Alison Bell, Esq. and Beth Danon, Esq.
After an employer determines that a staff person is needed but before advertising or hiring, there are several decisions to be made. These include whether an employee or independent contractor will be hired, whether the person will have a contract or not, what wages can or must be paid, and what duties will be performed.
When can/should a health care professional or facility hire an independent contractor rather than an employee?
Many organizations would rather hire an independent contractor to save money on employment taxes and to avoid the cost of benefits, workers’ compensation, and unemployment. Many workers would rather be treated as independent contractors to avoid withholding from their paychecks and other reasons. However, the decision is not up to the individuals involved; different federal and state laws dictate whether a staff person can be an independent contractor rather than an employee. To make it even more complicated, the test is not the same under all the laws; a worker may be an independent contractor according to the IRS but be considered an employee for workers’ compensation or unemployment purposes, although generally the tests are fairly close.
The IRS cares primarily about the degree of control exercised by the employer and the degree of independence experienced by the worker. It now has an eleven part test, grouped into three categories—behavioral control, financial control, and type of relationship. For example, within the issue of behavioral control, the IRS looks at the degree to which the person is generally subject to the organization’s instructions about when, where, and how to work. If the organization directs when and where to do the work, provides tools and equipment to the worker, purchases or tells the worker where to purchase supplies, informs the worker what order or sequence to follow, and similarly has significant control over how the work is performed, the worker will generally be considered an employee.
Within the issue of financial control, the IRS expects that an independent contractor will often perform the same work for other organizations, receive a flat fee rather than an hourly wage, have an opportunity for profit or loss, have unreimbursed expenses, or otherwise have a significant investment in the work. Finally, the type of relationship helps determine the status. An employee is less likely to have a written contract, is more likely to receive employee benefits, usually is not hired for a specific project or period, and performs work that is a key aspect of the organization’s business. For example, generally the IRS would assume that a physician or nurse hired by a physician’s office would be an employee, not an independent contractor, as either professional would be performing work essential to the operations of the organization. In contrast, the person who mows the lawn or cleans the office performs peripheral duties and is more likely to have other customers, bring their own supplies, etc.
Vermont law requires an organization to meet three elements to prove a worker is not an employee. The organization must show:
- The individual is free from control or direction over the performance of the services, and;
- The service is outside all the usual course (or places) of business for which such service is performed, and;
- The individual is customarily engaged in an independently established business.
The state test is much less detailed, so that in most instances a person who meets the IRS test will also meet the state test; however, there may be situations in which this is not true. For example, a temporary replacement physician is not performing services outside the usual business of a physician’s office and therefore is an employee under state law, even though she/he may meet the test to be an independent contractor under the IRS regulations, depending on the nature and extent of his/her services.
What is employment at will?
Vermont law assumes that an employee who is hired for an indefinite period is an employee at will. This means that the employee remains employed only as long as both the employer and employee agree. An at-will employee may leave at any time, and there is no law requiring that the employee give any notice. Similarly, an at-will employee can be terminated for any reason or for no reason at all, as long as the employee is not terminated for an illegal reason. Illegal reasons include (although this list is not all-inclusive) firing a person:
- because of his or her race, sex, age, religion, national origin, ancestry, place of birth, ethnicity, or sexual orientation, or
- because she/he is a qualified person with a disability, or
- because she/he filed a workers’ compensation claim, or
- because she/he missed work to serve on a jury, or
- because she/he reported a health or safety violation, or
- because she/he attempted to unionize other employees, or
- because she/he engaged in activities protected by public policy.
An employer can modify the at-will presumption by hiring an employee for a definite period, making promises that it expects the employee to rely on, entering into a contract with the employee, or taking other steps that a court deems sufficient to change the presumption. Creating personnel policies or practices that assure employees that they will have continued employment or that certain procedures will be followed before the employee is terminated is a common way to modify the standard (sometimes inadvertently).
How is an employment contract formed?
An employment contract is formed similarly to other contracts — an offer is made, it is accepted, and consideration is given for it. It does not have to be in writing to be binding on the parties. Generally, if an offer of employment (which usually states or at least implies a promise of payment) is made and then is accepted by the employee, an employment contract is formed. Thus, virtually every employee is working under some form of contract; the important issue is what the terms of the contract are. Remember, if the contract did not specify a length of time or a term, it is considered an at-will contract and may be terminated at any time by either party.
If the contract is at all ambiguous, it is generally construed against the drafter. Therefore, if an employer sends an offer letter or prepares personnel policies or makes oral promises to an employee or applicant and the contents are at all unclear, they will be interpreted to favor the employee. Thus, any communications with employees should be made clearly and carefully. The organization should determine before hiring whether it intends to hire its employees on an at-will or other contractual basis and craft its offer letter, personnel policies, and practices accordingly.
What laws govern how an employee is paid?
The Fair Labor Standards Act (FLSA) and Vermont wage and hour law govern certain aspects of how an employee can be paid. The federal law does not apply to all employers, so an organization must first decide if it is governed by the FLSA or only by state law. The FLSA applies to hospitals and to most other businesses, including physicians’ offices, that have annual receipts over $500,000; in addition, it applies to any employee who engages in interstate commerce (this includes activities such as ordering supplies from another state over the telephone or Internet). If either the organization or the employee is covered by the FLSA, the employer must pay any employee who is not exempt from the law at least the minimum wage and must pay time-and-a-half for any time worked over 40 hours in a workweek.
In Vermont, the minimum wage for employees is $7.25 an hour as of Jan. 1, 2006. Under Vermont law, employees of any retail or service establishment need not receive overtime pay. Employees of hospitals, public health centers, nursing homes, therapeutic community residences, maternity homes, and residential care homes have to receive overtime under Vermont law for any time worked over 40 hours in a workweek, unless the employer files an election and instead pays them time and a half for any hours more than eight in any day or 80 in a two week pay period.
Vermont law requires that employers pay employees weekly unless they notify the employees in writing that they will pay bi-weekly or semi-monthly, and payment must be made no more than six days after the end of the pay period. An employee who is terminated must be paid within 72 hours of discharge.
How does overtime work?
If an employer is covered by the FLSA, every employee is presumed to be entitled to overtime pay for any time worked over 40 hours in a workweek (not 80 hours in a pay period). Some positions are exempt from the requirements of the law, but the exemptions are intended to be quite narrow and construed against the employer. An employee must specifically meet an exemption or she/he is entitled to overtime pay.
The three primary exemptions applicable to physician’s offices are the executive, administrative, and professional exemptions. The first requirement for all three is that the employee be paid a salary of at least $455 for each week in which the employee performs any work (with a few exceptions). In addition to this “salary basis” test, the employee must also satisfy a “job duties” test to be exempt. The executive employee must manage a department, direct the work of two or more other employees, and have the authority to hire and terminate (or at least have his/her recommendations carry particular weight). The administrative employee must perform office work directly related to the organization’s general business operations, and must exercise discretion and independent judgment on matters of significance. The professional employee must have specialized knowledge in a recognized field (such as an MD or an RN). Generally, an LPN does not fit the “professional” exemption. Determining whether or not an exemption applies to a particular position or employee can be complicated and may require consultation with an attorney or other human resource professional.
An employer must pay a non-exempt employee one and a half times the employee’s regular rate of pay for any time worked over 40 hours in any workweek, even if the employer has not authorized or expressly permitted the overtime. The employee may not waive the overtime pay, and an employer may not offer compensatory time in a different workweek in lieu of the overtime pay. If an employee works unauthorized overtime, the employer may take disciplinary action, including termination, against the employee, although the employee must be paid for the time worked.
What are an employer’s obligations if it offers benefits?
Vermont law does not require an employer to provide employees with any specific break or lunch periods but only “reasonable opportunities during work periods to eat and to use toilet facilities in order to protect the health and hygiene of the employee.” There are no laws that require Vermont employers to offer employees vacation time, paid time off for illness, or any other employee benefits, except parental and family leave (described below), workers’ compensation, and unemployment benefits.
If an employer does offer health or retirement benefits, the Employee Retirement Income Security Act of 1974 (ERISA) sets minimum standards for most pension and health plans. Employers must provide employees with certain information about any covered plans, particularly a summary plan description and an annual report. Any employer who has discretionary control or authority over plan management or plan assets also has fiduciary responsibilities to run the plan in the interest of the participants. The U.S. Department of Labor exercises administrative authority over ERISA plans.
Why should an employer have job descriptions?
Written job descriptions help define the expectations an employer has for its employees, eliminate disagreements about the scope of job requirements, and provide a basis for evaluation of employee performance and appropriate compensation. In addition, the Americans with Disabilities Act (the ADA) requires that an employer be able to define the essential functions of any job in order to provide reasonable accommodation to a qualified individual with disabilities. Ideally, a job description should identify those functions the employer deems essential before the employee is even hired.
Like other employers, physicians may wish to use a range of measures to choose employees, including advertisements, background checks, applications, interviews, and references.
What should be in a job advertisement?
The content of a job advertisement varies by the nature of the job and extent of the search. However, no ad should express any discriminating exclusions – i.e., referencing the age or sex of applicants sought. The advertisement must be truthful and not misleading, although it need not include all of the particulars of the job. Many advertisements include an EEO statement.
What should be included in an EEO policy?
An EEO policy in Vermont should include the statement that an employer will not discriminate on the basis of race, color, religion, ancestry, national origin, place of birth, sex, sexual orientation, age, HIV-positive status, veteran status, membership in the armed services, or against a qualified individual with a disability. In addition, an employer must ensure that there is no retaliation against an individual who has opposed any alleged discrimination, has lodged a complaint of discrimination, or has cooperated with a state investigation into a discrimination complaint. Some employers voluntarily choose to add gender, marital status, economic status, or other categories particular to the employer’s clientele or mission to the EEO policies, but these latter categories are not required by law.
What kind of background checking may or should an employer do before hiring an employee?
The extent of background checking to be done before hiring an employee depends on the nature of the position and duties to be performed.
When can an employer do a criminal background check on an applicant?
The National Child Protection Act of 1993, as amended, in conjunction with Vermont law, provides that any business or organization that provides “care, treatment, education, training, instruction, supervision or recreation to children, the elderly, or individuals with disabilities” may obtain from the Vermont Criminal Information Center (VCIC) a national criminal record on any applicant. To obtain the record, an employer must: 1) file a user’s agreement with VCIC; 2) have the applicant fill out and sign VCIC’s written authorization release form, and; 3) make a conditional offer of employment to the applicant, conditional on the record check. No other employer is allowed to access the database, and there are penalties for misuse.
Although only employers who meet the conditions above can access the national criminal information databank, criminal convictions are public records and can also be obtained directly from a court.
The Equal Employment Opportunity Commission has taken the position that an employer may not have a blanket policy to refuse to hire a person because of a criminal arrest or conviction record because certain protected classes (e.g., racial minorities) have a disproportionate rate of arrest and conviction, and therefore such a policy would adversely impact them. Instead, the EEOC says that an employer must have a business necessity to justify using a conviction record (and can never even ask about, much less use, an arrest record) taking into account the nature and gravity of the offense(s), the time that has passed since the conviction, and the nature of the job.
When can an employer do a credit check?
The Fair Credit Reporting Act (FCRA) imposes some limitations on employers who seek to obtain and use a “consumer report” for employment purposes. The definition of “consumer record” includes any report created by an agency that assembles information on consumers, including reports about records on driving, criminal conduct, education, employment references, or financial credit. Before an employer can obtain such a report, it must:
- obtain written authorization from and provide a clear written disclosure to the employee or applicant;
- certify to the agency that it will comply with FCRA;
- before taking adverse action, provide the person with a copy of the report, and a statement of his/her rights from the FCRA; and
- if the employer intends to make the decision final, send the person a notice of adverse action.
The requirements are complicated but only procedural. Once the procedure is followed, the employer may use the credit report for any employment purpose.
The FCRA does not cover an employer’s own investigation conducted by the employer’s own staff, only reports from private investigators or other consumer reporting firms. Common law privacy concerns, however, dictate that any investigation into an employee’s personal life be reasonably related to a business goal and not be unreasonably intrusive. For their own protection, many employers follow FCRA if they will be conducting any kind of background check.
When can an employer conduct drug or alcohol testing?
Vermont has a fairly strict drug testing law. An employer may only require an applicant to submit to a drug test if:
- the applicant has already been offered the job conditioned on a negative test result;
- the applicant receives written notice of the employer’s policy, the procedure, and list of drugs to be tested;
- the employer follows the specific procedures required by the law, which includes a strict chain of custody, use of designated state labs, an appointed medical review officers and collector, etc.; and
- the employee is given an opportunity to retest any positive result.
No random or company-wide drug tests are permitted unless federal law requires it (i.e., for certain transportation employees). To test an employee, the employer must:
- have probable cause to believe the employee is using or under the influence of a drug on the job;
- have an employee assistance/rehabilitation program (EAP);
- not terminate the employee if the employee agrees to complete the EAP, and;
- follow the specific testing process in the act.
When can/must an employer check an applicant’s licensing or professional status?
An employer can check an applicant’s (or employee’s) licensing or professional status at any time. The National Practitioner Data Bank (NPDB) and Healthcare Integrity and Protection Data Bank (HIPDB) allow certain entities, including a “health care entity” or hospital, to obtain information about medical malpractice or similar claims. A “health care entity” is an organization that provides health care services and follows a formal peer review process, such as HMOs, nursing homes, or group practices. Only an authorized entity may obtain information from the databanks, and there are requirements about registration, fees, etc. available from the NPDB website.
The Vermont Board of Medical Practice maintains a database of physician licenses. The Vermont Secretary of State’s Office of Professional Regulation licenses most other health care professionals, including nurses, pharmacists, radiologic technologists, occupational therapists, physical therapists, etc., and its website includes a searchable database of their licenses. Licenses and any discipline that has been imposed are public records, although ongoing investigations or prior complaints that did not result in discipline are not. Given the easy availability of the information, an employer would be hard-pressed to explain why it did not check to ensure that an employee was properly licensed.
What questions are allowed or prohibited in an application or interview?
An employer should not ask questions that require an employee to provide information about protected characteristics such as age, sex, race, religion, national origin, sexual orientation, or disability, as the question alone may be initial evidence of discrimination. In addition, asking an applicant about his/her workers’ compensation history, birthplace, dates of attendance at school, arrest record, or marital status are problematic. Instead, a job application or interview should focus on the qualifications necessary to perform the job – licensing, education, employment history, performance of expected duties. If the applicant will be driving a car, inquiries about a driver’s license may be appropriate.
The most difficult area involves disabilities. According to the Americans with Disabilities Act, an employer may ask disability-related questions or require a medical examination only after making the employee a conditional job offer and then only if they are required of all applicants and are “job-related and consistent with business necessity.” Before the job offer, the employer may ask whether an employee can perform certain tasks required in the job but not if the applicant needs an accommodation to do the job, unless the applicant has an obvious disability or has disclosed the disability to the employer. Even if the disability is obvious or has been disclosed, the employer may not, however, ask the applicant any questions about the nature or severity of the disability. Thus, an applicant who is blind or visually impaired may be asked specifics of how she/he would perform the duties of the job but cannot be asked whether she/he has any sight or how she/he became blind or whether his/her vision is expected to improve in the future.
May an employer require an employee to sign a covenant not to compete before beginning work?
>Yes. Vermont law allows an employer to require an employee to sign a restrictive covenant agreement not to compete with the employer, as long as the restraint is narrowly tailored in geographical, temporal, and subject matter restrictions to protect the employer’s legitimate interests. For example, the Vermont Supreme Court has recently upheld a covenant restricting an employee from working for a competitor in Vermont or New York for twelve months after termination.
What documents must a new employee complete?
After an employee is hired (but not before), the employee must complete a form I-9, and the employer must examine evidence of the employee’s identity and employment eligibility within three business days of employment. The employee must also fill out Form W-4 for federal income tax withholding. Any insurance forms should also be completed, as well as emergency notification information.
What records must be in an employee’s personnel file?
Any information concerning an employee’s health or medical conditions must be kept separate from other personnel documents. Otherwise, Vermont has no law governing what documents must be or may not be in an employee’s personnel file. Additionally, there is no Vermont law requiring an employer to provide an employee with access to his/her personnel file. Good practice suggests, however, that documents such as the employee’s application or résumé, hiring letter, I-9, W-4, benefit applications, evaluations, pay awards, and disciplinary records be kept in the personnel file and that an employee be permitted to review these on reasonable notice. In addition, keeping a record or checklist of all competencies and/or trainings an employee has or is expected to complete is good practice.
What records must be kept and for how long?
Numerous federal laws require retention of records, but the length of retention varies. The Sarbanes-Oxley Act, passed after recent corporate accounting scandals, requires covered entities to have a records retention policy, and even organizations not covered by the Act are well-advised to do so. Most financial records, particularly those to support federal income tax filings, should be kept for at least seven years after the relevant return is filed. Employee benefits documents under ERISA must be kept for at least six years after the plan ends, as must records maintained under HIPAA. The Department of Health and Human Services requires certain medical records to be maintained for at least five years. Vermont’s unemployment law requires payroll and work hour records to be kept for four years, and various employment laws, including the FLSA, require retention for at least three years after an employee leaves (or as long as any legal proceeding involving them continues). OSHA requires that documents related to certain toxic exposures be kept as long as thirty years. Applications of even unsuccessful applicants must be kept for at least one year after the hiring is done.
Vermont law contains a six year statute of limitations for economic losses related to employment issues, so to protect themselves, employers probably should keep all employment records for at least six years after an employee’s employment terminates, tax-related records for at least seven years after the tax year. At the end of whatever time is chosen, records should be destroyed pursuant to an established document-destruction plan.
What should an employer do to supervise and evaluate employees
Each workplace has its own culture about how supervision and evaluation is done, ranging from formal to informal. When a problem arises, however, it is critical that the employer have documentation of all corrective action it has taken or attempts it has made to improve the employee’s performance. Best practice suggests that employers provide informal supervision on an ongoing basis but that formal supervision or evaluation occur at least annually. Evaluations should be as objective as possible and based on the employee’s job description. If an employee has worked for an employer for several years, there is no documentation that any problems were ever discussed, and the employee is then terminated, the employer may be in difficulty if the employee asserts the firing was for an illegal reason. Documentation can be as simple as handwritten notes in a file, or as formal as a typed evaluation form. Above all, evaluations and supervision must be honest and not gloss over problems or concerns.
What must an employer do to protect an employee’s privacy
As an employer, a physician practice may be subject to the privacy requirements of HIPAA, if it provides any health services to the employee (e.g., free screenings to employees), if it is self-insured (even partially) for health care, if it offers a medical reimbursement plan, or if it receives an employee’s protected health information (PHI) for any insurance-related purpose. An employer is not subject to HIPAA merely because it has information about an employee’s health for employment purposes, such as determining sick leave, family leave, workers’ compensation, or disability accommodations. Therefore, each employer must determine if it is subject to the HIPAA privacy regulations. If it is, the employer must have a HIPAA policy (for employee records), must enact appropriate procedures to ensure that none of the PHI is used for employment purposes, must appoint a privacy officer, and take other steps to comply with the regulations.
Employees also have a common law right to expect privacy in certain areas, such as on their person. The extent of the privacy right depends on the situation and circumstances, and employers can take steps to limit the expectation. For example, a private employer may notify employees that it will monitor email or Internet use, listen in on telephone calls, or search employees’ handbags, as long as the notification is clear and the practice is limited to business-related matters.
Must an employer have an employment handbook
Vermont law requires that every Vermont employer have two policies: a sexual harassment and a smoking policy. These do not have to be in a handbook per se, but they do have to be written and disseminated (and the sexual harassment policy must be posted). There are pros and cons to having a handbook with more than these policies. However, every employer has policies, even if they are not written down. Those policies should be applied consistently and fairly, and putting them in writing may make it easier to do so. If an employer has a handbook, it should be clear and simple. It should say what the employer means, and the employer should really mean everything it says. Which policies to include and the extent of detail in them should reflect the employer’s values, style, and culture. The contents of a handbook may be considered a contract, so any handbook should be reviewed by the organization’s attorney.
What policies should an employer consider including in a handbook?
Policies should address the employer’s expectations for employees — behavior, attendance, personal use of equipment, drugs and alcohol, etc. They should also provide information employees need to know about administrative matters — benefits information, filing harassment complaints, overtime rules, expense reimbursement policies, etc. Consequences for an employee’s breach of policy or failure to perform their job are often addressed. Leave time, particularly vacation and unpaid family leave issues, is an important topic, as there are choices an employer can make only by having a policy. Although a confidentiality provision is often included in a personnel handbook, most operational issues (how to do proper billing, what to put in a client’s chart, how to answer the phone, etc.) belong elsewhere.
Although employers are not required to provide paid leaves, many are required to provide leaves for medical reasons and childbirth. Two laws, the federal Family and Medical Leave Act (FMLA) and Vermont’s Parental and Family Leave Act (VPFLA), govern.
Who must comply with the FMLA and VPFLA?
The Family and Medical Leave Act of 1993 (FMLA) was enacted to entitle employees to take reasonable unpaid leave for medical reasons, for the birth or adoption of a child, or to care for a child, spouse, or parent who has a serious health condition. It applies to all private employers who employ 50 or more employees. Vermont has enacted a family leave law as well, which requires any employer that employs fifteen or more eligible employees to provide medical leave and any employer with at least ten eligible employees to provide parental/pregnancy and short-term leave. If an employee is covered by both federal and state leave law, she/he must receive the more favorable benefits.
Which employees are covered?
To be eligible under the FMLA, an employee must have been employed for at least twelve months with at least 1,250 hours of service during the last twelve months. State law applies to any employee who has been continuously employed by the same employer for at least one year, at an average of at least 30 hours per week.
May an employer require advance notice and medical certification?
An employer may require an employee to give reasonable written notice of his/her intent to take leave, unless the leave is for an emergency. If the leave is for a serious illness, the employer may require certification from a health care provider of the condition and the need for the leave. The FMLA includes a specific form for employers to use, which includes only the information to which the employer is entitled. The FMLA requires that an employer notify the employee if medical certification will be required and allow the employee 15 days to return the form; it also limits the information the employer can ask. For example, the employer cannot call the employee’s physician and ask questions. If an employee does not return the form documenting the need for leave, the employer probably can deny, or at least delay, the leave.
How much leave time must be given and for what reasons?
The FMLA allows covered employees to take up to twelve weeks of unpaid leave in a twelve month period for their own serious health condition, the serious health condition of an immediate family member, the birth and care of the employee’s newborn child, or for the adoption or foster care placement of a child. State law uses the term serious illness and defines it as any condition that poses an imminent danger of death, requires inpatient care in a hospital, or requires continuing in-home care under direction of a physician. It also limits parental leave to the initial placement of a child 16 years of age or younger for adoption. Vermont law defines immediate family members as the employee’s child, stepchild or ward who lives with the employee, foster child, parent, spouse (including civil union partner), or parent of the employee’s spouse or civil union partner. The employee may use any earned, accrued paid time during the 12 weeks leave, but she/he cannot use the paid leave to extend the leave beyond 12 weeks. The employee does not have to use any paid leave and may elect to take the entire 12 weeks unpaid.
What happens when the employee returns from leave?
At the conclusion of FMLA or VPFLA leave, an employee must be reinstated to the same or an equivalent position with equivalent benefits, pay, and other terms and conditions of employment. In other words, unlike with workers’ compensation, an employee cannot be permanently replaced while on family medical leave. Also, during the leave, the employer must continue the employee's group health insurance, as well as other benefits, including any accrual of seniority, vacation, sick time, etc. on the same terms and conditions as if the employee were continuously at work.
What is short-term family leave?
Vermont law also entitles eligible employees to an additional 24 hours of leave in any 12-month period, but limited to four hours in any 30-day period, for short-term family leave which can be used to participate in academic activities at their child’s school, attend routine medical appointments with their child or parent, or similar matters that might not qualify for FMLA. The employee is expected to make a reasonable attempt to schedule the appointments outside of work time and to give the earliest possible notice of the need for leave.
When is an employee entitled to workers’ compensation?
Vermont's workers’ compensation law (or its insurer) must pay an employee compensation if the worker "receives a personal injury by accident arising out of and in the course of his employment.” Generally, any employer who employs at least ten employees for more than 15 hours per week must reinstate any employee if the employee recovers within two years of the onset of the disability. Recovery is determined if the employee can "reasonably be expected to perform safely the duties of his or her prior position or an alternative suitable position."
The employer need not reinstate the employee to the same job, but must reinstate him/her to "the first available position suitable for the worker given the position the worker held at the time of the injury." The employee also regains seniority and unused leave time. Reinstatement is not required if the employee had prior notice or had already given notice before the injury that his/her employment would end, if the employment would have ended on its own, or if the employee fails to stay in touch with the employer about his/her status.
Under Vermont's workers’ compensation law, an employer need not hold a job open for an employee who is out on workers’ compensation, but if the job or a similar job is open when the employee recovers (and less than two years has passed since the employee was injured), the employer must reinstate the employee. Vermont employers are not required to establish light duty positions, but may do so.
What is an employer’s obligation to employee health and safety?
Both federal and state laws require that employers maintain a safe and healthful working environment. To that end, VOSHA provides technical assistance or inspection to ensure that employers are following state and federal regulations. An employer is not required, however, to eliminate every risk of harm in a workplace, particularly those that would not reasonably be known to it.
When and how can an employer monitor an employee’s electronic communications?
The Federal Wiretapping Act, as amended by the Electronic Communications Privacy Act, generally makes it criminal for anyone to intercept anyone else’s telephone or electronic communications. The Act contains an exception that allows employers to intercept and monitor the communications of employees on its premises for work-related purposes. An employer may monitor an employee’s personal call only so long as needed to determine the call is personal, or if the employee consents. Additionally, anyone may record or intercept any communication if one party to the communication consents (i.e., a person may record a conversation she/he is involved in, even without notice to the other parties). Some states prohibit this kind of interception without consent (so interstate calls may raise problems), but Vermont does not. A written policy clearly stating what communications will be monitored and obtaining employee acknowledgment or consent is a useful tool to avoid problems.
When is an employer liable for an employee’s acts?
Generally, an employer can be held liable by a third party for negligent acts committed by its employees within the scope of their employment. Sometimes employers are even liable for the intentional or reckless acts of employees, but usually only if the employer was aware of the potential that the employee would act as she/he did and the scope of the employee’s employment allowed the employee to engage in that act. Employers generally are not liable for the acts of their employees outside the scope of their employment.
When can an employee be disciplined or terminated?
In Vermont unless an employer acts otherwise, an employee may be disciplined or terminated at any time, with or without notice, and for any reason or for no reason at all, as long as it is not an illegal reason. Having said that, there are several specific laws that define illegal reasons for termination or that govern an employer’s behavior towards an employee, many of which have been addressed in this chapter. For example, common law may provide an employee with a civil remedy if an employer denies an employee any protection or benefit the employer has promised and on which the employee has detrimentally relied, defames an employee or former employee, intentionally inflicts emotional distress on him/her, or intentionally interferes with the employee’s contractual relations with others.
What are illegal reasons to discipline or terminate an employee?
There are numerous illegal reasons, but some of the most common follow.
- An employer may not discriminate against an employee because of the employee’s race, color, religion, ancestry, national origin, sex, sexual orientation, place of birth, or age, or against a qualified individual with a disability.
- An employer also may not retaliate against any employee who has complained about discrimination or harassment or who has cooperated in an investigation.
- Similarly, an employer may not discharge or retaliate against an employee who has requested family or medical leave or complained of a leave violation or cooperated in such an investigation.
- An employer may not change an employee’s status because the employee refuses to take a polygraph test (except those employees who sell regulated drugs).
- An employee cannot be retaliated against for filing a workers’ compensation or VOSHA claim.
- Employees of hospitals and nursing homes have whistleblower protection, and common law protects employees who refuse to violate professional ethics.
What is discrimination?
Discrimination is an action that adversely affects an employee in any aspect of the terms, conditions, or privileges of employment, such as hiring, firing, compensation, transfer, promotion, testing, recruiting, or receipt of benefits. Treating one employee or one class of employees differently from others because of one or more protected characteristics is illegal discrimination.
What kind of discrimination is prohibited?
Title VII of the Civil Rights Act of 1964 prohibits any employer with fifteen or more employees from discriminating on the basis of race, color, religion, sex, or national origin. The companion Age Discrimination in Employment Act (ADEA) prohibits discrimination against employees age forty or older. The Americans with Disabilities Act prohibits discrimination against qualified individuals with disabilities. The Vermont Fair Employment Practices Act applies to all Vermont employers, regardless of size, and covers ancestry, place of birth, and sexual orientation in addition to the categories of the three federal laws. Thus, in essence, no Vermont employer may discriminate on the basis of any of the categories above.
What is illegal harassment?
Illegal harassment is a form of discrimination, based on one of the protected characteristics above, and prohibited by both federal and state laws. To be illegal, the harassing conduct must occur because of an employee’s sex, race, or other protected characteristic (see EEO policy for the list of legally protected characteristics). While an employer may want to prohibit or discipline any kind of negative behavior, conduct that is based on reasons other than the protected characteristics is not illegal (unless it also violates some other law—assault or battery, for example).
Vermont has defined sexual harassment as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when:
submission to that conduct is made either explicitly or implicitly a term or condition of employment; or
submission to or rejection of such conduct by an individual is used as a component of the basis for employment decisions affecting that individual; or
the conduct has the purpose or effect of substantially interfering with an individual's work performance or creating an intimidating, hostile or offensive work environment. The federal definition is similar.
Vermont law requires every employer to have a sexual harassment policy, which shall include:
a statement that sexual harassment in the workplace is unlawful;
a statement that it is unlawful to retaliate against an employee for filing a complaint of sexual harassment or for cooperating in an investigation of sexual harassment;
a description and examples of sexual harassment;
a statement of the range of consequences for employees who commit sexual harassment;
if the employer has more than five employees, a description of the process for filing internal complaints about sexual harassment and the names, addresses, and telephone numbers of the person or persons to whom complaints should be made; and
the complaint process of the appropriate state and federal employment discrimination enforcement agencies, and directions as to how to contact such agencies.
A poster containing the policy must be in every workplace, and each employee must receive an individual written copy.
In addition, both federal and Vermont law require an employer to take prompt, remedial action reasonably calculated to end the harassment whenever the employer receives a report of illegal harassment. The first step in any response is to investigate and document the allegations. What other action to take will depend on the nature of the conduct at issue and the relationship of the perpetrator to the victim. An employer is directly liable if the conduct involves a supervisor who takes a tangible employment action against the victim. Conduct by a co-worker may involve liability to the employer only if the employer has knowledge of the harassment and fails to take appropriate and prompt remedial action.
What can an employer do to avoid liability for harassment or discrimination?
First, all changes in an employee’s terms and conditions of employment should be based on legitimate performance reasons or be consistent with the needs and mission of the organization. Second, problems should be addressed promptly and honestly, rather than being tolerated or ignored. Overly positive evaluations and the failure to note performance concerns in writing as soon as they occur are some of the most common problems. Third, if an employer learns that an employee feels she/he is being discriminated against or harassed, the employer should document the concerns, immediately investigate them, and take prompt action to try to end the behavior. Fourth, the employer should conduct periodic training of employees to ensure that they are aware of the laws and that their conduct conforms with them. Fifth, every employer’s policies must be clear and consistently followed. Inconsistent application of policies is another common problem area.
What must an employer do to accommodate an employee with a disability?
The Americans with Disabilities Act (ADA) and the Vermont FEPA both require an employer to provide a qualified individual with a disability a reasonable accommodation if the employee requires it to perform the essential functions of his/her job.
When does an employee have a disability?
According to the Americans with Disabilities Act and the Vermont Fair Employment Practices Act, a disability is a "physical or mental impairment that substantially limits one or more major life activities." Additionally, an individual who has a history or record of such an impairment or is regarded as having such an impairment is considered to have a disability. A physical impairment is further defined as:
any physiological disorder, or condition, cosmetic disfigurement or anatomical loss affecting one or more of the following body systems: neurological, musculoskeletal, special sense organs, respiratory (including speech organs), cardiovascular, reproductive, digestive, genitourinary, hemetic, and lymphatic, skin, and endocrine.
A mental impairment is defined as "any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities."
A person may have an impairment that fits either the physical or mental impairment definition, but still not be protected by the law because the law also requires that the disability "substantially limit" a major life activity. That means that the individual is either unable to perform the activity or is significantly restricted in the condition, manner, or duration in which she/he can perform it compared to the average person. Major life activities include (but are not limited to) such activities as caring for one’s self, performing manual tasks, walking, speaking, breathing, seeing, hearing, learning, or working. An alcoholic or drug abuser is considered a person with a disability, except that current use of alcohol or drugs is not protected, so that if the current use or alcohol or drugs prevents the person from performing the duties of the job, violates a company policy, or would constitute a direct threat to others, the person need not be accommodated and may be disciplined or discharged.
What documentation can an employer require to determine if an employee has a disability?
An employer can require an employee to provide medical confirmation of the existence of a disability and the need for a reasonable accommodation, although the employer must be careful to avoid seeking more information than is necessary to make those determinations.
What must an employer do if an employee has a disability?
The ADA and Vermont law require an employer to provide a reasonable accommodation if the employee is otherwise qualified for the job and if the employee needs the accommodation to perform the essential functions of his/her job. A reasonable accommodation means any modification or adjustment to the job or work environment. The essential functions of a job are key to any analysis under the ADA. If an employee cannot perform one or more of the essential functions of the job she/he was hired to do, and there is no reasonable accommodation that can enable him/her to perform that function, the employer can treat the employee differently from other employees without violating the law. For example, if an employer is hiring a truck driver and the applicant’s eyesight is so impaired that she/he cannot receive a driver's license, the employer need not hire the individual, and the applicant has no grounds to claim discrimination.
Marginal duties of a position (for example, a function that can be performed by another employee or a function that is only occasional) cannot be used to discriminate against an employee. For example, a receptionist who once a month has to unload and store a load of copy paper or office supplies probably cannot be terminated if she permanently injures her back and cannot perform that function. Because the event occurs so rarely and she is able to perform the majority of her job, the lifting is probably a marginal duty.
The laws do not define, in relation to any particular job, what is reasonable and what is not. That determination is made on a case-by-case basis, although employers do not have to change the essential functions or nature of the job to accommodate an employee. If an employee has a disability that prevents her from answering the phone ever (and no accommodation can alleviate the situation), a physician need not hire her as a receptionist. If the person has a hearing impairment, however, and there are accommodations that would enable her to perform the job, further analysis must be done.
What are examples of reasonable accommodations?
Examples of reasonable accommodation include “making existing facilities used by employees readily accessible to and usable by an individual with a disability; restructuring a job; modifying work schedules; acquiring or modifying equipment; providing qualified readers or interpreters; or appropriately modifying examinations, training, or other programs. Reasonable accommodation also may include reassigning a current employee to a vacant position for which the individual is qualified, if the person is unable to do the original job because of a disability even with an accommodation.” An employer is not required to provide personal use items such as glasses or hearing aids unless the employee only needs them to perform a specific function at work and in no other situation.
When must a reasonable accommodation be provided?
An employer has to accommodate a “known” disability. This means a person must notify the employer that she/he has a disability and the person must request a reasonable accommodation. Generally, unless the employee requests an accommodation, the employer does not have to provide one, unless the disability is obvious, and it appears that the disability prevents the employee from requesting the accommodation. The employer does not have to provide the specific accommodation requested by the employee but must enter into an interactive discussion with the employee about what accommodation will be effective.
When can an employer refuse to provide a reasonable accommodation?
Generally, an employer does not have to accommodate an employee if the accommodation is unreasonable — that is, if it would alter the essential functions of the job — or even if it is "reasonable," but it would be an undue hardship for the employer. Undue hardship is determined on a case by case basis, but involves an "action requiring significant difficulty or expense." Several factors will be considered, such as the nature and cost of the accommodation, the overall financial resources of the employer, and the nature and operations of the business.
What can an employer do if an employee presents a health or safety risk?
The Americans with Disabilities Act allows an employer to take action against an employee with a disability if the person presents a direct threat to the safety of him/herself or others. A “direct threat” means “a significant risk of substantial harm” that cannot be reduced or eliminated by any reasonable accommodation. The risk of harm must not be speculative but must be based on objective medical criteria.
What rules govern layoffs of employees?
The only law specifically governing layoffs is the Worker Adjustment and Retraining Act, which applies to organizations with 100 or more employees. The Act requires notification 60 days before a facility or operating unit of a business is closed or a mass layoff is held. Otherwise, outside of the union context, an employer is entitled under Vermont law to lay off employees because of financial or other reasons at any time, as long as the layoff is consistent with the employer’s own contract or policies.
What is unemployment compensation?
Under Vermont and Federal laws, employees who lose their jobs through no fault of their own are entitled to unemployment compensation. The unemployment compensation fund is funded entirely by employer taxes, and the amount of tax is based on the employer’s experience rating — that is, the number of claims attributable to it within the relevant period. Non-profit 501(c)(3) organizations may elect not to contribute (and pay any claims directly themselves). A former employee’s unemployment claim will not be attributable to the employer or the employee will be denied benefits for a few reasons, most commonly if the employee quits (leaves voluntarily without good cause attributable to the employer) or if she/he is terminated for gross misconduct connected with his/her work. The unemployment office particularly looks to find out if the employee has received notice and warning about the consequences of his/her behavior, as well as its severity, before denying benefits. Therefore, even though an employer is not required to give notice or warnings, the cost of not giving them may be increased unemployment taxes.
What can/should an employer say in giving a reference?
Employers must be careful in giving references for former employees, as defamation and tortious interference with contract claims have been made against employers for making false statements that damage a person’s reputation or ability to find another job. On the other hand, employers have been sued by a person’s new employer because they have given a falsely positive reference that fraudulently misrepresented the former employee in an overly positive light. Many of the legal cases have involved extreme situations, such as accusing an employee of stealing when the employer had no evidence the employee stole (and particularly if the employee is later able to prove that she/he did not) or giving a glowing reference for an employee who was terminated for sexual assault. To avoid liability, many employers refuse to give references for anyone. Others choose to give only limited information. Still others give a reference only after receiving written consent from the former employee to do so.
What are the requirements for continuation of health benefits for employees who leave employment?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires group health plans offered by employers with 20 or more employees to offer continuation coverage for employees or their dependents who experience a “qualifying event” and requires employers to give notice of COBRA rights. A qualifying event may be termination of employment, a reduction in hours, divorce, or similar acts. The continuation of coverage may require that the employee pay the cost of the coverage and may continue for up to 18 months (36 months for certain qualifying events) from the date the health plan would have ended. If the beneficiary does not pay the premium, the employer ceases to offer any group health plan, or the employee becomes eligible for another health insurance plan or Medicare, the continuation coverage ends. When the employee leaves employment, the employer or insurer must send the employee a notice to elect continuation coverage.
Vermont law requires all group health insurance plans, even those for employers with fewer than 20 employees, to provide 6 months of continuation coverage. The standards are similar to COBRA, although an employer need not send any notice of the right to elect continuation coverage under state law. It is good practice, however, to at least remind terminating employees about continuation and refer them to the group health insurer.
About the Author & Editor
Eileen M. Blackwood practices law with the law firm of Blackwood & Danon, P.C. in Burlington, Vermont. Her practice concentrates in the fields of employment, education, and non-profit law, and in the preparation of wills and other estate planning. She graduated from Dartmouth College with an A.B. degree in Women and Education and from Cornell Law School with a J.D. cum laude. Following law school, she clerked for the Hon. Franklin S. Billings, Jr. in the U.S. District Court for the State of Vermont and then practiced law with Paul, Frank & Collins, Inc. in Burlington until opening her own firm in 1992. She has authored many papers and regularly presents programs on various topics of education and employment law.
Beth A. Danon is a member of the law firm of Blackwood & Danon, P.C. in Burlington, Vermont. Her practice concentrates in the fields of employment, education, non-profit, personal injury, Social Security disability, and civil rights law. Prior to her employment with Blackwood & Danon, P.C., Ms. Danon was the supervising attorney at Vermont Protection & Advocacy, Inc., which is a non-profit corporation federally and state funded to advocate for and protect the rights of persons with mental disabilities. Prior to her employment with VP&A, she was with the law firm of Mickenberg, Dunn, Kochman, Danon & Smith for two years and with Mickenberg, Dunn, Sirotkin & Dorsch for ten years prior wherein her practice concentrated in the fields of employment, Social Security disability, workers’ compensation, real estate, affordable housing, personal injury, and civil rights law. Ms. Danon received her B.A. degree from CUNY Hunter College and her J.D. degree from CUNY Law School at Queens College. After graduating from law school in 1987, she clerked for Honorable Frank G. Mahady in the Vermont Supreme Court. She is a member of the Vermont Bar Association and serves on its Disability Law Committee and is a member of the Vermont Employment Lawyers Association.
Alison J. Bell has been a partner at Langrock Sperry & Wool since January 1990. Before joining Langrock Sperry & Wool as an associate in September 1987, she was an associate at Choate Hall & Stewart in Boston, Massachusetts from 1983 to 1987. Her practice areas are general civil law, with particular emphasis on employment law, commercial litigation, the hospitality industry, and alternative dispute resolution. She is a member of the Vermont Bar Association, the Vermont Trial Lawyers Association, the Vermont Employment Lawyers Association, the Association of Trial Lawyers of America. She received her J.D. degree from Boston College Law School in 1983, cum laude, and her B.A. from Harvard College in 1979.
 The complete independent contractor test can be found in IRS Publication 15-A, Employer’s Supplemental Tax Guide.
 21 V.S.A. § 341(a).
 29 U.S.C. §§201-219.
 Both the FLSA and Vermont law require employers to keep accurate records of the hours worked by and wages paid to each employee. 21 V.S.A. § 393.
 21 V.S.A. §384(b).
 21 V.S.A. §384(b)(4).
 21 V.S.A. §342(a), (b).
 21 V.S.A. §342(c).
 An employer may require an employee to obtain authorization before incurring overtime, but if the employee does not do so, the employer must still pay the employee, although it may discipline or discharge the employee for failing to obtain prior authorization.
 More information on the FLSA is available on the U.S. Department of Labor’s website, www.dol.gov.
 21 V.S.A. §304.
 18 U.S.C. §1001 et seq.
 If age or sex is truly a bona fide occupational qualification, it can be specified, but the bona fide occupational qualification is a very narrow exception.
 42 U.S.C. §§ 5119 et seq.
 20 V.S.A. § 2056c
 16 U.S.C. § 1681 et seq.
 21 V.S.A. §§ 512, 524.
 21 V.S.A. § 513. The Vermont Attorney General’s website has more information on drug testing. www.atg.state.vt.us/index.php.
 45 C.F.R. Part 60.
 42 U.S.C. §12101 et seq.; 29 C.F.R. Part 1630.
 Further specifics about what can and cannot be asked are available in the EEOC’s Enforcement Guidance: Premployment Disability – Related Questions and Medical Examinations at www.eeoc.gov/policy/docs/preemp.html.
 Summits 7, Inc. v. Kelly, 2005 Vt. 97, ___ A.2d ___ (2005)
 The I-9 is available at www.us.gov/graphics/formfee/forms/files/i-9.pdf.
 The W-4 is available from the Internal Revenue Service at www.irs.gov/pub/irs-pdf/fw4.pdf.
 29 U.S.C. § 2601 (a).
 21 V.S.A. § 470 et seq.
 21 V.S.A. § 601 et seq.
 21 V.S.A. § 618(a).
 21 V.S.A. § 643b(a)(2).
 21 V.S.A. § 643b(b).
 21 V.S.A. § 643b(d).
 VOSHA’s website and contact information may be found at www.state.vt.us/labind/vosha.htm.
 18 U.S.C. §§ 2510-2520.
 21 V.S.A. §495.
 21 V.S.A. §495.
 21 V.S.A. §473.
 21 V.S.A. §494a.
 21 V.S.A. §507.
 42 U.S.C. § 2000e et seq.
 21 V.S.A. § 495.
 21 V.S.A. § 485d(13).
 21 V.S.A. § 485h.
 42 U.S.C. § 12102 (2); 29 C.F.R. § 1630.2 (g).
 29 C.F.R. § 1630.2(j).
 ADA Questions and Answers, www.usdoj.gov/crt.
 29 U.S.C. §2101.
 21 V.S.A. § 1344(a).
 More information on COBRA can be found at www.dol.gov.
 Information on Vermont’s continuation coverage is available at www.bishca.state.vt.us, the website of the state Banking & Insurance Division.