Tips On What Every Employer Should Know

Monday, May 21, 2012 - 15:05

The Editor interviews Nigel F. Telman, Partner in the Labor & Employment Law Department in Proskauer’s Chicago office and Co-head of the Employment Litigation & Arbitration Group.  

Editor: Please tell us about your background and how you came to establish Proskauer’s Labor & Employment practice in the firm’s Chicago office two years ago.

Telman: In the summer of 2009, while I was a partner at my former law firm, the opportunity arose to help establish Proskauer’s L&E practice in their Chicago office (which opened in 2008). Having known the preeminence of Proskauer’s Labor & Employment Law Department throughout my career, it was an opportunity I could not let pass, especially since building a practice appealed to my entrepreneurial spirit.

Editor: Tell us about Proskauer’s Labor and Employment practice in the Midwest and the firm’s efforts to expand it.

Telman: Our L&E practice primarily focuses on litigating single and class action disputes stemming from workplace harassment and employment discrimination claims. We also represent employers in collective and class actions involving allegations of wage and hour violations under state and federal law, as well as handle internal investigations regarding allegations of discrimination or other wrongdoing involving senior executives. Our lawyers defend and enforce non-compete agreements, handle trade secret protection cases and counsel clients with respect to all of their HR policies to ensure compliance.

When the Chicago L&E practice started in March 2010, we focused primarily on elevating Proskauer’s presence in the Chicago market. However, I quickly realized that there was demand for our practice throughout the Midwest. During my first year at the firm, my practice consisted of continuing to service clients that I worked with at my previous firm, working with a few Illinois-based companies that became new clients, as well as handling work from Proskauer clients based outside the Midwest that had matters pending in Illinois. Now, in a little over two years, we have multiple matters pending in Michigan, Indiana and Ohio while, at the same time, we are building a strong reputation as one of the “go to” L&E practices in Illinois.  There is no underestimating the strong reputation of Proskauer’s L&E practice throughout the country.  It was very persuasive in enlisting our Midwest-based clients, especially when I introduced them to my colleagues and when they realized the depth of expertise available to them as a resource.

Editor: With Proskauer’s global presence, I assume that you coordinate with other offices on labor and employment matters when they expand beyond the Midwest.

Telman: That’s right. We have matters for Midwest-based clients pending in a number of jurisdictions across the country, and those matters are being handled by my colleagues in other Proskauer offices. 

Editor: We understand that you counsel clients engaged in a variety of industries, such as financial services, food services and manufacturing. To what extent are your clients actually located in the Midwest?

Telman: Many of the client relationships that we originated in the Chicago office are primarily based in the Midwest, but their businesses are national in scope. We have matters pending for those clients in almost all of our domestic offices.

Editor: What are common causes for employment disputes that lead to class action litigation?

Telman: Recently, we’ve seen a lot of wage and hour cases, primarily stemming from alleged misclassifications of employees as exempt under the FLSA.  Class action cases based on race and gender, however, are still prominent and seem to be on the rise. I think companies might be able to avoid some of these cases by encouraging their managers to give better (more honest) performance evaluations. While it is human nature to sugarcoat bad news in terms of performance, the result is that employees sometimes fail to understand that they need to improve and sometimes even believe that they are meeting performance expectations.  When the employee is finally disciplined for poor performance, she assumes that it must be because of discriminatory animus, and that leads to litigation. Once a few of these employees start talking to each other and a plaintiff’s attorney, you soon find yourself defending a class case.

Editor: Under what circumstances might companies prefer to arbitrate or settle out of court, given reputational risks and other consequences of high-profile litigation?

Telman: One of the first things we discuss with the client when we get a new case is what effect is this going to have on the brand, especially if the business is a consumer business. Even if we can win the case for the client we may win it at the expense of the brand, and that does not serve the business.  Another principle we follow concerns internal investigations – whether we conduct one or it is done by the company. It must be an honest investigation that seeks the truth.  There is nothing to gain from ignoring problems.  So, if the investigation reveals a problem, we recommend resolving the dispute with the employee if possible and taking immediate steps to fix the problem in order to prevent future litigation.

Editor: What is the tenor of EEOC investigations, both in your geographic area and as may be industry-related?

Telman: The Chicago office of the EEOC is one of the most aggressive in the Midwest. I represent clients in matters before the EEOC in Chicago and in a number of EEOC offices around the country. Several years ago, cases that the EEOC would not have pursued are now enlisting their resources. I recommend that clients develop a “triage” approach to charges in an effort to quickly determine which ones are high risk given the facts and EEOC enforcement trends.  That way, the client can devote the appropriate amount of resources to effectively deal with the high-risk charges.

Editor: Are there particular industries that are targeted by the EEOC?

Telman: Industries with many low-paid employees, such as the food service industry, seem to be subject to a large number of investigations.

Editor: Tell us about some of the employment law counseling and training programs that you offer to help clients proactively manage hiring issues, such as conducting various types of background checks.

Telman: While I love to litigate cases, I have a greater sense of accomplishment when we’re able to avoid litigation. Counseling can span from informal counseling, where I advise based on lessons learned in my litigation matters, all the way to the other end of the spectrum where clients ask us to train their employees on current issues or recent developments in the law. For example, one of my partners in the New York office and I are currently developing two training programs, one on how to appropriately manage independent contractors so that they may not be deemed employees. The second program delves into properly managing the hiring process – for example, when to use social media (if at all), when it is appropriate to conduct criminal and credit background checks and how to document interviews. 

Editor: What policies and procedures can companies adopt that will reduce the risk of an EEOC investigation?

Telman: I find that most companies have all the required policies in place. The problem is often consistent implementation of the policies over time. The EEOC seems to get very interested where it appears that an employer is inconsistent in the way it applies its policies and practices. So, it is very important to consistently apply company policies within and across departments. 

Editor: What are the key issues and trends with employee classification? We understand, for instance, that some long-term consultants are taking undue liberties in this regard.

Telman: One of the red flags is the use of long-term independent contractors. We suggest to clients that they put a system in place that periodically identifies consultants who have been working for that company so that someone can actively make the decision about whether it is necessary to continue the contract or create a full-time position within the company for the role. Companies that retain independent contractors for years may be questioned, and mundane things such as providing them company email addresses, business cards and requiring them to attend certain meetings may be seen as indicia of an employee/employer relationship.

Editor: What are common causes of employee misclassification, and how can companies recognize and correct the problem? Are federal and state enforcement agencies issuing clear guidance, and if so, does such guidance vary from state to state?

Telman: The number one thing that employers can do is be more active as to the use of independent contractors. There should be one person or some department within the company that has responsibility for actively managing them with an understanding of a clear delineation under the law of the distinction between independent contractors and employees.  With respect to the law and who enforces it, it can run the gamut from an EEOC claim under Title VII, potentially as a co-employer, to the Department of Labor.

Editor: Is there also a misclassification where you have salary versus hourly employees, where it is sometimes difficult to draw a bright line between the two?

Telman: There are federal guidelines on which employees should be exempt and nonexempt.  One of the causes of misclassification is sometimes the simple matter of a company not knowing what an employee is actually doing on a day-to-day basis. Jobs often evolve, and after a few years, the tasks that could lead to misclassification may change.  One of the things we sometimes recommend is that, as part of the annual performance evaluation process, the employee should be required to outline her duties and responsibilities. The employee’s manager can then review the employee's work in two respects: to make sure that she is not doing more than she should be doing and, secondly, as part of that analysis, a determination can be made regarding whether the job has changed sufficiently that the employee’s classification should change.

 

Please email the interviewee at ntelman@proskauer.com with questions about this interview.