Must Employees in Washington State Wear Masks?

With the Covid-19 vaccine being widely administered in Washington state, many ask, “must employees continue to wear masks at work?”  The short answer is, it depends.

For many (but not all) employers, as of May 21, 2021, an employer may lift an employee mask requirement, but only if the employer obtains from each employee one of two documents. The employee must provide either: (1) proof of the employee’s vaccination, or (2) written confirmation signed by the employee that they have been vaccinated.  If the employee provides the documentation, the employer may choose to relax employee social distancing to less than 6 feet, or may choose to no longer require masks of the vaccinated employees.  See Proclamation 20-25.13 issued by Governor Jay Inslee. However, it is important to note this Proclamation does not override CDC guidance, does not override stricter rules of  local governments, and does not require businesses to abolish mask or distancing requirements.  https://www.governor.wa.gov/sites/default/files/proclamations/proc_20-25.13.pdf

To learn more about what rules may apply to your industry, seehttps://www.governor.wa.gov/issues/issues/covid-19-resources/covid-19-reopening-guidance

Can Employers in Washington State Require Employees to Vaccinated Against Covid-19?

As vaccination against Covid-19 rolls out, employers want to know if they can require employees to get vaccinated. In Washington State, the short answer is, yes, but employers must do so in ways that comply with wage-and-hour rules, and other rules regarding employment. For example, requiring vaccination means the employee’s travel time, and time spent receiving the vaccine, are part of their work hours, and therefore such time is part of the employee’s paid time.  Not surprisingly, an employee cannot be prohibited from  using sick leave to recuperate from side effects they may have from the vaccine.  Depending on the needs of the business, some advance notice by the employee of their vaccine appointment may be appropriate.  If you are reluctant to require vaccination, an alternative option may be to encourage and incentivize employees to get vaccinated.  All in all, if you are a Washington employer and would like a vaccinated workforce, there are options.

Fortunately, Washington’s Department of Health and Department of Labor & Industries have each issued guidance to employers.  See: https://www.doh.wa.gov/Portals/1/Documents/1600/coronavirus/120-053-FAQStepsCriticalWorkersVaccination.pdf and  https://lni.wa.gov/agency/outreach/coronavirus-covid-19-vaccines-and-paid-sick-leave-common-questions

Attorneys’ Fees Clauses-The Basics

You have probably heard of “attorneys’ fee clauses” (a/k/a “prevailing party” clauses) in contracts. But do you know how they work?  In the United States, when parties are involved in litigation, typically each is responsible for paying its own costs and legal fees.  This is fine for those who can afford to hire attorneys to pursue (or defend) a lawsuit.  But what are people (or companies) that don’t have sufficient funds supposed to do?  It can be a problem when a deep-pocketed party can pursue a claim that lacks merit.  It can also mean there is little consequence for pursuing a lawsuit that really has no merit.[1]  The idea that each party is responsible for their own attorneys’ fees is known as “the American Rule” – versus the “the British Rule”, in which the losing party pays the winning parties’ legal fees.  Many believe the American system is why there is so much more litigation in the U.S. than in Britain.

But there are some exceptions to the American system.  For example, in Washington state, there are three situations in which the loser pays the winner’s costs and attorneys’ fees: (1) when it’s allowed by specific statute, (2) when it’s included in a contract, and (3) on “equitable” grounds (which is rarely ever found, so best not to count on it).

For example, when a party sues claiming violation of Washington’s Consumer Protection Act (RCW 19.86), the prevailing (winning) party can recover reasonable attorneys’ fees and other costs from the non-prevailing (losing) party (RCW 19.86.090).  This helps level the playing field when a customer is misled or otherwise injured by a seller of some product or services that violates the CPA, and encourage attorneys to take on cases against deep-pocketed parties.

But what about those lawsuits where the amount being fought over is less than $10,000?  By statute, the prevailing party is entitled to have its costs and reasonable attorneys’ fees paid by the other side.  RCW 4.84.250.  Not surprisingly, the idea is that the merits of the lawsuit should not be outweighed by the financial costs of suing or defending.  Likewise, when a winning party has to litigate how much fees they are to recover, they can get those fees paid by the losing party too.  See, e.g., Fisher Properties, Inc. v. Arden-Mayfair, Inc., 115 Wn.2d 364, 378, 798 P.2d 799 (1990) (“The general rule is that time spent on establishing entitlement to, and amount of, a court awarded attorney fee is compensable where the fee shifts to the opponent under fee shifting statutes.”). In other words, if you are on the losing side, it can be even more costly to argue too much about attorneys’ fees.

As for contracts, they can include a provision that, in the event of a lawsuit between them, the prevailing party will be entitled to recover their attorneys’ fees and costs. So long as it’s in a valid contract, the courts will generally enforce it.  The prospect of having to pay the other side’s legal fees gives everyone a reason to look very closely at the strengths and weaknesses of their case.  It gives the party that does not have the balance of the facts and law on its side an incentive not to drag things out, and to strongly consider negotiating a settlement to minimize risk of losing even more if the case went to trial.

In Washington, if there is an attorneys’ fee clause in a contract, it is deemed to apply to whichever side basically is the winner – even if the clause is drafted so that it looks like it favors just one of the parties.  For example, if a construction contract says the contractor can recover its attorneys’ fees if the customer unsuccessfully sues, the courts will read that clause as applying to both parties – so that the customer can recover its fees if it wins the lawsuit against the contractor.  RCW 4.84.320.

[1] Whether a lawsuit is actually “frivolous” is a harder question than one might think.

Families First Coronavirus Response Act (“FFCRA”)

Alphabet soup of the “Coronavirus Aid, Relief and Economic Security” (“CARES”) Act got you confused? You already know about, and may have received funds from, various programs of the CARES Act such as the “Paycheck Protection Program “(“PPP”), or the expanded “Economic Injury Disaster Loan Program” (“EIDL”) from the U.S. Small Business Administration (“SBA”).

But are you aware of the FFCRA?  That’s the “Families First Coronavirus Response Act”.  It requires companies that have fewer than 500 employees to provide paid leave to employees for certain Coronavirus-related reasons.  The FFCRA went into effect April 1, 2020, and will remain in effect until December 31, 2020.

WHAT TO KNOW ABOUT THE FFCRA

REQUIRED WORKPLACE POSTER: As of April 1, 2020, a workplace poster from the US Department of Labor is required to be posted and/or sent (e.g., emailed) to employees.  A copy can be obtained from the US DOL.  The English version is available via this link: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf   The poster is available in several languages, so check the US DOL website for copies that may be applicable for your employees (Spanish, Chinese, Hmong, Korean, Polish, Portuguese, Russian, Tagalog, Thai, Vietnamese).  The US DOL website has other workplace posters too, so while you are there, check to see if there are others that your business may be required to post. https://www.dol.gov/agencies/whd/posters

FFCRA BASICS: Businesses with fewer than 500 employees (“covered businesses”), must give employees paid sick leave if leave is needed due to the coronavirus. However, the rate of pay varies depending on the specific reason for leave.  The amount of leave available to the employee also varies depending on the reason for the employee having to take time off.

There are two sets of leave:  (1) two weeks, i.e., up to 80 hours, and; (2) employees who have been with the employer at least 30 days may also be entitled to an additional 10 weeks of paid expanded family and medical leave if they have to be out in order to care for a child whose school or place of care is closed due to COVID-19 related reasons.  This means some employees may be entitled to up to 12 weeks of paid leave, in certain circumstances.

1.  First two weeks: the employer must give two weeks (up to 80 hours) of paid sick leave at the employee’s regular pay rate (up to $511/day) if an employee is unable to work because they are quarantined (quarantine is by government order or on advice of a health care provider), and/or is experiencing COVID-19 symptoms and is seeking a medical diagnosis.

However, if the employee is unable to work not because the employee is sick, but because: (i) they are caring for someone who is subject to quarantine by government order or on advice of a health care provider, or (ii) if the employee must care for a child younger than 18 whose school or child care provider is closed or unavailable for reasons related to COVID-19, then the employer must give up to two weeks (80 hours) of paid sick leave at two-thirds of the employee’s regular pay rate (up to $200/day).

2.  Additional ten (10) weeks: If the employee is caring for a child whose school or place of care is closed due to COVID-19 related reasons, the employee is entitled to take an additional 10 weeks of paid leave, at 2/3 the employee’s regular rate of pay (up to $200/day).

To help businesses provide paid leave, the FFCRA authorizes tax credits which can lower your tax bill.  Not surprisingly, the IRS has numerous rules about this, so contact your CPA for details.

The FFCRA is just one of several programs created to help businesses and employees manage during the COVID-19 crisis.  If you find yourself overwhelmed or just needing a bit of help navigating the maze, contact a lawyer today.

Hiring in Seattle? Rules for Criminal Background Checks

In 2013, the City of Seattle enacted the “Fair Chance Employment” ordinance governing how criminal background checks are to be used in the hiring process. The rule went into effect on November 1, 2013.  SeeSeattle Municipal Code 14.17.

The rule limits the extent to which an arrest or conviction may be used to potentially disqualify job applicants.   The goal is to reduce recidivism and to provide more opportunity for those who have paid their debt to society to be gainfully employed.

So what size employers are affected? Any business with one or more employees, except certain types of jobs.

Which employees are subject to the ordinance?  Employees who provide services 50% or more of the time within the city limits.  This means it may apply to employers who are based outside of Seattle, but whose employees work at least 50% of the time in Seattle.  It applies to applicants for full time, part time and temporary employment. It applies to those positions that will require the employee to substantially work in Seattle, even if the employer is not based in Seattle.   So, for example, if your company is based in Edmonds, and you routinely send employees to jobsites in Seattle so that at least 50% of their time is spent on Seattle projects, expect that the ordinance will apply to applicants for those positions.

Does the ordinance apply to all employees in Seattle? No. It does not apply to individuals in law enforcement, policing, crime prevention, security, criminal justice or private investigation services.  It also does not apply to employees who will or may have unsupervised access to children under 16 years of age, developmentally disabled persons, or vulnerable adults.

So what are the rules? A few of the key requirements are: (1)  the ordinance prohibits automatic disqualification from employment simply because the applicant has either an arrest or conviction record; (2) questions about criminal history and conducting background checks must wait until afteran employer conducts an initial screening of applicants; (3) if a background check is done, the employer must give the applicant a chance to explain or correct the criminal history information, and;(4) the employer must have a “legitimate business reason” to deny the applicant a job based on a conviction record.

What’s a “legitimate business reason”?  It’s a bit subjective, but the ordinance provides some guidance: (1) the conviction (or pending charge) would have a “negative impact” on the employer or on the applicant’s ability to do the job, and (2) in arriving at this conclusion, the employer has considered several factors, including:

  1. the seriousness of the conviction or charge;
  2. the number and types of convictions or pending charges;
  3. how long it’s been since the conviction or charge (not including periods of incarceration);
  4. verifiable information related to the rehabilitation or good conduct of the individual;
  5. the specific duties and responsibilities of the position sought or held, and;
  6. the place and manner in which the position will be performed.

SeeS.M.C. 14.17.010

Bottom line – if an applicant is rejected because of a criminal history, the employer will have to demonstrate that it considered all these factors. If the employer cannot show that these factors were actually considered, the chances of OLS sustaining a violation (and imposing penalties) is much higher.  Though vague, the ordinance provides a bit of a roadmap for how to avoid a violation, and smart employers will follow it.

To help, the City’s Office of Labor Standards has a poster with the information that employers are required to provide about the ordinance, and employee’s rights under it.  Use the poster. It’s free – and mandatory. Willful failure to post it can be a $500 penalty. Fortunately, it’s easy to comply. Pick up the workplace poster from the OLS office in downtown Seattle, or simply go its website and download it:  https://www.seattle.gov/laborstandards/outreach/publications

OLS is the agency that investigates complaints of the ordinance being violated, and if it is found that an employer did violate it, the Director of OLS can impose penalties on the employer such as payment of unpaid wages, fines, and interest due (among other costs).  The minimum penalty for a first violation is $500 – in addition to other damages an employee or applicant may have.  A second violation is at least $1,000.  Penalties don’t get cheaper over time.

This is just a summary with some highlights of the ordinance, and is not legal advice. If you have questions about the ordinance, consult a lawyer.

Buying (or Investing in) A Brewery in Washington State? A Few Things To Keep In Mind

You love beer.  You’ve been making it at home for a few years, or are working in a brewery, and want to take the leap into running a microbrewery in the Seattle area.  How do you go about doing this? This article looks at a few important steps.

While you are dreaming about how you’ll open best brewery in the region, a good friend asks if you want to invest in his or her own microbrewery. A chance to get in to an existing operation!  It sounds like a great opportunity.  But even though you are friends, don’t forget to do your due diligence. It’s no insult to a solid business relationship to find out as much as possible about what, exactly, you are getting into – if there is resistance to you asking appropriate questions, it may not be the right fit. That said, it’s not uncommon for potential investors or buyers to be asked to sign a non-disclosure agreement (NDA) in order to keep confidential the financial and other proprietary information you want the company to share with you. The conditions can vary from one NDA to the next, so if you haven’t already hired a lawyer to help you navigate things, this is a good time to get one, not least because a properly drafted NDA is a contract.

Due diligence involves looking at a number of items, some of which don’t even relate to whether the beer is any good or how great the potential sales are or even how good or bad the company’s finances are.  For example, is the company’s own corporate paperwork in order?  Is the company complying with local rules regarding employees? Are its licenses up to date with both the state and federal authorities? Are there any outstanding tax or other liens?  What does the lease say about change in ownership of the tenant? Often change in ownership or control of the tenant company is considered a change in the tenant; is the landlord’s permission required for change in the tenant’s ownership? Is failure to get the landlord’s permission deemed a breach of the lease? These are just a few of the issues to consider before thinking about how great the beer will be.

But hold on. Before you can buy (or buy into) a brewery, remember that the state and federal licensing authorities must be notified of and approve the change in ownership.  A change in ownership by as little as 10% means the new investor (you), and the transfer to you, must be approved (see, e.g., Revised Code of Washington 66.24.025). A new owner is subject to background checks; both Washington’s Liquor and Cannabis Board (LCB) and the U.S. Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) have forms and procedures for this, and the process can take between several weeks and a few months. Even with no criminal background, an investor who is certified to be violating a child support order can be denied approval (or will have an existing license suspended. RCW 66.24.010). In short, without approval from the LCB and TTB, this path ends. Investing as a corporation or an LLC will not get around the requirements; not surprisingly, the LCB and TTB focus on the people who are involved, not just the entities.

Curious?  Stay tuned. But if you are seriously considering investing in or opening your own brewery, don’t wait for more blog posts – consult with a lawyer.  Law Office of Susan K. Fuller, PLLC, susanf@fullerpllc.com

© 2018 Law Office of Susan K. Fuller, PLLC

Opening a Business? Don’t Forget a Lawyer! Licenses and Leases

Congratulations, you have decided to go into business for yourself! Tired of working for others, and you are ready to take the leap. If you are opening a business in Washington State, there are many things to keep in mind, and a lawyer can bring help make the process more manageable. More importantly, a lawyer can help minimize the chances you’ll make a costly, avoidable mistake.

Funding

If you are not applying for outside funding, you may not yet have put together a business plan. If you haven’t put together a business plan, do start with that. It will help you figure out how to get on a successful path. There are a lot of resources to help you with your business plan. This article does not tell you how to make a business plan. Instead, this and other articles focus on some legal issues to consider before opening for business. By now, you have already decided on a type of entity structure for your business (e.g., corporation, limited liability company, partnership or sole proprietorship). If you haven’t  yet determined the right entity structure, don’t worry, your lawyer will be ready to help you figure out some solutions.  But now, let’s look at licenses and leases.

Licenses

Most people know they need a business license to do business in this state, need to be listed with the Department of Revenue, and Department of Labor and Industries, and possibly also the Secretary of State’s office (depending on entity type you have chosen). But you may also need a license in the city you will be working in. It is safest to assume your business will need to be licensed in your city, but because each jurisdiction handles things a little differently, it’s important to know what your jurisdiction requires.

In addition to a basic business license, do you also need a specialty license? Food and beverage businesses (restaurants, bars, food trucks, artisinal food and small batch producers, etc.) are obvious examples. Be sure to check whether the type of goods and services you will provide have special licensing or permitting requirements in your jurisdiction.

Leases

Opening a storefront or office? Great! You’ll probably be looking to rent. Don’t forget to have a lawyer help you with that process. Leases are legal documents that are important to the lifeblood of your business. Most landlords have lawyers prepare their standard leases, and that lawyer’s duty is to protect his or her client – the landlord. Who will look out for your interests? YOUR lawyer. Level the playing field and have a lawyer on your side.

For example, besides the base rent, what are you – the tenant – expected to pay for? Is it a triple net lease? How long is the initial term – and is there an option to renew? How much will the rent change if the lease is renewed? What happens if the business takes off and you want to move to a different location (or if the business is less successful than you’d like) ; can you terminate the lease early? Is there a penalty to do so? How much notice must you give the landlord if you want to leave? What happens if the landlord sells the building – must the new owner honor your lease, or can you be kicked out? These and many other questions are an important part of negotiating for terms that best suit the needs of your business. Many important terms are in the “boilerplate” sections that cause most normal people to fall asleep. But remember, lawyers are the ones who draft the boilerplate, so get a lawyer on your side.

Unless the space was used for the same kind of items you plan to sell or services you will provide, the space will need some remodeling to suit your needs. Who will pay for that? Tenant improvements are often paid for by the tenant, but sometimes the landlord will contribute, or allow a reduced rent while the space is being renovated.   These issues are typically addressed in the lease.

Try to find out what your jurisdiction requires when a new business is going into a space that will be put to a new use, so you can plan your budget and timeline as realistically as possible. What permits (if any) do you need simply because a different use of the space is planned? Is the space in a location that is zoned to allow the type of business you want to open, or would a variance have to be sought? Is it in an historic building that might have restrictions on what renovations can be done? How much work will be needed to make the space right for you (and what is it estimated to cost)? It is helpful to look into these sorts of issues and consider negotiating for an exit provision in case the building codes prohibit the renovations needed for your particular venture (or make it prohibitively expensive).

As you know, there are a lot of things to be done before ever opening your doors; level the playing field by hiring a lawyer on your team.

Independent Contractors: What’s the Difference Between an Independent Contractor and an Employee?

Many small business owners would like to know when they can hire an “Independent Contractor” vs. an “Employee.” This article is a modest effort to help clear things up a bit.

What IS an “Independent Contractor”?

First and foremost, and Independent Contractor is a business just like any other in Washington. That means the contractor must have, at minimum: (a) a Uniform Business Identifier (UBI) number, (b) a WA state business license (c) possibly also a business license in the city or town where it conducts business, and; (d) a special license for the type of work being done if a license is required for that trade.

The UBI number establishes an account at the state Department of Revenue – as a business, the Contractor pays Business and Occupation (B & O) taxes.

Let’s say Jane Doe considers herself an independent contractor. She’s an electrician, and a sole proprietor. She advertises her business, makes bids on jobs, is her own boss and sets her own schedule. She owns her own tools. She is a duly trained and licensed electrician. She has a UBI number and a state business license. Jane works in Seattle, so she also needs a Seattle Business license. Since her business is in King County, she should also be registered with a Personal Property account with the King County Assessor’s Office and may (or may not) owe personal property tax on business equipment. Jane’s business is subject to state B & O taxes on gross income. For federal income tax purposes, she may owe Self Employment (SE) tax (similar to tax withheld from a paycheck).

Now let’s look at John Doe. John also considers himself an independent contractor. He’s not an electrician, he is a yoga instructor in Seattle. His friend Mary runs a yoga studio, and John teaches classes there 3 days per week. Mary sets his schedule, and decides which classes he should teach. He does not advertise his services; instead, he relies instead on Mary’s marketing of the studio. He does not have a business license or a UBI number. Mary pays him cash. Both John and Mary are happy with this arrangement.

Is John really an independent contractor? No. Does it really matter, since he’s happy being called an independent contractor? Yes, it matters. If the Department of Labor & Industries (or the IRS) determines that John is not actually an independent contractor, that means he is Mary’s employee, and Mary (or her company), will be liable for paying John’s employment taxes that should have been withheld, will be liable for paying into the state worker’s compensation fund for employee John, and may owe other taxes and fees. Note: for Labor & Industries, a worker is presumed to be an employee unless it can be proven otherwise. This puts the burden on the business owner to show that the worker is listed and paid correctly.

Moral of the story: just calling yourself (or your worker) an “Independent Contractor” does not make it so.

Why is Jane and “independent contractor” and John is not? Because Jane meets the criteria that are used to define an independent contractor. If you are looking to hire an independent contractor, you must look for these criteria. The worker is an independent contractor only if she meets all 6* of them: (1) the worker is free from your “direction and control” (that is, you do not control the means and methods for how to get the job done); and (2) (a) the person performs a service that is outside the course of your business, or (b) the service is performed away from your location or job site, or (c) the contractor is responsible, in contract and in fact, for the costs of her own principal place of business; and (3)(a) she is engaged in her own business of providing the services you are looking to hire for, or (b) she has a principal place of business that qualifies for an IRS business deductio; and (4) she complies with IRS rules for filing a business tax return with the IRS, and (5) she has an active UBI number with the Washington Department of Revenue, and (6) she maintains her own set of books and records showing business income and expenses.

*In addition, those in certain construction trades must also (7) have a valid contractor registration per RCW 18.27 or 19.28. Jane also meets this test.

Washington’s Department of Labor and Industries wants people to understand the rules and the criteria for independent contractors, and has published a handbook to help explain things. It can be found at: http://www.lni.wa.gov/FormPub/Detail.asp?DocID=2134

The Handbook discusses the basic criteria listed above. The Labor & Industry criteria are similar to the ones used by the federal Department of Labor. It is important to understand these criteria, because they are what the relevant agencies will look at. Knowing what the agencies use to define “independent contractor” will help minimize problems for your small business. The last thing any business owner wants is the surprise of extra costs; so get educated about the difference between “independent contractors” vs. “employees”, and plan accordingly.

Affordable Care Act Basics (“Obamacare”) for Washington State Residents

1.What IS it? The AFA is a federal law designed to help people get medical insurance coverage.  For employers who have 50 or more Full Time or Full Time Equivalent (FTE) employees, it is mandatory to provide affordable health insurance or else pay a tax penalty. For everyone else, it provides a route to obtaining insurance through “insurance exchanges”, which function as an open marketplace for you to shop for insurance.  If you can afford coverage but nonetheless choose not to obtain it, you will owe a tax penalty.   The tax penalties start small, but increase over time if you continue not to get insurance.  Of course, if you don’t get insurance, you will also have to pay out of pocket for your medical expenses, so it’s smart to get coverage.  See http://www.healthcare.gov

2.What do I do if I’m Self-Employed? Use the insurance exchange. WA is ahead of many states in getting set up. See http://www.wahbexchange.org/ and http://www.wahealthplanfinder.org/

3.What IS a health insurance exchange? It’s a way for health insurance companies and persons seeking coverage to connect (the federal government calls the exchanges “the Marketplace”). To get in, you have to sign up during open enrollment (currently October 1, 2013 to March 31, 2014). The insurance companies make their coverage options available to individual members of the insurance exchange. In WA, the process is arranged via the state government. The insurance companies get to sell coverage plans to a much larger customer base and thereby lower the underwriting risks, and individuals get to sign up for coverage if their employer (or spouse’s employer) does not already make it available.  There are a variety of coverage options, and like any marketplace, the coverage options may change with the amount of money the customer is willing to pay.

4.What do I do if I own small business that has less than 25 employees? Must I provide health insurance? No. But if you want to, great! If you want to provide insurance but think your company can’t afford it, the company may be eligible for tax breaks on the employer portion of the insurance premiums to help out.  Employers with 25 or fewer employees are generally also eligible to obtain policies for their employees via the “Small Business Health Options Program” (SHOP). In WA SHOP is available through http://www.wahealthplanfinder.org/

5.What is “affordable” health insurance? If your company provides insurance, it is “affordable” if the employee’s premium is no more than 9.5% of the employee’s household income. Because you may not know your employee’s household income, a good practice is to have the employee’s share be no more than 9.5% of what you pay the employee as reported on the W-2 issued by your company.

6.I’ve got a pre-existing condition; can I still get coverage? Yes!

Got Employees or Thinking of Hiring? Here are Some Basics You Need to Know- Part 1

Interviews and New Hire Paperwork: Most employers are aware that there are some things they cannot ask in an interview.  For example, generally speaking, interviewers cannot ask about an applicant’s medical history.  Americans with Disabilities Act (“ADA”) 29 U.S.C. § 706 et seq. But it is permissible to ask if an applicant can meet the physical requirements of the job. (See also ADA).  So, for example, if the job description includes lifting 50 lbs or more on a daily basis, it is ok to ask if the applicant can meet that job requirement.  It helps to standardize the process with a list of questions to be asked of essentially all applicants, with some variation on questions focused on particular job requirements of each position.

When you are ready to hire the applicant, you are required to obtain proof that the applicant is legally eligible to work (i.e., citizens, and foreign citizens authorized to work in the U.S.), and complete federal form I-9.  This has been required since 1986, and the federal government has lots of helpful information regarding which documents are acceptable to prove both identity and eligibility to work.  See, e.g., http://www.uscis.gov/files/form/i-9.pdf.    As an employer, you are required do more than just take the applicant’s word that they are eligible to work.  The United States Citizenship and Immigration Service (“USCIS”) now has an “E-Verify” program to verify the applicant’s eligibility; participation in E-Verify is free.

Once you have the appropriate documentation, federal rules require the employer to retain copies for 3 years during the employee’s time with the company; if the employee is with your company for less than 3 years,  the documents must be kept for one year after the employee has left the company.  The documents do not get filed with the federal government, but the company must retain them in the event of an audit or review.

For companies in Washington State, take note that a New Hire Report form must be filed with the state’s Department of Social and Health Services (DSHS), within 20 days of hiring an employee.  The information is essentially the same as for an employee’s W-4 form (for the IRS).  The penalty for delaying or not filing the New Hire Report form with DSHS can add up: $25/month per employee. If the employer and employee conspire in the failure to file the document, the fee is $500.  RCW 26.23.040.

Given the myriad rules, it is extremely helpful to use a checklist; work with an HR consultant or lawyer for more information and to develop a checklist that works for you.  Also consider using a payroll service; such services can help manage the paperwork, freeing you up to focus on the main work of your business.

Non-Exempt v. Exempt Employees: You have undoubtedly heard the terms “non-exempt” and “exempt” employees.  This refers to whether the employee is covered by various wage and hour rules, including the federal Fair Labor Standards Act (“FLSA”).  Generally, employees who are paid on an hourly basis (not a fixed salary), are “non-exempt”, which means the wage and hour rules for minimum wage, calculating overtime, break times, etc. apply to these employees.  In contrast, many salaried and managerial employees are “exempt”, and are generally not subject to the same set of rules.  For example, managerial employees are not statutorily entitled to overtime pay (you can, of course, negotiate in the manager’s employment contract to provide comp time, vacation, sick leave, personal leave, etc., but those are provided by contract, not required by statute).

Work Environment: Even in “at-will” employment states like Washington, it is illegal to discriminate against employees on the basis of race, creed, color, national origin, families with children, sex, marital status, sexual orientation, age, honorably discharged veteran or military status, or the presence of any sensory, mental, or physical disability or the use of a trained dog guide or service animal by a person with a disability. See, e.g., Washington Law Against Discrimination. See RCW 49.60.180 et seq. There are some exceptions “if the particular disability prevents the proper performance of the particular worker involved.”  RCW 49.60.180(1).  The goal is to avoid discrimination while also recognizing a business’s legitimate needs.  It can be a delicate balance, so when in doubt, consult an HR professional or your lawyer.

Employment Contracts and Handbooks: Many employers have written employment contracts setting out some details of the terms of employment, such as the job description, salary, leave time accrual method, non-solicitation, non-disclosure and non-compete clauses, etc.  Many employers also have employment handbooks, which serve as a guide to the employer’s standards of behavior and job performance.  Not all employers use formal written contracts or handbooks; it really depends on the needs of the employer, the sensitivity of the job or position, and other factors.  If you are interested in using an employee manual, note that an employer can be bound by certain promises made in the handbook.  When a manual sets expectations that employers have of employees, it can also set expectations that employees have of the employer. It is wise to consult with an HR consultant and/or lawyer when considering using written employment contracts and handbooks.

This is just a fraction of some of the rules governing employment. Stay tuned for Employment Basics – Part 2.

Disclaimer: This article is for general information only and is not to be construed as legal advice.  Consult an attorney for guidance regarding your specific situation.

©2012 Law Office of Susan K. Fuller, PLLC