March 24, 2015
FromEmployment Law Daily - Strategic Perspectives

by Pamela Wolf

Employers can get tripped up trying to navigate the assessment and selection process for job applicants by inadvertently screening out a particular class of people. Abercrombie & Fitch’s “look policy” testing, now under scrutiny before the Supreme Court, underscores some of the problems, according to Polsinelli shareholder Chris Mason. Speaking at the second webinar in a year-long series of five, Mason and a team of other Polsinelli attorneys discussed employee assessment, selection, and onboarding, pointing to the particular federal laws that employers need to keep in mind along the way.

Screening applicants. Employers should be careful when using aptitude and qualification testing to ensure that particular questions do not inadvertently screen out a class of people, creating disparate impacts, Mason suggested. Aptitude and qualification testing can implicate several federal laws, including Title VII, the ADA, the ADEA, and GINA.

Mason offered these pointers for employers to keep in mind to avoid potential ADA violations:
  • Testing should be job related and consistent with business necessity.
  • Consider the implications of reasonable accommodations that may be required for the testing process.
  • Evaluate the impact of testing: Is the test screening out particular people or a protected class?

Mason also noted that personality testing, although not yet the subject of an EEOC decision, will be an issue in the future.

As to drug testing, employers should “be mindful that some medications taken by disabled individuals may result in a positive outcome,” according to Mason. “Be sure to discuss any positive results with a potential employee to understand the implications.”

Mason also reminded employers that background checks for employment fall within the Fair Credit Reporting Act (FCRA). “The definition of credit report is very broad, and includes background checks,” he explained. “Before conducting background checks, be sure to get potential employees’ consent and notify them of their rights under the FCRA.”

Keeping trade secrets secret. Polsinelli shareholder Gillian McKean Bidgood talked about several issues related to intellectual property. She said employers should address ownership of intellectual property within the company, including who owns the rights—the creator/employee or the company?

“Establish the ownership upfront through the onboarding process and in employment and intellectual property agreements,” she recommended. “Be sure the language in your agreements accomplishes your goal.”

Bidgood observed that nearly all states have adopted the Uniform Trade Secret Act. “Under the Act, in order to prove that something is a trade secret your company must keep the information secret,” she stressed.

“This is usually accomplished through confidentiality agreements with employees. It’s important that employers understand the nuances of their particular state’s version of the Act and how it will impact their intellectual property rights. For example, in one state a person’s voice on a commercial is a trade secret, but in another state a customer list may not be a trade secret even where the list is kept secret,” she explained.

Bidgood offered these additional tips:
  • When trade secrets exist within your organization, be sure to evaluate whether the right people have access to the information or whether too many people have access. Is the information stored in a controlled environment?
  • Protection of IP must go beyond a provision in an employee handbook. Handbooks often have a disclaimer that they are not a contract and often employees are not aware of the provision within the handbook. If you choose to rely on a handbook to inform your employees of IP protection rights, include an acknowledgment of IP confidentiality, at a minimum.
  • Decide what you are trying to protect—a relationship or a process or procedure? This will impact the type of restrictive covenant needed. 

The IP expert also had a word of advice when it comes to modifying the company’s standard restrictive covenants:

“If you’re trying to recruit a ‘superstar’ and he or she demands modifications to your restrictive covenant as part of the negotiation process, remember that these changes may make it more difficult for you to enforce your restrictive covenants with your other employees. A court may conclude that your standard restrictive covenant was broader than necessary and reasonable since the company agreed to a weaker restrictive covenant with the ‘superstar.’”

Taking about benefits. Jamie Zveitel Kwiatek offered several points for employers to keep in mind when talking to employees about benefits. “The best chance to educate an employee about their benefits is during the onboarding process,” according to the Polsinelli shareholder. “Have a checklist for both you and the employee to be sure all the benefits are covered and so the employee can refer back to understand the scope of benefits.”

The types of benefits and commonly asked questions about them include:
  • 401(k) contributions: Is there automatic enrollment and how can matching contributions be maximized?
  • PTO, vacation, and accrual: What is the process?
  • Welfare plans such as medical, life, disability: What are the coverage options, costs and benefits? 
  • Unique benefits: Does your company offer ID theft protection, sick leave, or adoption assistance? 
  • When is the employee eligible to receive each benefit?

Questions about unique benefits are best addressed during the onboarding process, Kwiatek said. Employers should also notify employees of how to make various benefits elections (paper or electronic), where to get more information, and timing restrictions on elections. “If benefits are covered in the employee handbook, keep it general, reserve the right to make changes, and provide that the plan documents prevail in the event of an inconsistency,” she suggested.

Kwiatek also cautioned that when a married employee opts to designate a beneficiary other than his or her spouse under a qualified retirement plan such as a 401(k) plan, the spouse must consent and the spouse’s signature must be notarized or witnessed by a plan representative.

Webinar series. Polsinelli’s webinar, Life Cycle of an Employee: Assessment, Selection and Onboarding, was moderated by shareholder Eric Packel. Although originally presented on March 3, the recorded version remains available. The no-charge, five-webinar series is designed to provide not only practical advice but also to highlight how various employment laws come into play at virtually every step of the employment process, Packtel pointed out.

So far, the webinars have gone through the recruitment process by evaluating past practices, creating the job description, and tailoring the documents not only to meet employer objectives for the position, but also to ensure compliance with all the various employment laws. The series has also covered screening employees and protecting company assets by analyzing trade secrets and the types of restrictive covenants that may be needed.

“In our next session, we will proceed in the life cycle by discussing the best ways to train and develop employees, while being mindful of legal pitfalls and concerns,” Packel said. Life Cycle of an Employee: Training and Development is slated for Thursday, May 7.