Lawyers Samantha Halem and Erik Hammarlund returned to the Harbor View Hotel in Edgartown last week to present a free seminar the Martha’s Vineyard Chamber of Commerce sponsored for employers, reprising a presentation they made in 2010. There have been some changes in the laws since 2010, but the bottom line, according to Ms. Halem and Mr. Hammarlund, is still that Massachusetts is a dangerous state in which to be an employer.
“The attorneys are not looking for a fair settlement,” Ms. Halem told the group. “They are looking to make money.”
Ms. Halem, a partner in the Marshall Halem law firm in Wellesley, specializes in defending businesses that run afoul of state and federal laws governing employment. (In 2010, Ms. Halem was a partner in the firm, but now she is named in the firm’s title.) Mr. Hammarlund, a Vineyard-based attorney, sometimes defends employers but more often represents employees filing suits against their employers.
To be on the safe side of the Massachusetts Wage Act, Mr. Hammarlund said this year: “If you’re paying at least the minimum wage [$8 an hour] with time-and-a-half for overtime, you’re probably okay.” Both lawyers agreed that it is also important to keep accurate records of employees’ hours, preferably signed by the employee.
However, there are at least two ways in which Vineyard employers try to circumvent paying overtime. Because executives or administrators are not subject to the Wage Act, an employer may classify an employee as a salaried executive, rather than as an hourly wage earner. What many employers don’t understand is that most salaried workers are still entitled to overtime pay. “Administrative Assistants,” for example, are usually not executives under the Wage Act, even though they have “administrative” in their titles. The rules are quite strict as to which employees may be classified as not subject to the Wage Act.
A second way businesses try to skirt the Wage Act is to classify a worker as an “independent contractor” and file a 1099 report with the IRS instead of a W2. Some workers even prefer to be “independent contractors,” because they do not have taxes or social security withheld, and there may be other tax advantages. However, it is illegal, even if the employee agrees.
The Wage Act (and IRS) rules for independent contractors are very strict. The contractor must do work outside of the usual business and must operate without immediate supervision; he or she must not do work also done by regular employees of the business. There are other requirements. Some businesses try to avoid paying overtime by hiring a worker as a regular employee for 40 hours a week, and then additional hours as an independent contractor. The IRS has recently been cracking down on employers who file both a W2 and a 1099 form for the same worker.
For businesses where part of the workers’ income is from tips, the laws in Massachusetts are strict. An employer must be able to prove that an employee is making at least the minimum wage when wages and tips are included. Therefore the law requires that the employer collect, keep track of, and distribute tips, and the employer may not charge workers for that service. The rules are also specific as to who may share in pooled tips (a maitre d’, for example, may not).
Of particular interest to nonprofits is that volunteers may have to be paid the minimum wage if they do work that a paid employee does. “Please spread the word,” Mr. Hammarlund begged the assembled owners and managers, “nonprofits are subject to the Wage Act.”
In a two-hour seminar, Ms. Halem and Mr. Hammarlund discussed many of the other pitfalls in interviewing, hiring, and managing workers.
New twists to the laws are that an employer cannot include a question about criminal history on the primary employment application, as well as questions which may violate anti-discrimination laws about age, religion, race, gender, etc. One may ask about criminal history in a face-to-face interview or in a “secondary” application, but as a first contact, criminal history questions are now forbidden. Massachusetts now has a new Criminal Offender Record Information (CORI) form; however, the presenters stressed that CORI is only good for Massachusetts. To check for criminal records nationwide requires a more expensive search.
Employers are required to verify that employees are legal workers in the United States. The first step is to ask new employees to fill out Form I-9. However, Mr. Hammarlund stressed that it is illegal to ask some new workers but not others to fill out the for. The best policy is to ask every new hire to fill out an I-9.
Mr. Hammarlund and Ms. Halem also discussed harassment laws, a frequent source of lawsuits, sometimes with big damage settlements. The lawyers suggest that employers should be very familiar with danger areas (or work with a lawyer who is). Can an employer yell at and embarrass an employee in front of other workers? Yes, provided that the yelling does not venture into forbidden areas (sexual harassment, for example). “It’s not illegal to be a jerk,” Mr. Hammarlund commented.
A new area of concern is social media. Can an employer regulate what an employee says about the company on Facebook? Can you specify that an employee must not engage in certain social media activities (posting revealing photos, for example)? The National Labor Relations Board has ruled that an employer may not stop an employee from exercising his or her right to free speech.
The wide-ranging discussion also covered hiring of minors, leaves of absence, military leaves, employee handbooks, and gender identity (may a man who identifies himself as female us the women’s rest room?).
In general, the advice of the speakers was that employers should conduct a human resources audit to ensure that the firm’s employment practices are consistent, fair, and legal. This was not a surprising conclusion from lawyers whose business it is to do such audits. However, the information presented and the reactions of the attendees suggested that such help might well be worth paying for.
For more information, contact Ms. Halem at firstname.lastname@example.org or Mr. Hammarlund at email@example.com.