hours worked because just like in baseball where a tie goes to the runner - if the employer has not documented the hours worked by the employee - the benefit of the doubt will go to the employee. 

The Department of Labor Web site is an excellent place for more information or please feel free to let me know if you desire more information on wage and hour reviews.

Update:  SMBTime blog had a great point in a follow up to this blog post regarding the fact that businesses should consider hiring an attorney to conduct the wage and hour audit so as the maintain the attorney-client privilege. 

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I read an interesting report regarding the Yankees' negotiations with Alex Rodriguez.  Apparently the Oracle of Omaha provided some advice that Rodriguez should contact the Yankees without his super agent Scott Boras.  With the assistance of two Goldman Sachs executives Rodriguez negotiated his $275 million, 10 year deal with the Yankees.

It was a tough week for Boras as Detroit pitcher Kenny Rogers also gave him the boot.

Is Boras a victim of his own success?  The contracts he has negotiated have been out of this world.  But the owners can't stand him and apparently the big money earned by his clients can't buy love either.  Rodriguez likely would have earned more on the free agent market but he wanted to remain a Yankee.  Boras must not have been listening.  Buffett did.

I wonder if Buffett will help LeBron James on his next big deal.  Or better yet, I wonder if he provides investment advice to law bloggers? 

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Last month I wrote on the rise of wage and hour litigation.  In that post I talked about how I believe wage and hour issues are often misunderstood by employers which often results in misclassification of workers or possibly "off-the-clock" allegations where workers are not properly credited for time worked. 

Yesterday, I heard the same sentiments from lawyers at the Iowa State Bar Association's Labor and Employment Law Seminar.  The plaintiffs' lawyers in the audience had a glint in their eye during the presentation on the Fair Labor Standards Act (FSLA). 

Why?

1. The FSLA is a plaintiffs friendly act.  It is truly the one law that favors the employee and consequently plaintiffs' lawyers.  Plaintiffs' lawyers are usually able to tell whether a lawsuit has merit very early in the process.   Further, class actions are often conditionally certified without having to meet the typical standards for class action certification.
2. Companies often make mistakes.  Wal-Mart, Merrill-Lynch,  Starbucks, Citigroup and the list goes on and on.  These companies have access to herds of the brightest and best lawyers.  Yet, many successful lawsuits have been filed against these and other companies for wage and hour claims.  What about all those smaller businesses out there?  Let's just say I have my doubts these smaller businesses are doing it any better.
3. The dollars at risk are HUGE!  $172 million, 78 million, 98 million, 87 million.  Even smaller businesses potentially face risks in the hundreds of thousands.   Willful violations are not uncommon which double the damages and attorney's fees are generally awarded to the winning plaintiffs.

How can businesses avoid wage and hour claims?  Stay tuned for the next post . . .

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Accurate and properly written job descriptions can be an invaluable aid in hiring well and legally.  But bad job descriptions . . . well that can be worse than none.  Inaccurate descriptions, and those that an employer allows to become outdated only confuse the hiring process, complicate employee reviews and make accommodation under the ADA a daunting task.

For those reasons, any employer that adopts written job descriptions must commit itself to the ongoing task of ensuring that all descriptions prepared and circulated are accurate initially, reviewed periodically and updated as necessary.

In preparing a good job description, an employer should keep the following in mind:

• List specific qualifications.  Ensure that all educational "requirements" are mandatory, or consider using the phrase "or equivalent experience."
• List essential job functions and duties.  Carefully determine if the position has any lifting and other physical requirements.  If the description contains physical requirement, they must be "essential" or the requirement may be found to discriminate against disabled job applicants.  Be as specific as possible about responsibilities and duties, particularly supervisory and discretionary duties, because job descriptions (and duties) are important in determining whether an employee is entitled to overtime pay.
• Seek appropriate input.  Seek input from employees who hold the position and their managers to ensure accuracy.
• Identify and list the pay range.
• Use appropriate language.  Keep language neutral, non-age restrictive and relevant to job requirements.  For example, say "college degree required" as opposed to "recent college graduate".
• Monitor accuracy.  Implement and monitor a system to ensure that all job descriptions are current and complete.

For further discussion on job descriptions visit an excellent post from attorney Liz Overton on Sullivan & Ward's Iowa Law Blog.  Another insightful post is from Pennsylvania attorney Michael Moore (no not that one) who explains that proper business records (including well written job descriptions) are your only true defense in surviving a wage and hour audit.

Photo on flickr by macartisan.

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It's tough to hire good employees these days.  I am not familar with the company but I loved this video from Success With People.  They have an intriguing low-cost mentoring program for hiring better people and engaging them in your business. 

The Pennsylvania Employment Law Blog also has a helpful post The Interviewing and Hiring Process.  The five keys every business owner should think about when it comes to interviewing and hiring according to Michael Moore:

1. Uniformity of Process;
2. Documentation;
3. Prohibited Questions;
4. Applicant Communication;
5. Training.

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Charlie Longbrief picked up the phone on a Friday afternoon.  He was accustomed to these late Friday afternoon calls.   People with problems always seemed to call at this time because they need peace of mind over the weekend.  It was his friend Joe Smith who worked as sales manager for Shake, Rattle & Roll, Inc. a local baby toy manufacturer. 

"Charlie I need help.  I have just been fired from my job," said Joe.

"Tell me about it," replied Charlie.

"Well, I didn't like working there anyway and I was looking for another job.  I think I found one with a competitor but unfortunately my employer caught wind of it and they fired me.  I have a non-compete but of course they can't enforce that against me because I was fired, right?" asked Joe.

"Unfortunately Joe that is not always the case.  In Iowa, non-competes may be enforced even in situations where the employee has been fired.  It may be a factor to consider but the fact you were fired rather than quit does not necessarily invalidate the non-compete," Charlie said.

Joe shot back, "But I was told by my cousin Frank that works down at the loading dock that one of his friends said they couldn't uphold a non-compete against me if I was fired."

"I know that is a common belief but I am sorry to inform you that is not always the case.  It always depends on the circumstances of the particular case.  Every case is different but just because you are fired does not mean they can't enforce the non-compete," said Charlie with a little more emphasis this time.   

Charlie continued, "As you know I mostly represent businesses and I recently wrote an article on Protecting Your Iowa Business With a Non-Compete.  Why don't you take a look at it.   It outlines some of the key issues in determining whether a non-compete is valid in Iowa.  From an employee perspective it is never a bad idea to look at the situation from the employer's perspective and vise versa.  Read the article and then let's talk."

"Thanks, Charlie.  Not what I wanted to hear but at least I have a better idea of where I stand.  I'll give you a call back Monday," said Joe. 

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I read with interest fellow IowaBiz author Victor Aspengren's article on Forget the Ratings in conducting annual performance reviews.  Victor points out that most companies use subjective rating systems in their performance reviews which leave everyone in the company, supervisors and employees alike, dreading the annual review process.

What happens next is what I call the Lake Wobegon effect:  Every employee becomes "above average" because supervisors are unwilling to hold employees accountable.  Then when it comes time to discipline or terminate employees companies are often shocked when I tell them it may be difficult to discipline or terminate an employee because of their employee evaluations.

Employee evaluations are valuable proof in an employment lawsuit.  Make sure poor performance is properly documented.  Otherwise, the judge or jury will not believe you when you say the employee performed poorly but all their evaluations are excellent.  You should conduct the evaluations on a regular basis, usually at least once per year.  And Victor's ideas on creating a dialogue with your employees is on the mark as long as that dialogue is open, honest and holds employees accountable for their performance.

See also:  Considerations for Your Performance Evaluation and Employee Evaluations are Critical to Firing Decisions.

photo on flickr by Krista76

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First with Drew McLellan on marketing, and now with Shirley Poertner on leadership, the IowaBiz.com free breakfast series is off to a fast start.  Shirley spoke yesterday about accountability in the workplace.  A concept that is frequently missing in many organizations.

Shirley says we have fallen into a "blame" society. 

• If you spill hot coffee in your lap while driving . . . sue McDonald's.
• If you invest money in a high risk portfolio and lose . . sue your broker.
• If your accountant misses the "S" Election . . . blame the lawyer. (Shirley really didn't say this one I just needed to poke fun at Joe one more time). 

This notion of blaming others permeates the workplace.  "It's not my fault" becomes the rallying cry of employees and supervisors alike. 

So how do we hold others accountable in the workplace according to Shirley? 

1. Set clear expectations.  You may think you have set clear expectations but would your employees say the same thing?  You might be surprised by the answers.
2. Consider Both Motivation and Ability.  Your initial thought may be that your employees are lazy or just want to make your life miserable.  Have you thought about other factors that may be influencing behavior?  What about whether the employees have the skill and knowledge to complete the task?  Is there a bureaucracy in your organization preventing work from getting done?    
3. To Hold Others Accountable:  Skillfully Handle the Hazardous Half Minute. 

• Describe the gap.  Make a statement about what you expected and what occurred.  Ex.  You made a commitment to get the project done by Friday.  It's the following Wednesday and the project is not completed.
• End with a question.  What happened?
• Then listen.  What's going on?  Is it about motivation or ability or both?

These strategies for accountability in the workplace will not only provide you happier employees and greater productivity but it may also help you reduce workplace litigation.  Treating employees with respect and effective communication are two of the cornerstones on how to avoid lawsuits from employees. 

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I've got baseball on the brain over on Sullivan & Ward's new Iowa Law Blog thanks to HR Capitalist.  Go Tribe!

photo on flickr by hyku

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Attorney Liz Overton has an excellent post on the need to carefully prepare job descriptions for small businesses over on Sullivan & Ward's Iowa Law Blog. 

I encourage you to check it out.

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It took us awhile but Sullivan & Ward's Iowa Law Blog is now live.  It was designed with the able assistance of LexBlog.  (The same company that designed and maintains this blog).

While Rush on Business tends to focus only on issues impacting Iowa businesses, we are taking a broader approach with the Iowa Law Blog to cover many different aspects of Iowa law.  I know many believe that a law blog (or any blog for that matter) should cover a niche topic.  However, I believe that a broader blog is better than no blog and it is frankly tough for a law firm of our size to have eight different niche blogs.  Besides the New Jersey Law Blog is a prime example of how a state law blog can achieve remarkable blogging success.

The Iowa Law Blog will focus on several legal areas including:

• Utility law (the core of the law firm's work for over 70 years);
• Business Law;
• Trust and Estates;
• Trial and Mediation;
• Employment Law;
• Regulatory Compliance;
• Family Law; and
• Real Estate

Similar to what Stark and Stark has done in New Jersey, we hope to keep businesses and individuals updated on legal and legislative developments in the Hawkeye State.  (Yes, you read that correctly despite the lack of wins and no offense).

We hope you find valuable information on the Iowa Law Blog and look forward to your comments.

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Shanti Atkins of the Compliance Training Blog has an interesting blog post about the crippling trend of wage and hour litigation.  The post references a recent BusinessWeek article discussing how plaintiffs' employment lawyers are "printing" money  with wage and hour cases.  One of the plaintiff's lawyers is quoted as saying,

"I can hit a company with a hundred sexual harassment lawsuits, and it will not inflict anywhere near the damage that [a wage and hour suit] will."

In my experience, wage and hour issues are often misunderstood by employers.  Employers tend to run into problems when they ignore overtime regulations.  If you have questions I suggest checking out this handy reference guide to the Fair Labor Standards Act (FLSA) and consulting your employment lawyer.  You might also consider a wage and hour review to avoid misclassification of employees.

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A federal court jury in New York says Isiah Thomas and the New York Knicks are liable for the sexual harassment of a former female executive.  The jury found the former employee was subjected to unwanted sexual advances and verbal insults.  A retaliation claim also was alleged.  While Isiah Thomas still maintains his innocence and vows an appeal,  the jury has spoken.  The Verdict:  the Knicks and its owner owe nearly $12 million in damages.  (Thomas escaped punitive damages but his employer was not so lucky).

Could the harassment lawsuit have been avoided?  

Employers have an obligation to prevent sexual and other forms of harassment in the workplace.  At times employees will screw up but an employer must be prepared.  Some ways to avoid harassment claims include the following:

• Have a written policy against harassment which should include an anti-retaliation provision for those employees who report harassment.
• Provide and communicate in writing multiple channels for your complaint procedure. Employees should be able to report harassment to more than one person within the company.  The complaint process should be clearly defined in your employment manual.
• Make sure you train supervisors each year and require supervisors to report harassing conduct.
• Once notified of harassing conduct - take immediate action to investigate fully.
• Do not retaliate against employees that make a complaint.
• Discipline or terminate the offender as appropriate.

Michael Moore of the Pennsylvania Employment Law Blog has a great post on this issue and the particular problems created by complaints by high level executives.

The executive absolutely cannot have any direct or indirect control over the investigation.  Claims involving the company's CEO may require HR to go directly to the board of directors to protect the company.  Obviously, such action puts HR in an impossible position, so consider using outside counsel to manage the situation.

It is never easy dealing with claims of this nature but do not sweep it under the rug just because a high level employee is involved.  The stakes are high and you must follow your written policies and take the complaints seriously.  Ignore the behavior or retaliate at your peril.

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Mark Toth, Chief Legal Officer of Manpower, has a terrific employment law blog post any small business owner should read.  Toth's blog is creative and fun and his advice is right on the mark.  Follow his greatest hits and you are much more likely to stay out of trouble with your employees.

I particularly agree with Toth's Employment Law Golden Rule:

Treat all employees the way you would want to be treated — honestly, objectively, consistently and fairly on a timely basis.

See also my blog post on Seven Ways to Avoid Employee Lawsuits.  Toth and I have very similar thoughts on this subject.  My number 1:  Treat Employees with Respect.  Seems like a basic philosophy but it is amazing how many employers forget to treat their employees with respect.  Employees that are humilated or treated in a disrespectful way are much more likely to sue your company.

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Michael Moore of the Pennsylvania Employment Law Blog has an excellent post on the possibility of reverse discrimination when employers make decisions under the auspices of voluntary affirmative action plans, diversity programs, or even "risk management".  Michael says:

I am surprised by how many companies will select non-minority employees for layoff in a reduction in force or discipline believing that they have eliminated potential discrimination claims.   

His observation that our discrimination laws are written to prohibit employment decisions based on factors such as race, gender, age, religion, disability, etc. is often forgotten.  Employers must carefully follow the laws and regulations if they intend to implement an affirmative action or diversity program. 

FYI:  Michael's blog was recently named # 3 in the HR Blog Power Rankings by the HR Capitalist.  A ranking well deserved in my opinion.

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I encourage you to check out Blawg Review #126 written by Anita Campbell of Small Business Trends.  Anita is a lawyer by training but an entrepreneur at heart.  Her award winning Web site was the "Best of the Web" according to Forbes Magazine for small business blogs.

The lineup of small business experts on Anita's site is impressive.  The articles are well-written and informative.  Fellow IowaBiz authors should especially take notice.  The site is something to which we should aspire. 

And thank you to Anita for including my post on whether Licensing is a Viable Option Rather than Franchising?

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Charlie Longbrief, attorney at law, had just turned off his computer late on a Friday afternoon when the phone rang.  It was Pete Geek who owned a local computer consulting service.

"Charlie, I've got a problem," Pete said.

"Tell me about it," Charlie said.

"Well, I had to fire one of my sales people earlier this week.  The termination seemed to go fine but he hasn't returned his company laptop or cell phone.  I want to deduct the value of those items from his last paycheck or at least withhold his last paycheck until he brings those things back to me."  Pete responded.

"Do you have any type of written agreement with him regarding the return of the equipment?" Charlie asked.

"No, I don't," said Pete.

Charlie advised, "I know it is frustrating but Chapter 91A.5 of the Iowa Code won't allow you withhold the check or deduct the value in this situation unless you have written agreement with the employee where the equipment has been specifically assigned to the employee, and acknowledged in writing by the employee.  Also the written agreement should authorize you to deduct the value of the equipment from the last paycheck if not returned.  If you violate the law you could be forced to pay the employee's attorney's fees, liquidated damages and any court costs plus the wages you owe him.  You definitely have the right to your equipment but you can't get it that way."

"I am glad I asked.  By the way, maybe you could prepare an agreement for my employees to sign authorizing me to deduct the value of the equipment from wages if the equipment is not returned,"  Pete asked.

"You bet.  By the way, you may want to check out a blog post from Jill Pugh on 10 Things to Keep in Mind When You Fire an Employee.  It's also a good idea to review the provisions of Iowa's Wage Payment Collection Act."

"Thanks a lot, Charlie.  I am glad I called."

Photo on Flickr by cutesmallfuzzy.

* This is a hypothetical.  Be sure to seek the advice of an employment attorney for advice in your specific situation.

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Thanks to Nina Kaufman for quoting my post  "Employees v. Independent Contractors" on the Entrepreneur.com Blog Network.  Nina's blog on the network is "Making It Legal:  The small business mentor's guide to entrepreneurship and law."  Her advice on the employee v. independent contractor issue is excellent:

This is not an area to play fast and loose with the law. It’s like gambling in Vegas; the house is stacked against you. As confident as you think you may be about the situation, it’s wise to confirm your choice with an employment or other business attorney.

Another blog post worth mentioning on the subject is from David Willis on his Texas Small Business Law Blog.  David is right on track with his warning to small business owners:

The bottom line is that an SBO cannot simply say that a particular worker is an independent contractor and expect that decision to have legal effect. The consequences for failing to properly determine the relationship between the SBO and worker can be quite serious, resulting in legal liability to third parties, insurance issues, and penalties for unpaid employment taxes. For these reasons, it is critical that an SBO seek help from a professional when defining the nature of an employment relationship is important to the SBO’s business.

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Drake University Law School is hosting a Risk and Responsbility in the 21 Century Symposium on September 7, 2007. 

The goals of the symposium are (1) to explore the notion of risk, (2) consider how we should respond to it in this century, both in the private and in the public arena, and in doing so, (3) examine the responsibilities of individuals, private institutions, and government.

The featured speaker is Tom Vilsack.  Vilsack is the former two-term governor of the State of Iowa and former presidential candidate.  He is now a visting distinguished professor of law at Drake Law School and an attorney with Dorsey & Whitney.

Also scheduled are a number of other terrific speakers including best-selling author Phillip Howard, trial lawyer Marc Stanley, Connecticut Law School professor Tom Baker, Harvard Business School professor David Moss, Drake University business professor Tom Root, Cedar Rapids Mayor Kathleen Halloran, and Iowa Insurance Commissoner Susan Voss.

The event has applied for six hours Iowa and federal CLE credit.

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Many businesses make the mistake of treating employees as an independent contractors so they can save money on taxes, red tape and benefit coverage.  The risks associated with this approach is often not worth it.

Businesses that misclassify workers often find themselves embroiled in wage and hour lawsuits or workforce development audits.  These businesses could also face tax penalities and lack of insurance coverage in key liability situations.

Often, businesses treat employees as independent contractors because they fail to fully understand the distinction between the two categories.  The most important difference is whether or not you have the right to control the work.  Other factors, such as where the work is performed, who provides the equipment, how payment is made and if there are set hours, also play an important role.

Generally, an employee is someone whose manner of work the employer has a right to control, even if the employer does not actually exercise that control.  True employees are sometimes known as W-2 employees because of the W-2 form issued to them for federal income tax purposes. 

On the other hand, an independent contractor is someone you engage to perform a certain task, but whose manner of work you do not have the right to control.  You have the right to tell your independent contractor what it is you want done, and you remain free to dismiss them if you do not like the work (depending on your contractual arrangement).  Ultimately though it is the results you are interested in.  The manner in which the results are accomplished is up to the independent contractor and is not subject to your control.  An independent contractor is given a 1099 form to report income for federal tax purposes.

If you have questions about whether to treat workers as employees or independent contractors be sure to consult with an employment or tax lawyer.  This area of the law is more complicated than just the control issue.  Tax lawyer Tripp Atkins is currently analyzing the 20-factor IRS test for determining an employee or independent contractor on his blog.

The safest course is to treat workers as employees if the workers' status as an independent contractor could reasonably be questioned.   

Photo on Flickr by Partsnpieces.   

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Want some great business advice?  Looking for something interesting?  Try out these posts:

Matt Gardner has an interesting post on his Wealth and Estate Planning blog about the "pot of gold" Iowa landowners are sitting on because of the renewable energy craze and why they should review their estate plan.  (Sounds like Iowa farmers have something in common with today's hip-hop stars  - both ignore estate planning). 

Michael Moore (this one's no sicko) talks about what not to do when it comes to employment record retention / destruction policies on his Pennsylvania Employment Law Blog.  Michael has written some great material on this subject and has some terrific comments on this blog as well. 

Roy F. Harmon III addresses record retention for ERISA Plan administrators on his Health Plan Law blog.

Carl Lingren shares key interviewing tips for employers on his Employer Ease blog.

Brett Trout says technology lawyers are so hot but have you seen this guy's face lately.  (Trust me, there is a story there).

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Eric Swenson of Managing People in the 21st Century discusses how small businesses will sometimes "borrow" and "modify" another company's employee handbook in an effort to save money.  Swenson's post illustrates why this is a bad idea. 

In one instance, a small company not required to offer FMLA benefits under the law was required to do so because of misstatements in their employee handbook.  The article from the Sedgwick Law Firm in California refers to an Iowa Federal Court decision by Judge Bennett in Myers v. Tursso Company, Inc.   Judge Bennett held it is possible that an employer with fewer than 50 employees within a 75 mile radius, could still find themselves "required" to grant FMLA leave, based on their conduct, even though not technically within the coverage of the statute. 

For more check out the article by Michael Fox on Jottings by an Employment Lawyer.

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I am excited to announce that the Sullivan & Ward law firm will publish its Iowa Law Blog beginning in mid to late August.  The firm's law blog will cover general legal issues inlcuding the following areas of law:

• Utility and electric cooperative law;
• Business law;
• Trusts and estates;
• Family law;
• Real Estate law;
• Trial & mediation; and
• Regulatory compliance.

It will be a group effort by the lawyers at Sullivan & Ward.  Our friends at Lexblog are developing the blog.  Kevin and his staff have been great to work with.  I'll let you know when it hits the blogosphere. 

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Michael Moore has an informative post on Developing a Record Retention Policy on his Pennsylvania Employment Law Blog.  Michael raises a particularly insightful issue:

Anticipate the arguments that may be made and inferences that could be drawn from the destruction of certain documents and weigh it against the expense of retaining and producing the documents.

In a comment left on my Document Retention and Electronic Discovery post Michael pointed out that businesses need to carefully consider how the destruction of records pursuant to a policy might play to a jury.  Often it may be important for a business to retain the information rather than destroy it.  He warns,

The employer that destroys old e-mails "pursuant to its record retention policy" is left with the inference that the e-mail may have existed and, even worse, it was destroyed in order to keep the truth from coming out. 

I agree that you must carefully consider these policies.  That is why it is so important to assemble a team in order to develop a sound document retention policy.  I would caution businesses to avoid pulling a form, changing the names and feel like you are covered when it comes to record retention.  You should take into account the various ways your organization stores information and be sure to get the IT staff involved in the process.  This will help you determine whether it is beneficial and practical to keep or destroy certain information.   But whatever happens, do not forget to implement a litigation hold in the event of a dispute.

Part of the trial lawyer's job in business cases is explaining to the jury how a document retention policy works, why it was implemented and the methods by which the business consistently follows it policy.  Developing trust can help alleviate the thoughts about businesses just wanting to keep the truth from coming out. 

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Yesterday I had an interesting discussion with one of my buddies.  He is an executive with a Fortune 500 company out-of-state and he was expressing his frustration with lawyers - actually his own lawyers.  He just got off the phone with one of his outside counsel when I called.  After talking with him for less than 30 seconds I could tell the last person he wanted to talk with was another lawyer. 

Although not word for word his frustrations could be summed up in a post from Dan Hull called the 7 Habits of Highly Useless Corporate Lawyers.   This post is right on the mark and should be required reading for every corporate lawyer in America.  The biggest frustration?  No. 3 - Taking a stand.  Nothing seems to frustrate business people more than a lawyer who comes down squarely on both sides of the issue. 

The cure:  try listening to your clients.  You might be surprised what you learn. 

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Charlie Longbrief had just turned off his computer to end his day when the phone rang.  It was John Grains.  John owns the local grain elevator in Hometown, Iowa and Charlie has been his business lawyer for several years.

"Charlie, I've got a problem,"  he said. 

"Tell me about it," Charlie said.

"Well, I need to fire Nancy in my accounting department.  She just isn't getting the job done.  She is late for work.  She is lazy and never gets her work done on time.  Nancy makes mistakes.  She is one of the worst employees I have.  I just can't take it anymore."

"How old is she?  Is she a minority?  How long has she worked for you?", Charlie asked.

"She's 25 and white.  She has worked for us for six months but you also probably need to know that she is eight months pregnant.  I knew she was pregnant when I hired her.   What do you think? Can I get rid of her?"

Charlie paused, leaned back in his chair and thought for a little bit.   "Have you conducted any evaluations?"

"Actually, yes.  We gave her a review after three months on the job and pointed out some very specific instances where she needed improvement consistent with her job description.  I included the dates, times and specific examples of conduct.  I suggested some ways she could improve.   I gave her a chance to respond to our comments and I told her we would review her again at the six month mark to see if she had improved.  I indicated that if she had not improved by that date I would need to let her go.  I documented the review in writing, including her responses, and asked her to sign the review, " explained John.

"Any improvement?" asked Charlie.

"Very little.  She isn't late for work as much but the work product has not improved at all.  Just last week she missed a deadline for a very important meeting. I hate to fire someone who is eight months pregnant but I don't feel like I have any choice," he said. 

Charlie advised, "Well, the fact you have conducted an effective employee evaluation and followed it up in writing is extremely helpful.  It sounds like your performance expectations are consistent with your job description.   Without the evaluation the decision to fire her could be much more difficult because of her pregnancy.  A plaintiffs' attorney could look at this suspiciously because of her pregnancy.   Why don't you send me a copy of the evaluation and her job description but my initial reaction is you likely have a reasonable basis for her termination.  The key is whether you have demonstrated legitimate business reasons for her termination."

* This is an educational hypothetical.  Please consult your employment lawyer for specific advice in your own situation.   Slight changes in factual situations may require a material variance in applicable advice.  Read our Disclaimer.

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In today’s business environment, organizations need to respond to an increasing number of document requests, from regulatory compliance issues to internal investigations to full-scale litigation. Much of this information is available electronically. Despite the prevalence of such document requests most organizations remain reactive rather than proactive when it comes to dealing with the issue of electronic discovery.

In reality, electronic discovery of documents has been around for several years. But late last year, the federal courts amended its rules regarding electronic discovery. Organizations can no longer afford to be reactive when it comes to the discovery of electronically stored information (ESI). Organizations not prepared for electronic discovery could face fines and/or sanctions if they are sued in federal court.  (FYI:  It is also expected that Iowa will soon amend its state civil rules regarding electronic discovery making it imperative that all businesses in Iowa should prepare for discovery of ESI).

One way to prepare your organization for the new federal electronic discovery rules is to have a solid document and email retention policy. If don’t have such a policy you need one but even organizations that have a policy should review their policy to make sure it covers issues that may come up under the new federal rules. Some important issues to cover include, but are not limited to:

• The name of the custodian for electronically stored information;
• A list of servers and back-up tapes used by the organization;
• The different ways employees save information in the organization;
• How to implement a litigation hold including email back-up.

It is important to have your IT staff involved in the process. Many organizations will write a policy but fail to take into account the various ways the organization actually stores information. ESI is present, not only on office computers, but also laptops, BlackBerrys, iPhones, other PDAs, and even cell phones.

Fortunately the new federal rules provide a “safe harbor” provision for those organizations that inadvertently destroy ESI during the routine, good faith operation of an electronic information system. How do you qualify for this safe harbor? The best way is through the implementation of an ESI management system that is actively enforced and audited. Investing in an ESI management system is likely to pay big dividends down the road if you are ever involved in litigation and is critically important under the new federal rules regarding electronic discovery.

For more information regarding the new federal electronic discovery rules, document retention policies and ESI management, you may want to check out my podcast with Brett Trout on electronic discovery issues.  Another great resource is the Electronic Discovery Law Blog which I highly recommend.

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I ran across this list of tips for new small businesses.  Some terrific advice.  Here are the ten tips as listed:

1. Save up as much money as possible before starting.
2. Start on a shoestring.
3. Protect your personal assets.
4. Understand how--and if--you will make a profit.
5. Make a business plan, so matter how short.
6. Get and keep a competitive edge.
7. Put all agreements in writing.
8. Hire and keep good people.
9. Pay attention to the legal status of your workers.
10. Pay your bills early and your taxes on time. 

I especially appreciate the emphais placed on paying your payroll taxes on time, particularly the portion you withhold from your employees' wages. (See the commentary on No. 10).  It is critically important to understand that a corporation or LLC will not protect you from personal liability in the event these taxes are not paid.  (For an example, see a post from my favorite blogging accountant, Joe Kristan).

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An employer recently called me to inquire about a drug testing policy.  The employer received reports that a delivery driver had driven while under the influence of alcohol.  These types of occurrences often serve as wake up calls.  Drug testing can deter such behavior.  So it makes sense to implement drug tests in the workplace, right?  Well . . . maybe.   

I have dealt with many employers who were surprised by the requirements of Iowa's drug testing law (Iowa code section 730.5).  Before making a decision on drug testing, several factors should be considered.

The types of private sector workplace drug testing in Iowa include:

1. Unannounced testing of workers randomly selected from pools of employees.
2. Testing of employees during, and after completion of drug or alcohol rehabilitation.
3. Testing of employees for reasonable suspicion.
4. Testing of prospective employees.
5. Testing of employees, as required by federal law or regulation or by law enforcement.
6. Testing of employees in the investigation of workplace accidents that cause sufficient injury or damage to require a report to OSHA.

But the responsibilities of employers that drug test are many, including:

1. The employer must establish a detailed written drug testing policy - prior to testing - and provide it to every employee subject to testing.
2. The employer must establish - prior to testing - and maintain either an Employee Assistance program or a resource file where workers can access help for substance abuse problems.
3. The employer must provide supervisors with a minimal amount of annual training (2 hours the first year, and 1 hour each year thereafter).
4. In the event of a positive alcohol test in which the alcohol concentration exceeds the levels established by the employer - and under certain other conditions - the employer may be required to pay up to $2,000 in rehabiliation costs for the employee in question, depending on employee benefit plan coverage.
5. A laboratory doing business for an employer that conducts drug or alcohol tests must file an annual report with the Iowa Department of Public Health by March 1 of each year concerning the number of positive drug and alcohol tests during the previous calendar year.

Before deciding to drug test you should make sure you review the requirements of Iowa Code 730.5 with your employment or business lawyer. Performing drug tests may be necessary in your business but you need to make sure you are acting within the requirements of the law. Mistakes could be very costly and subject you to significant liability.  The costs of drug testing may be more than many small businesses want to spend. And just because you do not test doesn't mean you cannot have a policy prohibiting drugs and alcohol in the workplace.

See this post on Avoiding the Pitfalls of Drug Testing for an example of why it is so important to follow Iowa's drug testing law.  Be sure to get appropriate advice before implementing a testing policy.

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I am hoping you will provide me with some input.  What do you think are the top legal issues facing small businesses today?

My general sense is that employee/human resource issues rank high.  If you are a small business owner, what keeps you up at night from a legal perspective?  If you are a lawyer or consultant, please add your perspective.

Please comment below.   Don't be shy.  I am hoping to develop some blog posts surrounding this discussion and I would love to hear from you.  If you are not interested in commenting publicly, please feel free to email me at rnigut@sullivan-ward.com.  With your input I should be better able to hone in on the legal issues facing small business owners.

Thanks for reading.  I appreciate it. 

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Michael Libbie had a great post on the recent 2007 Iowa Employment Values Study showing that more than anything workers want R-E-S-P-E-C-T.  Being respected in the workplace is the value Iowa workers feel is most important. 

But what if more employers were like Tony Dungy?  A post from TechRepublic says it very well,

"Dungy is one of the exceptions, and is part of a new breed of coaches who do things differently. He's not a yeller and he does not lead or motivate with fear. Instead, he believes in putting the right personnel in place, building a winning strategy based on the strengths of that personnel, and then treating them with the respect they deserve as professionals and human beings. As a result, the performance of his players is not driven by a fear of his wrath. The only fear they have is a fear of letting him down or disappointing him because of their trust in him and their loyalty to him."

Studies have shown that how well-respected employees feel is directly related to how enthusiastic they are about their overall employment situations.  Employees who feel well-respected are several times more likely to stay in their jobs.  Interestingly, one study says the main reason employees don't feel respect is not related to abusive management behavior as much as it is indifference or the failure of management to go out of its way to demonstrate respect to employees.

For the record, just check out my Number 1 out of 7 Ways to Avoid Employee Lawsuits written several months in advance of the Iowa Employment Values Study.  As I said then, it seems like a basic philosophy but it is amazing how many employers forget to treat their employees with respect.  Employees that are humilated or treated in a disrespectful way are much more likely to sue your company. 

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The Tennesse Business Litigation Blog has a post discussing the use of an ombudsman in business to prevent lawsuits.

"The ombudsman position can be a very effective tool which provides an outlet for disgruntled employees to air disputes and reinstate respect in the workplace. A large percentage of litigation, including employment litigation, is spawned from misunderstanding. Imagine how much money a business can save by having an experienced neutral person review and assess a dispute before lawyers become involved. An ombudsman can also educate managers about dealing with workplace conflict and identify certain weaknesses in specific managers relating to interpersonal dealings that can be valuable come evaluation time."

Sullivan & Ward lawyer Larry McLellan is likewise a huge proponent of an ombudsman in a business.  Larry, who frequently serves as a mediator and has a master's in law degree in dispute resolution, has studied how businesses can reduce their legal costs through the use of an intermediary in the workplace.  Naturally it tends to be large businesses that use ombudsman programs but small businesses should also consider it.   Larry is always available to discuss with businesses and industry groups how they can reduce their legal costs by incorporting effective dispute resolution strategies in the workplace. 

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A few days ago Brian Honnold had an excellent post about the fear of lawsuits by America's small businesses over on IowaBiz.com.  The most alarming statistic?  Small businesses bear 69% of the total cost of the tort system to all U.S. businesses.  That's $98 billion a year in costs.  Further, six in ten small business owners feel constrained when making business decisions because of the fear of lawsuits.

So what's the solution?

Many call for legal reform.  That's what the Institute for Legal Reform is all about. But is it really working?  Despite millions of dollars poured into extensive campaigns, it is apparent our nation's small businesses do not feel any safer.

Should we kill all the lawyers?  Wait . . . I shouldn't have said that.  I am a lawyer.

The best protection for small businesses is to build a solid foundation.  A house of bricks rather than one of straw or sticks.  As Brian discussed, insurance is a component in building that solid foundation but other protections are necessary.

Here are five suggestions on how to protect yourself from lawsuits:

1. Use written agreements.  Unfortunately the day is over when you could rely on a handshake.  Make sure that your agreements are comprehensive.  The agreements should always set forth the rights and responsibilities of the parties in detail.  It is a good idea to have your written agreements drafted and/or reviewed by a business attorney.
2. Have a comprehensive employee manual.  Employee lawsuits are on the rise and a major distraction for your business.  A written employee handbook affords you a better opportunity to avoid misunderstandings that can lead to litigation.  Disputes are are less likely to occur when your employees know the rules.  Keep in mind that a well-written employee handbook can help your business but a poorly written handbook can cause even more problems for your business.  Don't pull a template from the Internet without consulting an employment lawyer.
3. Maintain your corporate or other limited liability structure.  Make sure to keep your personal guarantees to a minimum, stay current with corporate records, pay your applicable taxes and do not mix your personal assets with your business assets.
4. Protect your intellectual property.  Consider obtaining trademarks, copyrights and patents as applicable.  Consult an intellectual property lawyer in order to protect yourself against infringers.  Likewise, avoid infringing someone else's intellectual property.  Before deciding on a business or product name you should check to see if the name is trademarked by someone else.  Similarly, be careful not to steal copyrighted materials for your own use.
5. Consider alternative dispute resolution.  Mediation is often an efficient way to resolve business disputes.  It is a process in which the parties to a dispute, with the assistance of a neutral third party (the mediator), identify disputed issues, develop options, consider alternatives and work to reach an agreement. There is a time to go to court but consider the costs of the litigation before making that decision.  Approach the decision of whether to litigate in a business-like-manner rather than emotionally.

Be proactive.  Don't wait for the wolf to knock on your door before you protect yourself.

P.S. I wrote this post originally for IowaBiz.com.  The blog sponsor, Professional Solutions Insurance Services, and its parent company, NCMIC, had a nice write up in the Des Moines Business Record this week. 

Photo by Laenulfean on Flickr.

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On her Employee Handbooks Blog Jill Pugh discusses 10 things to keep in mind if you need to fire an employee.

A no-no I see the most on the list is the desire to withhold money from the employee's last paycheck.  (See No. 5). 

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On the Apprentice Donald Trump always says with such gusto, "You're fired!"  The board room discussion usually focuses on what went wrong and the faults of the candidate.

But is it more important to organizational success to know how to fire or how not to fire?  If a problem arises with an employee do you always focus on what went wrong?  Or instead, do you focus on how changing behaviors and performance could have a positive impact on the organization and the employee?

Inc.com has a series of slides on the Dos and Don't of firing and an article with tips on how to fire employees. Chris Musselwhite, a consultant and columnist with Inc. says:

Despite the discomforts, dismissing an employee can be one of the most important tasks of leadership you'll face. It can be an opportunity to strengthen or build a culture of respect, accountability and trust--especially in an entrepreneurial environment--or it can foster a culture of fear and secrecy at all levels. Other employees are watching, and how you deal with the problem will set standards or norms in the organization. You are shaping your organization's culture whether you take action or ignore the problem. The real question is, what do you want your organization's norms related to competent performance to be?   

Musselwhite cites the three most common mistakes leaders make with a potential firing:

• To treat it as a legalistic, mechanical problem. If you only are worried about having filed the right paperwork and getting through it without having to call the security guards, you've probably been thinking of it as a chance to get rid of a thorn in your side, instead of thinking about the best way to solve the problem for everyone's benefit.
• To wait until a crisis occurs before taking action. If you can address the problem early, before frustration and resentment are high, the chances for success are exponentially greater.
• To make decisions based on emotions rather than facts. We can't fire people based on personality clashes or annoying behaviors. It's got to be about the impact on the organization, accountability and getting the job done. When the decision is fact-based, you remove many of the emotional stressors that arise when sitting down to consider your options.

I agree with Musselwhite that dismissal should be the last step in a postive process for your organization, leader or employee.  Be sure to set out clear performance expectations for employees and provide them with training, mentoring and other opportunities for success.  If it doesn't work after attempting this approach you are more likely to avoid litigation if you end up firing the employee.

Thanks to Mike Colwell of the Des Moines Partnership's new business accelerator for pointing out the articles.

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I recommend employers listen to a podcast from Jason Storipan of Stark & Stark concerning Attendance Control Issues for employees.  Please remember that laws do vary from state to state but much of the information given in Jason's podcast is applicable to all employers even if you are not located in New Jersey.

If you are developing policies and procedures to deal with employee attendance issues be sure to contact your employment lawyer and keep in mind two important ideals:  Fairness and Consistency.

If you treat people fairly and in a consistent manner your liability risks from an employee lawsuit decrease dramatically.  May seem like common sense but as George Will said, "This is an age in which one cannot find common sense without a search warrant." 

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Iowa Governor Chet Culver signed a bill today expanding housing and civil rights protections to the LGBT community.  In signing the bill Governor Culver said,

"It is unacceptable that members of the LGBT community are denied the same protections as every other Iowan, and that is why I made a promise to do whatever necessary to grant these individuals the rights they deserve. I am happy to say that today, we keep this promise. This legislation will guarantee that no individual, regardless of race, age, gender, sexual orientation, or gender identity, is denied the protections of state government."

If you are an Iowa employer be sure to talk with your employment lawyer concerning your employee handbooks and anti-discrimination policies.  It is important to review your handbooks to make sure your anti-discrimination policies now cover sexual orientation and gender identity.  Failing to include such provisions in your policies could result in increased liability.

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With Memorial Day coming up next Monday I thought it appropriate to touch on Military Leave Laws and Veteran Discrimination.

A law known as the Uniformed Services Employment and Reemployment Rights Act (USERRA) protects the rights of military service members to take a leave of absence to take a leave of absence from their civilian jobs for active military service and to return to their jobs with accrued seniority and other protections.

Some of the core protections include (a couple of nice overviews are here and here):

1. Protection against discrimination with prior, current or even possibly future military service;
2. Protection against retaliation for trying to enforce USERRA;
3. Reemployment rights upon return from military service including certain protections from discharge;
4. Continuation of benefits that are based upon seniority or length of employee service;
5. Certain preservation of other benefits while absent and upon return of service.

However, as the Employment Advisory blog points out about a recent 11th Circuit decision involving USERRA, the rights of the military service members do have their limits.

Employers are required to provide notice to persons entitled to the rights and benefits under USERRA.  In Iowa you can find information on how to obtain your USERRA poster by going to the Iowa Workforce Development Web site.

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Many employers today are conducting do-it-yourself background checks by surfing search engines and other social network sites such as Faceboook and MySpace.  I have discussed the risks and liabilities of utilizing such background checks in the past.

Another reason to be careful before using search engines or social network sites is "cyber slamming".  It occurs when defamatory statements are made about individuals on the Internet.  The Internet is full of sites and chat rooms where anyone can make postings.  Some of these may be anonymous comments that are not reliable.

Recently I was contacted by a prospective client who complained someone was writing defamatory and damaging comments about them on the Internet.  While a lawsuit is a consideration another option may be a service from ReputationDefender which attempts to remove such harmful comments for a fee and also provides monitoring services for clients.

I also suggest you follow this tip from Susan Cartier Liebel:

The same way  you check your credit report on an annual basis, Google your name and your company's name on a weekly basis to see if there is any information circulating that you find is potentially threatening to you.  You must stay proactive and aggresively stamp out any malicious virus threatening to infect and destroy your good name on the internet.   

Like so many things from a legal prospective, protecting your reputation on the Internet requires you to be proactive.

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Earlier this week Larry McLellan and I spoke to a group of clients concerning employment law.  Larry gave a fascinating talk on conflict in the workplace.  I took two main things away from Larry's talk.  First, not all conflict is negative.  There can be constructive conflict in the workplace.  Second, people who have good conflict management skills spend less time dealing with unproductive conflict.  Employees who are trained in conflict management can manage conflict so that it creates positive results instead of tension and stress.  And this is important because unproductive conflict in the workplace often leads to litigation.

Well, a cure for workplace conflict may just be a new book written by Timothy Johnson called GUST - The "Tale" Wind of Office Politics.  Like Larry suggests, Timothy shows us that office politics are not necessarily negative.  The key, however, is identifying the strategies to deal with the various office politicians including the Snake, Ostrich and Bear.  What are those strategies?  Well, I strongly suggest you buy the book.  It is a business fable and a quick read.  I know it can help you develop skills to spend less time dealing with unproductive conflict in the workplace and to create positive results.  It is available on Amazon.com. 

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One of the biggest challenges for my clients is hiring and retaining talented employees.  David Maister has an excellent post on hiring talented people.  In his post David expands on the War for Talent is Back by Bob Sutton of Harvard Business Online.

Thanks to Kevin O'Keefe for pointing out the posts.  Kevin runs an ever-expanding law blog development and Internet marketing business called LexBlog.  His blog is definitely one I check out every day.

One of the more interesting takes from these posts is the feeling that superstars are overrated.  I am not sure I necessarily agree.  What is overrated is a superstar that has a hard time working within your company's system.  But what if your superstar gets along with others, isn't too greedy and fits just right in your company's system?  Also, from a start-up perspective having a great business system is necessary but having the "right" people first is the recipe for success.  If you don't have the "right" people can you ever develop the great system?  As Jim Collins says, "First Who, Then What".

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The Virginia Tech tradegy continues to raise awareness of the growing necessity to prevent workplace violence.  Shanti Atkins of the Harassment Training Blog outlines a Seven-Step Workplace Prevention Plan for employers.  Those steps include:

1. Develop a Management Team to develop, review and implement policies regarding workplace violence;
2. Implement an Education and Training Program;
3. Increase Security Measures;
4. Develop a Response Procedure;
5. Use Judicial Resources;
6. Prescreening and Consistent Enforcement of Workplace Policies;
7. Establish Clear Communication Channels.

Perhaps the best advice from the blog post is to take threats of violence seriously.  Shanti says that you should not assume that an employee is just venting or blowing off steam.  Employers should take steps to investigate complaints promptly and take disciplinary action if warranted.  Reporting employees should also be assured they will not be retaliated against for making such complaints.   

It is all too easy to believe that it will not happen to you.  Some employers may not even have a policy concerning workplace violence.  Employers would do well to develop such a policy and re-examine those procedures on a yearly basis.

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Stephen R. Hampton, Executive Officer of Wage Payment and Minimum Wage for the Iowa Division of Labor offered up the following to explain the changes to Iowa's new minimum wage law in the April 2007 edition of the Iowa Lawyer.  The law took effect April 1, 2007.

• It increased the minimum wage from $5.15 per hour to $6.20 per hour as of April 1, 2007.  That wage rate will go up to $7.25 per hour as of January 1, 2008.
• It generally applies to all employers who gross at least $300,000 in sales or business per year.  In addition, the law applies to some types of employers regardless of business volume, such as government agencies, schools, day care centers, pre-schools, hospitals, and those in construction, laundry, and dry cleaning.  There are some employers who are not required to comply with the law, such as many types of agriculture-related employers, certain summer camps, and others.
• It also changes the "initial employment wage" that employers may pay a new hire the first 90 calendar days of employment.  As of April 1, an Iowa employer is allowed to pay an "initial employment wage" of $5.30 per hour during this 90-calendar-day period.  That "initial employment wage" will increase to $6.35 per hour as of January 1, 2008.
• Commencing April 1, tipped employees, those who "customarily and regularly", receive more than $30 per month in tips, must be paid at least $3.72 per hour.  This amount will increase to $4.35 per hour on January 1, 2008.  If the wage paid and tips received do not average at least minimum wage for all hours worked, the employer is required to pay the difference.
• Iowa employers will be required to put up a new poster reflecting the new minimum wage.

More information on the new Iowa minimum wage law and a free copy of the poster is currently available under the Announcements column on the Iowa Workforce Development Web site.  If you have specific questions regarding the minimum wage laws please consult your employment lawyer.

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I read an excellent article by Adam Siegelhiem of Stark & Stark concerning Restrictive Covenant Agreements for Franchises.  Although his post is intended for franchises it is advisable for any business to consider restrictive covenant agreements for their employees.

Somewhat surprisingly, many of the small business owners I talk with are reluctant to enter into restrictive covenant agreements with their employees.  These business owners are afraid that the employee won't sign or that other confrontations may occur.  Some just don't believe they should keep their employees from finding another job - even if it is to the employer's detriment.

But in order to avoid disruptions to your business and client relationships you should consider various agreements to protect yourself including, but not limited to:

• Confidentiality agreements;
• Non-compete agreements;
• Non-solicitations of clients;
• Non-solicitation of company employees.

If you are one of those who is not comfortable with a non-compete agreement for your employees I would strongly encourage you to have at least the confidentiality and non-solicitation agreements.  These agreements generally provide protection for your business without restricting the employee's ability to work elsewhere.  If a departing employee attempts to take clients or other employees with them you will be glad you had those agreements in place.

* Remember these types of agreements are very state specific so it is important to seek the advice of a business lawyer in your state before implementing the agreements discussed in this post.

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The federal government has launched a new initiative aimed at cracking down on discriminatory hiring practices.  According to this law.com article that is exactly what happened to Walgreen Co. when the EEOC decided to file a class action against the company for alleged discrimination against African-American workers.

The initiative is called E-RACE (Eradicating Racism and Colorism in Employment).  Specifically the EEOC will focus on hiring decisions based on names, arrest and conviction records, employment and personality tests and credit scores - all of which may disparately impact people of color.

It may surprise some that discrimination claims are still so prevalent.  But the most frequently filed claims with the EEOC are still race-based claims accounting for a total of 36% of the claims in fiscal year 2006.  Maybe your company's employment training should center on the basics after all.

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Problem:  You need to train your existing employees on new manufacturing techniques but you don't have the necessary funds to complete it.

Solution:  Consider a grant under the Iowa Jobs Training Program (260F) through the Des Moines Area Community College Business Resources.  A client recently obtained this grant to train his employees.  He was able to obtain $50,000 to train workers over a three-year period.  To qualify for this program, your business must be engaged in interstate or intrastate commerce for the purposes of manufacturing, processing, assembling products, or conducting research and development.  Businesses that provide services in interstate commerce are also eligible.  Businesses under the 260F program are required to provide 25% of the training program cost as a cash match.

I recommend checking out DMACC's Business Resources site.  Another funding option for expanding companies includes the Iowa New Jobs Training Program (260E).  The 260E program is free to participating businesses.

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An excellent post from Shanti Atkins of the Harassment Training Blog reminds us that employment law is always changing and evolving.  What was hot 10 years ago is not necessarily hot today.  Is your training centered on trends from the past?

Shanti points out that pregnancy discrimination and national origin / race cases are on the rise.  A trend she also identifies is that the EEOC is looking for and taking cases to court that have a broad impact in the workplace.  Over the past several years the EEOC is filing between 400 to 421 cases per year.

A couple of other trends I have noticed include an increase in religious discrimination claims and recent cases make it likely employers will face a rise in retaliation claims.

For more information you should review the EEOC Enforcement Statistics and Litigation.

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Some time ago I wrote about Seven Considerations Before Starting Your Business Blog.  In the post I included some sample blogging policies from several tech savvy firms.  But Jay Shepherd of Gruntled Employees blog recommends a two-word business blogging policy:

"Be professional".

Why use 59 words when two will do?  Well said, Jay.

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Employment Law Colorado blog has an interesting blog post on a former employee suing IBM for his Internet addiction.  The lawsuit is based upon a claim that IBM violated the Americans with Disabilities Act.    Although many bloggers' spouses may disagree, Internet addiction is not currently recognized as a true addiction.

This Findlaw article examines the viability of the lawsuit.  Surprisingly Internet addiction lawsuits are something employers could see more of in the future.  So shut off those Blackberrys now.

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Iowa patent and information technology lawyer Brett Trout recently completed his series of posts on the new federal rules concerning electronic discovery.  Brett and I also recently completed a podcast interview discussing the new electronic discovery rules.  I encourage you to check it out.  Brett has a lot of great information to share on the topic.

One way to prepare your business for the new electronic discovery rules is to have a solid document retention policy.  I found this helpful white paper from LexisNexis Applied Discovery regarding the elements of a good document retention policy.   Some of the key elements include:

• A written document retention policy must be actively enforced and audited;
• the policy should include the name of the custodian of the information;
• the policy should list the types of servers and back up tapes used;
• a lawyer needs to be familiar with the company's IT system;
• companies must educate employees about the policy and stress implications of not following it;
• the policy must be easy to follow, periodically updated and state how often it will be updated;
• the policy must address the different ways employees save information;
• the policy should also address the litigation hold including email back up tapes.

I am interested in hearing from you if you have other document retention recommendations.  In the end, a solid document retention policy could help you avoid substantial sanctions and/or judgments for mismanaging or willfully destroying documents. 

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The Iowa legislature is now considering amendments to Iowa's right-to-work law.  This is a hot button political issue - the merits of which I am not discussing in this blog post.  What I am addressing is the confusion many people express over the Iowa right-to-work law.  Many individuals confuse the law with the belief that non-compete agreements are not enforceable in Iowa.  I have heard many times, "Iowa is a right-to-work state so this non-compete is not enforceable, right?"

Wrong.  Right-to-work has nothing to do with it.  As I discussed in a previous blog post on the topic, non-compete agreements are enforceable in Iowa under certain circumstances.  Iowa's right-to-work issue generally involves the prohibition of a union from making membership or payment of dues or fees a condition of employment, either before or after hire.  Iowans are free to work and join a union and Iowans are also free not to join a union.  The right-to-work law does not involve the issue of non-compete agreements.

If you are looking for a discussion on the political issues of Iowa's right-to-work law check out Mark Ingebretsen's article on IAbiz Online.  IAbiz Online, launched in January of 2007, is the companion Website to the new IA.biz Magazine.  Both projects are communication tools of the Iowa Association of Business and Industry.  (And yes, you might even catch some of my articles re-published on the Web site).

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The U.S. Supreme Court has decided to hear an important employment discrimination case in which a Coca-Cola bottling company fired a black employee.  The case involves allegations that a supervisor was motivated by racial bias and influenced a human resources manager to fire the worker.  The human resources person was located elsewhere and did not know the employee's race.  Such circumstances are sometimes referred to as "cat's paw" liability.

The Court will be asked to consider whether an employer can be held liable for intentional discrimination when the person who fired the employee harbored no discriminatory bias.

See also the Tennessee Business Litigation Blog for a discussion on the case.

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I ran across an excellent article by employment law litigator Jason Storipan of Stark & Stark on issues involving electronic discovery and employment law.  Storipan cautions that employers must be aware and plan for the new electronic discovery rules:

". . . [e]mployment law is an area of the law that the increases in the use of technology in the business world increases the risk of a lawsuit.  As any employer is aware, technology has changed the workplace, and its use can create a host of problems in the workplace that can lead to litigation.  The new Rules on electronic discovery potentially can lead to even more problems for the unprepared employer.  In this instance, the best way for the employer to prepare is to plan as if it is involved in litigation and meet with its counsel." 

I agree with Storipan.  Early preparation for electronic discovery by companies is crucial.  The duty to preserve electronic materials begins when a company reasonably anticipates litigation, not once litigation begins.  Spoilation is the destruction of of evidence.  There are significant consequences for destroying evidence.  Employers must be aware of how to preserve this evidence and comply with the new electronic discovery rules.  Waiting until you get into litigation is not the answer.

FYI:  Patent and information technology lawyer Brett Trout of Des Moines is also planning a series of posts on electronic discovery issues.  Be sure to check those out.

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The Fifth Circuit Court of Appeals has ruled there is no private right of action for violations of HIPAA (Health Insurance Portability and Accountability Act of 1996).  To this point, every federal district court that has decided the issue has also ruled no private right of action exists.  No other federal circuit court has decided the issue.

A woman had sued filed suit against a doctor for disclosing medical information without her consent.  The Court based its decision on the fact that HIPAA provides both civil and criminal penalties for improper disclosure of medical information and limits enforcement to the Department of Health and Human Services.  The Court ruled that since HIPAA specifically delegates enforcement, there is a strong indication that Congress intended to preclude private enforcement.

Read the opinion.

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Employment lawsuits are continually on the rise.  Here are seven things that may help you avoid employee lawsuits:

1.  Treat Employees with Respect:  Seems like a basic philosophy but it is amazing how many employers forget to treat their employees with respect.  Employees that are humilated or treated in a disrespectful way are much more likely to sue your company. 

2.  Communicate with Your Employees:  First, make sure you have an effective employee handbook with up-to-date employment policies and publicize your policies to employees.  Make sure you follow your policies.  One of the easiest ways to land in an employee lawsuit is the failure to follow your employment policies.  Also make sure you have an open door policy where employees are allowed to voice their concerns or complaints.  Do not let complaints fester.  Deal with them right away.

3.  Implement an Effective Unlawful Discrimination and Harassment Policy:  Your harassment policy should include more than just sexual harassment.  There may be other forms of harassment based upon race, religion, age or disability.  It is also critical to consistently train employees and supervisors regarding unlawful harassment and discrimination.  You should consider training employees on harassment and discrimination issues at least once every year.

4.  Document, Document, Document:  The importance of good record keeping cannot be overstated.  If you don't have something in writing, chances are a jury or judge may not believe it happened.  Be sure to document even verbal warnings and maintain an appropriate personnel file in order to make sure the documentation is not lost.

5.  Conduct Honest Employee Evaluations on a Regular Basis:  Unless your company is headquartered in Lake Wobegon every employee is probably not above average.  Evaluations can be valuable proof in an employment lawsuit.  Make sure poor performance is properly documented.  Otherwise, the judge or jury will not believe you when you say the employee performed poorly but all their evaluations are excellent.  You should conduct the evaluations on a regular basis, usually at least once per year.

6. Do Not Retaliate:  Employers are often blindsided by retaliation claims.  There are a number of proactive measures you can take in order to avoid liability for retaliation claims.  It is important to avoid retaliation because recent cases have lowered the burden for plaintiffs to prove their retaliation claims.

7.  Take Action and Investigate Promptly: If a complaint arises, make sure you take the complaint seriously and investigate promptly.  A quick and thorough investigation may help eliminate problems before you have a real mess.  You will need to consider who should conduct the internal investigation.

These simple steps will go a long ways to reducing employee lawsuits.  To ensure that your company has done everything it can to avoid employee lawsuits, you should have your employment policies, training and practices reviewed by your employment lawyer.

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George's Employment Blawg, written by attorney George Lenard of St. Louis, has some excellent posts (see here and here) on the risks and liabilities associated with using Facebook for employment background checks.   Some of the risks may include discrimination claims and Fair Credit Reporting Act violations.  The use of other social networking sites such as MySpace have similar considerations. 

[Lenard] would advise employers to cut applicants and employees some slack. You were once young too and maybe did similar things -- if not publicly on the Internet. Ask yourself how relevant the information creating the negative impression is to job performance.

If you are going to do Internet searches and use them as a basis for employment decisions, you better do so consistently, without regard to any legally protected classifications, e.g. race, sex, age. You should document them.

I would add that if employers intend to conduct background checks of any kind for prospective employees it is important to have them sign a release and authorization allowing you to conduct background checks.  In Iowa, many employers are using the Iowa Courts Online to conduct free background searches.  Using the release and authorization may make it safer from a legal standpoint but you still must be aware of discrimination and Fair Credit Reporting Act issues when using these online resources to conduct background checks.

It is also advisable to consult your employment lawyer before using these online resources.

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The core of this Iowa business and corporate law blog consists of six main categories found on the right hand side margin including incorporation and LLC formation, starting a business, franchise law, employment law, business litigation and buying and selling a business.  I attempt to cover many of the basics in each category and also follow a variety of new developments including the recent Iowa consumer class action against Microsoft which is one of the largest cases in Iowa history.

In a recent interview with the Des Moines Register I was asked why I started this blog.  Initially I sought to differentiate myself from other Iowa business lawyers in order to more effectively market my services.  While blogging has worked to accomplish my initial goal, I quickly developed a much higher sense of purpose with this blog.  I want to do my part to improve the public image of lawyers.  My strong sense of purpose is to educate and provide information to business people in a way that helps them identify legal issues and make more informed choices about what legal services they need.  The collaborative process of a law blog (or any blog) can allow this to happen. 

Be sure to let me know if you have any questions about this Iowa business and corporate law blog.    Please feel free to explore and comment.  I hope you find it interesting and informative.

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In December's issue of Inc. Magazine, Norm Brodsky describes a paradox of successful negotiation.  The less interest you have in doing a deal, the more likely you are to get one you'll find difficult to refuse.

Brodsky is considering selling his businesses (records storage, secure document-shredding and delivery).  He turned down an offer from a major corporation because they would not buy the delivery business.  A VC firm then approached Brodsky.  Brodsky explained to the VC partner why they should buy all three of the businesses, set his price and then told the VC partner he would not negotiate.

A short time later the VC partner shot Brodsky an offer several million dollars below the asking price.  Brodsky didn't respond.  The VC firm then inquired about why Brodsky had not responded and Brodsky again informed them he would not negotiate.  He really didn't care if he sold his businesses or not. Low and behold, the VC firm agreed to the price and the deal is in the due diligence phase.

This lesson is applicable in business litigation as well.  If you are willing to walk away empty handed you are often much more likely to get a good deal.  You are probably in the strongest negotiating position when you really don't care if the case settles or not.  However, it is rare in the litigation context that an initial "take it or leave it" approach results in a settlement.  Particularly if you are negotiating with an insurance company there will be an expectation that you engage in a negotiation process with multiple offers going back and forth.  Usually a case will not settle until both parties have the perception that they could do worse if they go to trial.  The parties need to sense the risk.

Still, as Brodsky demonstrates, the "take it or leave it" approach can be very effective under certain circumstances and is a very powerful negotiation technique with the right client and case.  Being a good poker player doesn't hurt either.

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The time to hire a business attorney is before you get into legal trouble.  It is much easier and more cost-effective to prevent problems rather than solve them.  Further, if you do get into legal trouble it will be much easier to deal with the issues if you already have a solid relationship with a business attorney.

So how do you hire a business attorney for your Iowa business?  I suggest you insist upon two main criteria:

1. The attorney must be experienced and competent with business law issues.  Since you are in business you probably should not hire the local personal injury, family law or other attorney that does not have experience with business law issues.  Choosing a lawyer that is not familar with business law may have serious consequences and may increase the costs because the lawyer may learn on your dime. By analogy, you don't want a plastic surgeon operating on your heart.

2.  Make sure you feel comfortable with the attorney.  Don't make a snap decision based upon hourly rates.  Do you trust the lawyer?  Did you get your call returned right away?  Is the attorney easy to talk with?  Does the attorney care about you and your business?  Does the relationship feel right?  There are many competent and experienced business attorneys in Iowa so make sure to trust your instincts.

Here are a couple of articles which may help you choose the right attorney for your business:

How to Hire an Attorney from Entrepreneur.com

Ten Questions to Ask Your Business Attorney from Allbusiness.com

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Business.gov is the "Official Link to the U.S Government".  This Web site is an excellent resource for the start-up business. 

The site has many helpful areas including:

1.  Business Resource Library - contains information on a variety of regulatory topics including taxes, managing and hiring employees and intellectual property;

2.  Government forms search - by agency, form number or name;

3.  State Compliance Resources - which might be particularly helpful if you are doing business in more than one state;

4.  Links to the Small Business Business Administration - includes links to planning, starting, managing and exiting a business.

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In Iowa, non-compete agreements are enforceable under certain circumstances.  The best time to secure a non-compete is when you hire the employee although continued employment may be sufficient consideration to bind even current employees.  Iowa courts have developed a three-part test to determine whether a non-compete agreement is enforceable:

1.  Is it necessary for the protection of the employer's business?

Factors to consider:  Does the employee have a great deal of personal contact with customers?  Is the employee in a position to lure customers away?  Have you spent significant time and money training the employee?

2. Is the non-compete unreasonably restrictive of the employee's rights? 

Factors to consider:  Is the non-compete limited in time?  The most common time restrictions are 1-3 years.  Courts tend to favor shorter time restrictions.  (This will always depend on the cirmcumstances of the particular case).

Is the non-compete limited in geographic scope?  For a local business, a 50-mile limit may be reasonable while a regional business may use a scope spread out over several states.  It depends on the market area of the particular business.  Because of the Internet and other technologies, geographic limits are becoming a less effective way to control competition from former employees.  Businesses must carefully consider how to be reasonable and still control competition in the global marketplace.

3. Is the non-compete prejudical to the public interest? 

Factors to consider:  Does the particular non-compete harm the general public?  This part of the test has rarely been used to invalidate non-competes in Iowa.  For example, non-competes in Iowa have been upheld against doctors and dentists where you might expect that limiting access to health care could harm the general public.

Finally, Iowa has adopted a "partial enforcement" doctrine permitting a court to uphold a non-compete agreement to the extent it is reasonable and allowing the Court to modify terms if necessary.  For example, a court may reduce a time restriction from 3 years to 1 year if the judge finds that is appropriate.  Or, a judge could change a geographic restriction from the entire state of Iowa to a 100-mile radius of the business.  This is different from an all or nothing approach where a judge might declare the entire non-compete agreement invalid if just one of the terms is found unreasonable.  When litigating non-compete agreements in Iowa the parties must consider whether the agreement may be partially enforced.   

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Last week was a momentous week as Brett Trout and I concluded the first ever full-day CLE devoted to lawyer blogging in the country through LAWpportunities.  We were fortunate to have been joined by blogging experts Mike Sansone and Sandy Renshaw.  Mike delighted the crowd with his tutorial on RSS feeds.  Any lawyer not using RSS feeds in their law practice is missing out.  If you are a lawyer interested in harnessing the power of RSS feeds you may want to check out the Iowa State Bar Association eCommerce seminar on December 1st where I will be talking about how RSS feeds may gain you a client for life. 

Prior to their appearance at our blogging seminar, Mike and Sandy joined several other Iowa bloggers (Drew, Tim, Mike, Tom, Mitch, Doug and Brooke) in welcoming Starbucker to Iowa Blogging Central (aka Panera U in West Des Moines).  Now Sansone is probably the biggest Panera fan I know and Starbucker obviously has a certain affinity for a cup of latte now and then.  But fellas your favorites could use a little help.

First, Starbucks reported earlier this month that it had lost the personal data of 60,000 employees and contractors when two laptops turned up missing.  It is bad enough that the personal data included names, addresses and social security numbers but that is only part of the story.  The rest of story is that the laptops were missing from . . . a closet!  Who stores computers containing confidential information in a closet?  (Well, I guess Starbucks actually).  Anyway, after a two month investigation did not turn up the laptops Starbucks has offered the employees and contractors free credit protection to guard against identity theft.  Also, Starbucks already implemented a policy whereby confidential information such as social security numbers are not allowed on laptops and other mobile devices but these laptops unfortunately contained the information before the policy was in place.  No word on whether Starbucks has implemented a policy prohibiting the storage of laptops in closets.

Second, Panera had its own little legal blunder.  Panera had the exclusive right to sell sandwiches in a Massachusetts mall.  The owner of the mall then signed a lease with Qdoba Mexican Grill.  Panera sued to enforce the exclusivity portion of their lease.  The court ruled that a burrito is not a sandwich.  The decision came down to the difference between two slices of bread versus one tortilla.  The judge also concluded that a sandwich is not commonly understood to include burritos, tacos and quesadillas which are typically made of a single tortilla stuffed with a choice of meat, rice and beans.  (No wonder the guys at Pancheros looked at me a little funny when I ordered a sandwich with steak, rice, beans, cheese and salsa on tortilla.  I guess the judge was right).

Only in America!

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As evidenced by a recent study from Iowa Association of Business and Industry, Iowa companies are concerned about the legal climate in Iowa. 

Here are five ways to avoid lawsuits against your business:

1.  Use written agreements.  Unfortunately the day is over when you could rely on a handshake.  Make sure that your agreements are comprehensive.  The agreements should always set forth the rights and responsibilities of the parties in detail.  It is a good idea to have your written agreements drafted and/or reviewed by a business attorney.

2.  Have a comprehensive employee manual.  Employee lawsuits are on the rise and a major distraction for your business.  A written employee handbook affords you a better opportunity to avoid misunderstandings that can lead to litigation.  Disputes are are less likely to occur when your employees know the rules.  Keep in mind that a well-written employee handbook can help your business but a poorly written handbook can cause even more problems for your business.  Don't pull a template from the Internet without consulting an employment lawyer.

3.  Maintain your corporate or other limited liability structure.  Make sure to keep your personal guarantees to a minimum, stay current with corporate records, pay your applicable taxes and do not mix your personal assets with your business assets.

4.  Protect your intellectual property.  Consider obtaining trademarks, copyrights and patents as applicable.  Consult an intellectual property lawyer in order to protect yourself against infringers.  Likewise, avoid infringing someone else's intellectual property.  Before deciding on a business or product name you should check to see if the name is trademarked by someone else.  Similarly, be careful not to steal copyrighted materials for your own use.

5.  Consider alternative dispute resolution.  Mediation is often an efficient way to resolve business disputes.  Mediation is a process in which the parties to a dispute, with the assistance of a neutral third party (the mediator), identify disputed issues, develop options, consider alternatives and work to reach an agreement. There is a time to go to court but consider the costs of the litigation before making that decision.  Approach the decision of whether to litigate in a business-like-manner rather than emotionally.

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Last week I attended the Iowa State Bar Association Employment Law Seminar.  One of the more interesting discussions involved whether an employer should ask an applicant whether he or she is a U.S. citizen or authorized to work in the U.S. on the employment application.  There was some lively debate on the issue. 

The speaker on immigration law, James Benzoni of Des Moines, advised that employers should not ask the question on the employment application.  He said asking the question prior to hiring opens the employer up to possible national origin discrimination claims and that the I-9 process takes care of determining whether the employee is eligible after hiring.  He asked, "Isn't that why we have the I-9 process?"

The Staff Selection blog has a list of questions not to ask in an interview or employment application.  The blog post (source: Business.gov) advises that it is acceptable to ask, "Will you be able to show proof of eligibility to work in the U.S. if hired?" 

But if I understand Benzoni's advice correctly he would argue why even take the chance with that question.  Isn't it presumed the applicant is able to show proof of eligibility?  Isn't that part of why the applicant is applying for the job - because they're eligible to work in the U.S.?

Benzoni makes a good point.  Before hiring, questions regarding whether someone is a U.S. citizen or eligible to work in the U.S. could open the employer to possible discrimination claims.  The I-9 process does flush out whether the employee is able to show proof of eligibility.

The question of citizenship and eligibility is frequently asked on employment applications so employers would be wise to review their applications and ask their employment lawyer for specific advice on the issue.

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New York Small Business lawyer Imke Ratschko presents a helpful e-book on her blog "Small Business Guide to Risk Management - A complete guide for business decision-makers" published by the Association of Small Business Development Centers.

This easy to read guide discusses the many risks that businesses face and provides checklists to assess those risks and mitigate them to the extent possible.

In particular, employee related lawsuits are a major concern of many businesses.  The guide contains an excellent overview of the issues related to human resources.  From the human resource section:

At a minimum, employers should ensure that they are in strict compliance with all applicable federal and state labor regulations.  A next step would be to institute proactive management policies and practices to educate managers and employees about their respective rights and responsibilities.  Employee lawsuits are often a symptom not only of perceived transgressions, but also of low employee morale brought on by ineffective or indifferent management attitudes.

Another insightful section involves intellectual property including patents, trademarks, copyrights and trade secrets. 

I encourage you to check it out.

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The new federal electronic discovery rules become effective December 1, 2006.   Fed. R. Civ. P. 26, 33, 34, 37, and 45 are being amended to take into account the importance of electronic records in the discovery process.

Here are the pending rules amendments.

Thanks to the Minnesota Business Litigation blog for the reminder.

Lawyers may also want to stay tuned for a panel discussion of the new electronic discovery rules with Dennis Kennedy, Tom Mighell and Ron Friedmann of Prism Legal Consulting.

Dennis Kennedy also has a helpful electronic discovery resources page you may want to check out.

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Many companies have policies covering Internet use, email, cell phones and other technologies.  But does your company have a policy covering blogs?  If not, you need to consider it.  Kevin O'Keefe of LexBlog posted an interesting article that appeared in Scotland's National Newspaper regarding the need for companies to rewrite their employment contracts to cover blogs.

In Iowa, most employers hire employees on an "at will" basis rather than through an employment contract.  Accordingly, it is generally more applicable that Iowa employers consider rewriting their employee handbooks to cover blogs rather than employment contracts.

Like O'Keefe, I am not attempting to discourage blogging but it is definitely important for businesses to look before they leap with blogs.  Another issue is what happens if an employee writes derogatory remarks on a Web site unrelated to the employer.  It may cause nothing more than a minor embarrassment, but at worst, it has the potential to affect the company's entire corporate image. 

You should consider contacting your employment lawyer to conduct a review of your employee handbook policies to see if you have adequately considered the issues involved with the blogging phenomenon. 

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Iowa patent and technology lawyer Brett Trout recently posted about a couple of cases where bloggers were hit with big verdicts.  One of the verdicts included $11.3 million awarded to a Florida woman after being called a "crook", "con artist" and a "fraud" in an online post. 

This just points out that businesses must look before they leap with blogs.  Blogging raises a whole host of issues incuding copyright infringement, privacy issues and defamation.  I recall an instance on the Web where a former employee blasted an employer and then the employer openly discussed on the Web the circumstances of the employee's departure.  The employee could have faced a defamation claim and also a claim for divulging trade secrets of the company regarding pay and product information.  On the other hand, the employer could have faced privacy claims for sharing the circumstances of the employee's termination.

Companies considering a corporate blog should consider seeking advice from a lawyer with a good understanding of technology and blog law.

Often blogging is similar to email.  It is often a less formal method of communication and some bloggers don't think it through before posting their words for the world to see.  So look before you leap when it comes to blogging.

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Is it acceptable to request the birth date of an applicant on the job application? 

It is generally NOT advisable to request an applicant's date of birth on an employment application (except to ask whether an applicant is over the age of 18).  The Age Discrimination in Employment Act prohibits discrimination on the basis of age and applies to people age 40 and over.  Like sex, age is rarely relevant to a job description.

In order to avoid age discrimination you may also want to refrain from asking questions about when an applicant attended elementary, high school or college.

It is always a good idea to consult your employment lawyer regarding your employment applications.

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Corporate Law Notes Blog recently posted an interesting article which should cause employers to carefully consider their policies concerning monitoring of personal email and other technologies in the workplace.

A Massachusetts trial court ruled that the employer did not adequately put the employee on notice that his personal email account (Yahoo in this case) would be monitored despite several warnings in the manual that "Internet activity" would be monitored.

The case emphasizes the need to specifically set forth in an employee manual that "the content of personal email" may be reviewed and monitored when accessed through company owned computers or other technology.  It also emphasizes the need to be specific about whether other technologies will be monitored including voice mail, cell phones, text messaging, etc.

The awareness of monitoring email or other communications in the workplace will likely increase given the congressional page scandal involving Mark Foley.

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A recent Iowa Supreme Court case, McVey v. National Organization Service, Inc., stresses the importance of developing a drug-testing policy that complies with Iowa law and making sure that policy is delivered to each employee.

McVey lost her job after testing positive for marijuana during a random test.  The employer notified her over the phone and she did not return to work.  Depsite testing postitive, McVey filed a wrongful termination lawsuit seeking damages and also reinstatement.  The trial court dismissed her claim and she appealed.

McVey and her attorney, Mark Hedberg, made two arguments.  First, that McVey did not receive a copy of the the company's drug-testing policy.  Second, the written policy was not adequate to meet Iowa's statutory requirements.

The Court agreed with McVey.  The Court ruled the requirement that the employer adopt an employee drug-testing policy and deliver it to each employee is a necessary step in invoking the statutory authorization for employee drug-testing.  The Court said that even if McVey had received a copy of the employer's policy, the policy submitted did not meet the detailed requirements of Iowa law because it did not set forth what disciplinary or rehabilitation actions the employer shall take against the employee upon receipt of a confirmed positive test.

Here are some suggested preventative measures in order to avoid some of the pitfalls of Iowa's drug-testing law:

1)  Make sure your policy complies with Iowa and federal law;

2)  DO NOT assume your DOT/CDL drug-testing policy will satisfy the state law;

3)  Periodically review your drug-testing policy to make sure it is compliant with state and federal laws through a human resource audit;

4)  If you have any questions please be sure to contact your attorney.

Also, make sure to see my post on drug testing from April 29, 2006 before the recent decision.

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Employers are usually cognizant of discrimination and harassment claims. However, they are often blindsided by retaliation claims. The successful resolution of a discrimination or harassment complaint means you are only halfway home. Supervisors and employees must not retaliate against the employee who complained. This is even more important now because of a recent United States Supreme Court decision lowering the burden for employees to show retaliation.

Here are some proactive measures employers can take in order to avoid retaliation claims:

1) Make sure your employee handbook includes a policy prohibiting retaliation.
2) Always have alternative reporting avenues.
3) Conduct supervisor and management training on harassment, discrimination and retaliation.
4) Make sure supervisors and management have been asked the tough questions when it comes to employee discipline. Make sure the discipline has nothing to do with the complaints of harassment, discrimination or retaliation.
5) Periodically talk with the complaining employee to determine if anyone has retaliated against them. If performance is an issue for the employee be sure to bring this to the attention of the employee and make sure to document your conversations. Document! Document! Document!

Be sure to consult your employment lawyer for advice in specific situations.

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Rush Nigut is a featured speaker at the Iowa Association of Electric Cooperatives (IAEC) Human Resource Seminar this Tuesday, September 19, 2006 at the Wildwood Lodge in Clive, Iowa.

Rush's topics include defamation, wage and hour issues, retaliation and discrimination in the workplace.

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In a decision described as a "blockbuster" and a "bombshell", the U.S. Court of Appeals for the District of Columbia has ruled the IRS may not tax emotional distress or professional reputation damage awards unrelated to lost wages or earnings.

The case began when Marrita Murphy sued the Department of Labor alleging that her former employer, the New York Air National Guard, had blacklisted her and provided unfavorable job references because she blew the whistle on environmental hazards at an airbase. Murphy received $70,000 in compensatory damages--$45,000 for emotional distress and $25,000 for injury to her professional reputation.

Murphy included the $70,000 award on her 2000 federal income tax return, then filed an amended return seeking a refund of more than $20,000, the amount of taxes paid on the $70,000 award. The Internal Revenue Service denied her request. Murphy then sued the IRS and the United States in federal district court. The federal district court rejected her claims and granted summary judgment to the government defendants.

On appeal, the D.C. Circuit reversed the lower court's decision. The panel agreed Murphy could not prevail based on federal law 26 U.S.C. section 104(a)(2), which was amended in 1996 to prohibit the exclusion of emotional distress damages (as opposed to physical injuries) from gross income calculations. Federal law provides that damages for personal injuries and sickness are not taxable; physical injuries are based in tort and not subject to calculation as gross income.

However, the D.C. Circuit delared section 104(a)(2) unconstitutional under the 16th Amendment.

The court agreed with Murphy that her $70,000 award for emotional injury and loss of reputation was not income within the meaning of the 16th Amendment. "As we have seen, it is clear from the record that the damages were awarded to make Murphy emotionally and reputationally 'whole' and not to compensate her for lost wages or taxable earnings of any kind," Chief Judge Douglas H. Ginsburg wrote for the court. "Under this analysis, therefore, the compensation she received in lieu of what she lost cannot be considered income and, hence, it would appear the 16th Amendment does not empower the Congress to tax her award."

This decision could have a favorable impact on employees and employers alike. Employees will obviously benefit because they will pay less taxes on their settlement or judgment. Employers benefit because plaintiffs may accept less in settlement.

If the case is appealed to the U.S. Supreme Court, plaintiffs nationwide could avoid the tax if the Court rules favorably. However, many tax experts think the Supreme Court will reverse in the event the IRS appeals.

See the D. C. Circuit Court ruling.

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Employers Must Protect Employees' Social Security Numbers

In a recent newsletter update from the Krupin O'Brien employment law firm, attorney Natalie Cantor Gros wrote an informative article regarding the importance of employers protecting the Social Security numbers of employees.

The article points out that a Michigan employer paid $275,000 settlement to group of 911 operators whose Social Security numbers were stolen when a labor union employee brought home documents containing Social Security numbers and the employee's daughter use the information to make unauthorized purchases.

Michigan has passed a law designed to protect employees' Social Security numbers and other states are following. With about 9 million victims of identity theft in 2005 it is critical that employers take adequate steps to protect employees' Social Security numbers.

Employers should be particularly careful of allowing employees to have such confidential and private information on laptops. I have read over and over again about the loss of sensitive information on stolen laptops. Will employers ever learn?

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The Use of Comp Time in Place of Overtime

Some employers decide to provide employees comp time instead of paying overtime. Under the law, employers are usually not allowed to provide only one hour of comp time for each hour of overtime. Instead, an employer may be able to give compensatory time if the overtime premium is included. This means an employee is entitled to 1 1/2 hours of comp time for each hour of overtime worked, as long as the employee takes the time off during the same pay period as the overtime work. (This is often a misunderstood fact by employers).

If you have questions concerning the use of comp time in lieu of overtime please consult an employment lawyer or contact the Iowa Workforce Development.

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Employers Face Overtime Lawsuits

According to Business Law Today and the Washington Post lawyers for big businesses around the country are working overtime to protect corporate giants facing lawsuits for failing to pay overtime to rank-and-file employees.

As discussed in an article by Stephen Franklin of the Chicago Tribune, cases against State Farm Mutual Insurance and Allstate Insurance led to payouts of over $100 million for each.

This is also a significant problem for smaller businesses. In my experience it is not uncommon for small employers to misclassify employees. The U.S. Department of Labor has upped its enforcement of federal overtime standards. According to the Business Law Today article, the department saw a 26 percent increase in back wages won for workers and an 11 percent increase in the number of workers it was able to help last year.

A human resource audit can help you determine whether you are classifying workers properly.

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Employees are often issued laptops, cell phones and other technologies. Unfortunately employees will often fail to return equipment when they leave the company. When that happens many employers want to deduct the value of the equipment from the employee's last check. Iowa employers must familarize themselves with Iowa Code Chapter 91A.5 concerning deductions from wages. This chapter prohibits an Iowa employer from withholding or diverting all or a portion of an employee's wages unless permitted by state or federal law or a court order. An employer may be allowed to deduct wages if the employer has written authorization from the employee to deduct for a lawful purpose that benefits the employee.

Consequently an employer may want to consider a written agreement with the employee upon issuance of the equipment. The agreement should authorize the employer to deduct the value of the equipment from wages if the equipment is not returned. With the appropriate language an employer may be allowed to deduct from the last paycheck.

Please be sure to consult a lawyer for specific advice concerning your circumstances.

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Did you know that several cities including Des Moines,Iowa now have laws or ordinances prohibiting workplace discrimination based on sexual orientation? Even though no federal prohibition exists, there is a trend toward enacting legislation in this area.

Under these laws, it is generally unlawful to use sexual orientation to:

Refuse to hire a job applicant.
Terminate an employee from a job.
Discriminate in compensation or in other terms or conditions of employment.
Print, circulate, or use any discriminatory statement, advertisement, publication, or job application form.
Make any inquiry that is discriminatory in connection with prospective employment.

If an employee or a job applicant feels that his or her rights have been violated and files a lawsuit, the possible damages a company may face include payment of back pay, reinstatement of the employee, a training requirement to eliminate the discriminatory practice, and payment of damages for emotional distress.

Be aware of your local regulations. Although discrimination based on sexual orientation is not yet prohibited by federal legislation, this is a hot issue. You may need to carefully consider your policies if you have one location in Des Moines and the other outside Des Moines. Do you want or need two policies that are separate and distinct regarding sexual orientation? However, even if this local regulation does not apply to your company, it is prudent to recognize this trend to avoid claims of wrongful termination in violation of public policy.

If your company is in Des Moines or another city that has a similar regulation you should review your Employee Handbook and any other written policies regarding harassment and discrimination. These policies may need to be re-written to include sexual orientation as a protected class. This may include several sections and policies within your Employee Handbook such as Equal Employment Opportunity, unlawful discrimination and harassment, and personal appearance policies. You should also review any documents that include your Equal Employment Opportunity policy such as employment applications, Affirmative Action plans and employment advertisements for open positions.

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Three people are facing federal charges for trying to steal Coke's trade secret information and offering to sell it to rival Pepsi. Apparently, Pepsi immediately notified Coke about this offer, who in turn notified the FBI. One of the defendants is reportedly an administrative assistance to a Coke executive.

This proves the point of a recent blog post. (See "Employees Pose Biggest Threat to Data Security" - posted July 6, 2006). Employees present the biggest threat to security in companies. While significant dollars are often spent on keeping out hackers and other outside threats, companies generally ignore the need to prevent employee fraud.

Fortunately for Coke their rival acted honorably. Can you be sure your rival will act the same way?

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Employers are expected to face more retaliation claims due to a recent United States Supreme Court decision which adopted a broader definition of anti-retaliation provisions Title VII of the Civil Rights Act of 1964. The act forbids an employer from firing, demoting or harassing employees that complain about discrimination on the job.

Under the ruling the provision now applies to any "employer actions that would have been materially adverse to a reasonable employee or job applicant".

For more information read the following article from Inc.com.

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A recent audit by Palisade Systems of Ames, Iowa found that the biggest threat to a data breach or theft comes from employees or consultants that do not property secure the data they are entrusted with. Companies may spend millions to keep out hackers but only 2% of companies have monitoring and content filtering technology in place to prevent future misuse or theft of sensitive data from employees.

Click here for more information on how employees pose the biggest threat to data security.

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For over fifty years, the Sullivan & Ward law firm has represented rural electric cooperatives and generating electric cooperatives in the state of Iowa, as well as several electric cooperatives from across the country. Our attorneys, including John Ward and Michael Joynt, have gained national recognition for their expertise in the area of rural electric cooperatives and public utility law and are often speakers for various seminars throughout the country. Sullivan & Ward also represents many telephone and water cooperatives throughout Iowa.

In its capacity as general counsel for these organizations Sullivan & Ward advises companies and their boards on issues of corporate governance, general business functions, employment matters and litigation. The firm has extensive experience with matters unique to electric cooperatives including formation and organization, voting rights, tax issues, FERC issues, RUS programs and other regulatory matters.

Click here for more information concerning Sullivan & Ward's rural electric cooperative and public utility law practice.

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Seattle, Washington lawyer D. Jill Pugh recently wrote an interesting blog post regarding the fact employers are increasingly using Google to find out information about employees and applicants. Employers are able to find out all kinds of i