July 13, 2018

A. Establishing The Employment Relationship; Preserving At-Will Employment

The “at-will” employment relationship – In the absence of evidence to the contrary, Michigan law presumes that employees and employers have an atwill employment relationship. When an employer agrees to hire an employee for an indefinite period of time, Michigan law presumes that an at-will employment relationship has been established.

On the other hand, When an employer and an employee enter into an employment relationship for a definite term or duration, without specifying at-will status or other qualifiers negating “just cause” such as “at the satisfaction of the employer” – which carries less protection for the employer than “at-will” – the law presumes that a “just cause” employment relationship has been established. The employer then must have “good cause” to terminate the employee including before the expiration of any agreed upon term/duration of employment.

1. What is at-will? – Under an at-will employment relationship, the employment relationship is terminable at the will of either party for any reason or for no reason at all, as long as the employment relationship is not terminated for a reason that violates the law. Rood v General Dynamics Corp., 444 Mich 107; 507 NW2d 591 (1993).

2. The “just cause” employment relationship – In certain situations, a just cause employment relationship can be created where an employer then needs to establish that it has just and proper cause to discharge an employee. A just cause employer may also have to follow certain procedures prior to discharge, such as progressive discipline. A just cause employer has thereby permitted in most cases a third party –– judge, usually a jury, etc. –– to decide what is “just cause”.

a. “Just Cause” Elements – Below are the most often used elements in applying just cause. Arbitration decisions under collective bargaining agreements are the most voluminous source of cases showing how “just cause” takes decision-making control away from the employer. A “no” answer to one or more of the questions means that the employer’s case has been seriously weakened in that some arbitrary, capricious, or discrimination element was present. Arbitrator C. R. Daugherty has reduced the basic elements of discipline and discharge action, which different arbitrators have emphasized, to seven tests:

i. Notice: Did the employer give the employee forewarning or foreknowledge of the possible or probable consequences of the employee’s disciplinary conduct?

ii. Reasonable Rule Or Order: Was the employer’s rule or managerial order reasonably related to (a) the orderly, efficient, and safe operation of the employer’s business, and (b) the performance that the employer might properly expect from the employee?

iii. Investigation: Did the employer, before administering the discipline, make an effort to discover whether the employer did in fact violate or disobey a rule of order of management?

iv. Fair Investigation: Was the employer’s investigation conducted fairly and objectively?

v. Proof: In the investigation, did the “judge” obtain substantial evidence or proof that the employee was guilty as charged?

vi. Equal Treatment: Has the employer applied its rules, orders, and penalties evenhandedly and without discrimination to all employees?

vii. Penalty: Was the degree of discipline administered by the employer in a particular cause reasonably related to (a) the seriousness of the employee’s proven offense, and (b) the record of the employee in his/her service with the employer?

b. Apply “Just Cause” In Practice But Do Not Be Legally Bound By It – In practice, at-will employers should take employment actions that are fair, accurate and consistent (“FAC”) and the above just cause principles are a useful checklist to follow in ensuring “FAC” decisions and actions. Doing so not only promotes a better workforce and work environment, it protects against exposing yourself to potential legal liability under the ever increasing mound of employment laws. However, legally binding yourself to “just cause” is not advisable.

c. Here is another, slightly changed checklist to consider in guiding employment decision making, particularly if a person in a protected classification or potentially protected circumstances (age, gender, race, disability, etc.) is involved:

1. If you can’t see it or hear it, it’s not real.

2. If it’s not written down, it didn’t happen.

3. If it wasn’t discussed with the employee, it doesn’t count.

4. If the employee didn’t get a copy, it wasn’t serious.

5. If you haven’t heard the employee’s story, get it.

6. If the employee hasn’t seen the “F” word (☺…”fired”) before the “F” word happens, think again.

7. Do unto your employee as you would have your boss do unto you.

3. Toussaint Wrongful Discharge Claims

a. In Toussaint v Blue Cross and Blue Shield, 408 Mich 579; 292 NW2d 880 (1980), the Michigan Supreme Court recognized that an employer can often unknowingly depart from the at-will employment relationship and create a just cause employment relationship through its statements, policy manuals, procedures, or practices that give rise to a legitimate expectation of continued employment absent just cause for dismissal.

b. Under the Toussaint doctrine, there are two theories by which an employee may demonstrate a just cause contract: (1) the contract theory (express oral or written statements or implied-in-fact

contracts) and (2) the “legitimate expectations” theory.

i. Express oral or written statements from an employer can be used by an employee to establish a just cause employment relationship. For example, statements made to employees, such as “you’ll be here as long as you do a good job,” have been found to establish a just cause employment relationship where there was no express “at-will” relationship stated.

ii. The “legitimate expectations” theory – A just cause employment relationship can also be established when an employer’s handbooks, policy manuals, or other promises instill legitimate expectations in employees that they will not be discharged except for just cause. Under this theory, an employee can rely on an employer’s statements regarding policies and procedures as the basis for establishing a just cause employment relationship.

4. Preserving at-will status

a. Although an employment relationship is presumed to be at-will absent special circumstances to the contrary, employers often make statements or policies that an employee may try to rely upon to establish a just cause employment relationship. However, an employer can and should take express measures to preserve at-will employment, for example:

i. Express at-will statements – It is less likely for an employer to face Toussaint-type liability if it requires its employees to sign an express at-will statement, for example, acknowledgment in a tear-out page in the employee handbook and also on the employment application. In addition to other important information, these statements acknowledge that there is an at-will employment relationship between the parties. These written statements should be signed by the employee, and should be kept in the personnel file.

ii. The employee handbook as a tool to prevent wrongful discharge claims

(i) Disclaim intent to create a contract of employment other than a contract for “at-will” employment, or simply provide for at-will employment, for example in part:

“Since the Handbook is designed to give you general information, it is not intended to create a contract for anything other than at-will employment and does not guarantee any particular duration of or continued employment, employment status, benefits, or other terms and conditions of employment. . . .” [CAUTION: See Part II. A., B. and particularly E.3. for items that need an agreement between the employer and employee, and therefore proper wording is critical so as not to confuse what is contractual with what is not.] Also reserve the right to change the employee handbook, for example in part: “The policies and practices outlined in this Handbook are dependent upon economic and other considerations. Therefore, they may require being changed including terminated or updated from time to time in the [employer’s] discretion to keep pace with changing times, and decisions involving employment will be made in the [employer’s] sole discretion under the particular circumstances in order to conduct work and business in a manner that is beneficial to our employees and the [employer], customers and business relationships.” [Of course, consider inserting the “public” in the last phrase, particularly if a public sector employer].

iii. See more particularly Parts I.C. and II. A. through E. for additional information.

B. Discrimination – Protected Classifications

1. Principal federal statutes

a. Age Discrimination in Employment Act (ADEA) – Prohibits discrimination against individuals aged 40 and over. There is no upper age limit with limited exceptions. Covers employers with 20 or more employees, state and local governments. b. Title VII of the Civil Rights Act of 1964 - Prohibits discrimination in employment on the basis of race, sex, creed, color, religion and national origin. Also prohibits harassment based on race, sex or other unlawful criteria. Amended by the Civil Rights Act of 1991, which made it easier to prove liability in certain cases; increased the damages available to plaintiffs; and provides for trial by jury.

Covers employers with 15 or more employees, state and local governments.

c. Pregnancy Discrimination Act (PDA) - Prohibits discrimination on the basis of pregnancy. An employer cannot exclude applicants or employees on basis of pregnancy, child birth or related medical conditions (applies with few exceptions to fetal protection policies). Employers must treat pregnancy and child birth the same as other temporary disabilities under insurance and fringe benefit programs. Title VII coverages.

d. Americans With Disabilities Act (ADA)- Prohibits discrimination in employment on the basis of disability. Imposes an affirmative duty of reasonable accommodation. Covers employers with 15 or more employees, state and local governments.

e. Family and Medical Leave Act (FMLA)- Requires unpaid jobprotected leaves of up to 12 weeks annually for certain family or medical reasons and up to 26 weeks annually for those conditions in combination with or just for certain military-related circumstances. During the leave period the employer must maintain group health insurance coverage. Applies to employers with 50 or more employees and to employees with one year of service who have worked at least 1,250 hours in the preceding year.

f. Vietnam Era Veterans Readjustment Assistance Act of 1974 - Prohibits discrimination against Vietnam era veterans, and requires job-protected leave for periods of active duties. Also imposes an affirmative duty to hire veterans or recipients of federal contracts and grants.

g. Uniformed Services Employment and Reemployment Rights Act (USERRA) - Provides many various antidiscrimination and job protection measures for military, including guard, personnel. Covers virtually all employers regardless of size.

h. National Labor Relations Act (NLRA) - Protects employees’ right to engage in and refrain from union organizing activity and other protected concerted activity.

i. Immigration Reform and Control Act of 1986 - Makes it unlawful to knowingly to hire an alien who is not authorized to work in the U.S.; requires the employer to verify an alien’s uthorization to work; prohibits employers from discriminating against an individual because of his/her national origin or citizenship status.

j. Employee Polygraph Protection Act of 1988 - Prohibits private employers from using lie detector tests to screen applicants or, with exceptions, test current employees; prohibits disciplinary or retaliatory actions against employees or applicants who refuse to take the test.

k. Occupational Safety and Health Act of 1970 – Requires maintenance, and sets standards for, safe working conditions. Also prohibits an employer from discharging or otherwise retaliating, against employees who report safety violations. Michigan has its own regulatory and enforcement plan, the MIOSHA, instead of the federal.

l. Drug Free Workplace Act - Requires federal contractors and grant recipients to establish a drug free workplace policy and to educate employees about it; requires reporting of employee criminal convictions for workplace related drug activity.

m. Vocational Rehabilitation Act of 1973 - Prohibits handicap discrimination by federal contractors and recipients of federal funds. Also imposes affirmative duty of accommodation and an affirmative duty to hire such individuals.

n. Department of Defense and Department of Transportation Drug Testing Rules - Require drug and alcohol testing of drivers and employees in safety sensitive or security related positions in defense and transportation industries.

o. Equal Pay Act of 1963 (EPA) - Requires equal pay for work of equal skill, effort and responsibility performed under similar working conditions.

p. Executive Orders 11141 and 11246 - Prohibit discrimination on basis of race, color, religion, sex, national origin and age, and require affirmative action by federal government contractors and subcontractors.

q. Bankruptcy Amendments and Federal Judgeship Act of 1984 - Prohibits private employer discrimination against employees who have filed for bankruptcy, failed to pay debts that will be discharged under the bankruptcy code, or associated with other individuals who have filed or are filing for bankruptcy.

r. Employee Retirement Income Security Act (“ERISA”) – Regulates employee benefit and retirement plans. Prohibits discharge of employees for the purpose of interfering with employee’s attainment of benefits.

s. Consolidated Omnibus Budget Reconciliation Act (“COBRA”) - Requires continuation of group health care coverage upon discharge, subject to narrow exceptions.

t. Worker Adjustment and Retraining Notification Act (“WARN Act”) -Requires notice to employees of plant closings or mass layoffs for certain size operations and plant closings and masslayoffs.

u. 42 USC Section 1981 - Prohibits racial discrimination in the “making and enforcement” of contracts, meaning in the making, performance, modification and termination of contracts and the enjoyment of all benefits, privileges, terms and conditions of a contractual relationship. Unlike Title VII, it applies to all employers regardless of the number of employees, has a 4-year limitations period instead of 300-day agency filing and right-to-sue letter requirements, and has no damages caps between $50,000- $300,000 (depending on number of employees in workforce). Hiring, discharge and even retaliation claims, etc. may be subject to 1981 racial discrimination claims.

v. 42 U.S.C. § 1983 - Commonly referred to as "section 1983," provides: Every person who under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, Suit in equity, or other proper proceeding for redress . . . . Suits under this statute run the gamut from employment discharge to alleged stifling of free speech in public employment, to alleged torts committed by an employee against a fellow employee or visitor.

w. Fair Labor Standards Act (FLSA) - Section 15(a)(3) states that it is a violation for any person to “discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee.

x. Sarbanes-Oxley Act (Dodd-Frank) of 2002 - Section 806 protects employees of public companies who 'blow the whistle' by reporting conduct that they reasonably believe is a violation of federal law relating to financial, securities or shareholder fraud. Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, requires the Securities and Exchange Commission (SEC) to establish a new whistleblower program to pay awards to whistleblowers who provide the SEC with information about violations of securities laws that leads to a successful enforcement action resulting in monetary sanctions exceeding $1 million.

Section 922 of the Dodd-Frank Act also protects whistleblowers by prohibiting retaliation by employers against individuals who provide the SEC with information regarding potential securities violations.

2. Principal state statutes

a. In General: Most states have laws that duplicate the protections of the primary federal laws listed above, prohibiting discrimination based on age, race, sex, etc. (see 2.i. and j. below). Most states including Michigan also have laws in the following categories:

b. Whistleblower Laws: Protect employees who report or threaten to report violation or suspected violation of federal, state or local law, and protect employees involved in investigation of possible violations of federal, state or local law.

c. Jury Duty Protection: Prohibits discrimination against an employee because he/she is required to perform jury duty. d. Political Activities Laws: Prohibit discharging or threatening to discharge an employee for the purpose of influencing the employee’s vote.

e. Workers’ Compensation Laws: Provide for the payment of lost wages and medical expenses to employees who suffer work-related injuries; also prohibits employers from retaliating against employees who exercise their rights under the Act.

f. Occupational Safety and Health Laws: Prescribe and regulate safe working conditions and duties of employers and employees regarding those conditions; create employee “right-to-know” about hazardous chemicals in the workplace, including labeling requirements. Also prohibit retaliation against employees who exercise their rights under the Act.

g. Youth Employment Laws: Regulate employment (including work conditions and hours) of minors and the issuance and revocation of working permits.

h. Garnishment Laws: Establish procedures for garnishing an employee’s wages; often prohibit the disciplining or discharging an employee because his/her wages are garnished.

i. Michigan Elliott-Larsen Civil Rights Act (ELCRA or CRA): Mirrors largely Title VII but prohibits discrimination at any age except for statutory age floors and also covers marital status, height and weight. Employers with one or more employees are covered.

j. Michigan Persons with Disabilities Civil Rights Act (PWDCRA): Similar in most regards to the Americans with Disabilities Act with some important differences, e.g., no duty to reasonably accommodate by placing in an open, different job for which the employee is qualified (with or without accommodation) if the employee cannot perform the essential functions of the incumbent job (with or without accommodation), or placing on a leave of absence (or providing time to heal) requirement unlike the ADA (with certain exceptions under the ADA). Employers with one or more employees are covered.

3. What factors cannot be considered?

Under the laws listed above in Part I.B., in Michigan it is unlawful to make employment decisions including hiring or firing, based on any of the following factors, chiefly:

• Race
• Color
• Sex
• Religion
• National Origin
• Age
• Pregnancy
• Sexual or Other Harassment (e.g., Racial)
• Marital Status
• Weight
• Height
• Disability (including regarded as disabled or history of disability, and association with another with a disability)
• Family or Medical Leave (taken under FMLA)
• Veteran Status/Military Service
• Participation in investigations by various governmental enforcement agencies (e.g., Equal Employment Opportunity Commission, US Department of Labor including its Wage and Hour Division, etc.) or opposition to perceived (in good faith) unlawful employer acts under various statutes (e.g., Title VII, Fair Labor Standards Act, etc.)
• “Whistle blowing” (reporting or threatened reporting of suspected violation of law)
• Lie Detector Tests (Results or Refusal)
• Bankruptcy
• Garnishments
• Citizenship Status
• Union Activity or “Protected Concerted Activity”
• Filing a Claim against the employer (e.g. Worker’s Compensationclaims, discrimination claims)
• Eligibility for Employee Benefits (Pension, Health Care, etc.)
• Jury Duty
• Being Subpoenaed
• Federal Campaign Contributions
• Political Activity (exceptions under Hatch Act and constitutionally for public sector employees)
• Period of Unemployment or Public Assistance
• Victim of Crime
• Genetic Information

C. The Employment Application

1. Complying with federal and state requirements – Determine that your application process, including the application form, complies with state and federal requirements. The application:

• Should be focused on information that is directly related to the employer’s need to know and to make an effective determination about whether the applicant is a proper fit for an open position.
• Should be designed to incorporate the necessary releases and approvals to check qualifications, background, and essential job functions determinations under the ADA (and Michigan PWDCRA) and initiate the applicant to the employment status desired by the employer.
  
  You should establish and maintain applicant flow data consistent both with state and federal guidelines and with application and resume controls that eliminate an ongoing obligation to consider applicants for any future opening indefinitely.

2. Protections and Exclusions –

a. Releases – The application should be designed to incorporate the necessary releases and approvals from the applicant so that the employer can verify information in the application and check the applicant’s employment or prior employment, references and qualifications (See also FCRA Part I. F. 5 below).

b. Misrepresentations and omissions – The application should include an express statement that any misrepresentations, including omissions, made on the application can result in refusal to hire, or discharge at any time.

c. At-will employment – The application should inform the employee that he or she will be an at-will employee if hired, and the employment can be ended with or without cause and with or without notice and is for no definite duration. The application should also make it clear that the applicant’s at-will status as an employee cannot change absent a written agreement with the employer.

d. Shortened limitations period – The application should contain a provision where the applicant or employee agrees to bring any and all employment related lawsuits within a proscribed period of time (i.e., not longer than 180 days) or the limitations period set by law, whichever is less, after the event giving rise to the lawsuit; otherwise, the action is forever barred. Any longer limitations period is waived.

• Specifically state civil rights claims.
• Be sure also to include a statement about the EEOC right-to-sue letter administrative process and timetable for filing suit, which cannot be waived, just as rights regarding filing an unfair labor practice charge under the National Labor Relations Act cannot be waived through this shortened limitations process in addition to a few other laws whose limitations periods cannot be contractually waived.

e. Time period for consideration – Specify a time period (e.g., 30 calendar days) during which the application will be considered. Thereafter, it will be discarded.

f. Authorization to work – If hired, certification and documentation of right to work as required by the Immigration Reform and Control Act (I-9’s, etc.) will be produced by the individual.

g. Need for accommodation (also in handbook and posted) – Include a statement that the individual must notify the employer of the need for physical or mental disability accommodation within 182 days of knowing of the need or when it reasonably should have been known; otherwise, the individual may be barred from any claim under Michigan law of alleged employer failure to accommodate.

h. Drug testing – If applicable to hiring or in employment, provide a simple statement of the individual agreeing to provide an appropriate specimen to test for the presence of illegal drugs and other controlled substances and that employment decisions will be made as a result of the testing.

i. Physical exam and release of medical information – If applicable, state the job offer may be conditioned on passing a physical exam, and the individual authorizes every physician and health care provider to provide all information (medical reports, X-rays, clinical abstracts, etc.) to the employer. The individual releases all these sources of information from liability for such medical disclosures as legally permitted. Such medical information will not be requested until a conditional job offer has been made.

j. Security – Obtain agreement that the contents of any offices, work spaces, desks, lockers, computer and other electronic data, any and all employer property and the individual’s person and property s/he brings onto employer premises or present during the work day (including break times) are subject to search, inspection and surveillance at any time. The individual waives any related claims.

Also, the individual agrees not to disclose if not work-related or use for his/her own purposes any of the employer’s confidential or proprietary information such as customer information, organization’s financial data, computer information, etc. even if the employer enters into a separate non-disclosure/confidentiality agreement, together with a non-competition agreement, intellectual property agreement, etc. However, ensure that the various language is consistent. Also ensure the confidentiality agreement is not overbroad under the National Labor Relations Act under which employees have the right to discuss and disclose wages and other terms and conditions of employment among themselves and with “outsiders.”

k. General disclaimers and instructions – Build in protection by having clear instructions on completing the application and the consequence of the application being disregarded if the instructions are not followed, e.g.: “[Employer] does not consider for hire anyone who does not complete the attached Application for Employment in accordance with the instructions set forth below. . . Please make sure that you read and understand the following instructions before completing the application.

INSTRUCTIONS

You must fill out this application in person and on premises. Print in ink, and ask for extra paper if you need more space. . . You must sign and date the application and any attachments or extra papers you submit with the application. If you do not comply with these instructions, your application will be disregarded.” l. Social security number – Pursuant to Michigan’s 2005 Social Security Number Privacy Act, the SSN must not be requested in the employment application or appear there. Yes, the employer can request it to verify the individual’s identity or for another similar administrative purpose related to an account, transaction, employment, an investigation of the individual’s credit, driving history or criminal record. But keep it separately and confidentially on another document or documents relating to the SSN’s lawful use, such as for payroll, health insurance, I-9, etc. m. Attendance record – Ask how much time has been lost from work or school during each of the past (at least) two years excluding vacations and holidays. Ask if there are any activities, commitments or responsibilities that might restrict the hours (including overtime) or days the applicant can work. Of course, it’s unlawful to ask about these in the context of protected classifications (e.g., family, pregnancy, disability, etc.).

n. Discipline and discharge – Ask at least about suspension, firing, involuntary resignation or termination (including being asked to resign or resigning by mutual agreement), and what job, when and why.

o. Surety bond, license or certification denial – Ask if the applicant has ever had an application for surety bond refused or ever been denied a license or certification, with a detailed written explanation if the answer is “yes.”

p. Confiscation/Retrieval of Misappropriated Information by Court Order? – For example, stolen files, computerized information. Agreement to a court order and then law enforcement entering personal premises to seize employer information, even if intermingled in employee’s or ex-employee’s personal property (e.g., laptop). May not be enforceable but a worthwhile safety measure for the disgruntled including fired employee with valuable information? Perhaps.

D. Interviewing – Asking The Right Questions

1. What an employer MUST NOT ask

• Although not strictly prohibited, recommend not asking the age of the applicant or the applicant’s family members; 18 years or more of age is okay
• when the applicant graduated from various levels of education
• questions about home ownership or rental, or whether the applicant has a foreign residence
• questions that are directly or indirectly related to whether the applicant is over 40 years of age
• questions requiring the applicant to identify citizenship, national origin, ancestry, or nationality; okay to ask if proof of right to remain in the U.S.
• questions requiring the applicant to identify race, color, or ethnicity
• questions about the applicant’s physical characteristics, particularly height and weight
• the sex of the applicant, or his or her sexual orientation (not unlawful in Michigan yet-pending federal legislation-except certain municipalities)
• questions regarding pregnancy, birth control, child bearing, or child care
• questions about an applicant’s marital status or spouse
• questions specifically related to medical conditions, physical status, mental status, or disabilities, whether work related or not (also applies to workers compensation history), unless the individual raises the disability/medical circumstances, or it’s obvious, and the employer reasonably believes a reasonable accommodation will be necessary for the person to do the job, or the person requests job accommodation
• questions about the applicant’s religion or the religious history of his or her family
• questions regarding the applicant’s ethnic, social, or religious affiliations, affiliated schools attended, or organization memberships
• questions regarding the applicant’s arrest records; “pending felony arrest” is a permitted question but is frowned upon by the EEOC; convictions, guilty pleas and nolo contendere are okay questions but how handled thereafter can create legal risks under antidiscrimination laws
• general questions about the applicant’s military service, type of discharge (except about a dishonorable discharge is lawful), reserve duty, or service in any foreign military organization; okay to ask if U.S. service and in what branch, and about specialized training
• asking for employee personal computer or web passwords or access to the same (e.g., Facebook)
• questions about political affiliations
• questions related to union sympathies, affiliations, or memberships
• questions about clubs, societies, and other associations are suspect

2. What an employer MAY ask

Questions about any information relevant to the position available, including work experience, qualifications, education, training, special skills, for example:

• why the applicant left his or her former employment and why there are gaps in his or her employment history (if there are)
• what kind of reference the applicant would receive from a former employer
• questions about the applicant’s prior position and duties
• what the applicant liked or disliked about his or her prior position
• what kind of specific, position-related duties the applicant is seeking
• what hours, days, or schedule the applicant is available to work, including necessary overtime
• what the applicant believes are his or her strengths and weaknesses for the job opening (compared to previous positions)
• whether the applicant has a legal right to work in the United States (ideally asked after the preliminary hiring decision has been made)
• questions about languages that are relevant to the position
• whether the applicant has the necessary writing, math, and communication skills, technical ability, and so on, to perform the essential functions of the position
• questions about the applicant’s height and weight, or gender (only where such factors are a bona fide occupational qualification directly related to effective and safe performance; note that this is a difficult legal standard to meet)
• questions directly related to the applicant’s present ability to perform the essential functions of the position
• questions related to pertinent previous employment history information
• questions regarding convictions for a felony (or pleas of guilty or

nolo contendere/no contest) or pending felony charges

• questions about convictions for lesser offenses directly related to position requirements – for example, dishonestly, sexual crimes
• questions regarding pertinent training and qualifications obtained during military service
• questions about membership in job-related organizations, such as professional or technical associations
• questions related to persons willing to provide personal references and recommendations
• questions related to any concerns the applicant may have about the employer’s nepotism policy, policies in general, corporate culture, and the like
• questions eliciting information about the applicant’s salary and benefit expectations
• question about how much time lost from work in the past 24 months for reasons other than holidays and vacations
• ETC.

E. Job Offer Letters

1. Job Offer Letters – An employer must be careful about the terms that are used in job offer letters that are submitted to applicants. Do not offer more than you can deliver, and make it clear to the employee that he or she would be an at-will employee. Be careful not to supersede or eliminate the legal protections of the employer stated in the employment application and any policies such as in the employee handbook if one is used.

F. Criminal History/Background Checks and Credit and Reference Checks

1. Criminal Background Checks

a. Improper Requests for Information – Michigan law prohibits an employer from inquiring into whether an applicant for employment has been arrested for a misdemeanor, unless that arrest resulted in a conviction.

b. Appropriate Requests for Information – Employers may request information regarding convictions for a felony or misdemeanor – Employers may request information concerning pending felony charges.

c. When an applicant has a Criminal Record

Criminal background checks may violate state and/or federal civil rights statutes if they have a disparate impact on minority applicants. Courts have held that conviction of a felony or misdemeanor may not by itself lawfully constitute an absolute bar to employment, but an employer may give fair consideration to the relationship between a conviction and the applicant’s fitness for a particular job.

Employers need to consider the following in assessing the relevance of an applicant’s past conviction:

o The age and time of the offense

o The seriousness and nature of the violation

o Rehabilitation; and

o The relationship to the position sought On the application, put “Criminal history does not automatically disqualify an applicant” or similar disclaimer.

REMEMBER: Falsification about a past conviction is a valid, non-discriminatory reason not to hire an applicant. Employers should, however, provide applicants the opportunity to explain the discrepancy. Government records do occasionally contain mistakes.

2. Reference Checks

a. Negligent Hiring and Retention

i. Employers have a legal duty to exercise reasonable care in both the hiring of employees and their retention. If an employer hires or retains an employee who the employer knew or should have known was unfit to be employed, due to violent propensities, the employer may be liable to third parties for injuries which thereafter result.

ii. “[A] duty imposed upon employer who invites the general public to his premises, and whose employees are brought into contact with the members of such public in the course of the master’s business, is that of exercising reasonable care for the safety of his customers, patrons, or other invitees….” Hersch v Kentfield Builders, Inc., 385 Mich 410, 412, 189 NW2d 286 (1971). Compare Brown v Samuel Whitten Steel, also a Michigan Supreme Court case from 2007, where there was no employer liability for the rape of a fellow female security guard, based on the perpetrator-employee’s prior lewd sexual comments to the victim, his history of violence but no prior criminal record, all known beforehand by the employer; thus, there was no unmistakable particularized threat of rape known by the employer, and no employer liability. Similarly, under

Michigan’s Elliott-Larsen Civil Rights Act (“CRA”), an employer is not liable for its employee’s acts, even criminal acts, where either (1) the acts are not taken within the scope of his/her employment, or (2) the employer did not have actual or constructive knowledge about prior similar conduct taken by the perpetrator and actual or constructive knowledge of the employee-perpetrator’s propensity to act in accordance with such prior similar conduct. Hamed v Wayne County and Wayne County Sheriff’s Dept, No. 139505 (MI Sup Ct, 2009) (Under the CRA alleging sexual harassment offensive environment and quid pro quo theories, employers held not liable for rape of prisoner by Sheriff’s deputy who was convicted of criminal sexual conduct for the rape because the wrongdoing was not reasonably foreseeable).

iii. The employer’s duty, if any, to investigate the applicant’s and/or employee’s character?

• · The essential question is whether it is reasonable for the employer to permit the employee to perform the job in light of information about him, which the employer knew or should have known.
• · What is a reasonable inquiry under the circumstances? If, for example, the employee may be entering a customer’s home, or works nights unsupervised or largely unsupervised with few other co-workers, the employer may likely have an increased responsibility of advanced inquiry about whether it is safe to permit the employee to do so. Unsupervised contact with customers off premises anywhere in locations unlikely to be seen by others with customers may be another similar circumstance.
• · In Michigan, there is not an affirmative legal duty per se on most employers to conduct background investigations to determine any history or indications of violent propensities.

There is no such duty to advise a prospective or later employer about a former employee’s violent past.

• · Exceptions to this last bullet point above, where criminal history checks are mandatory, are for public school employees and school contract workers under the School Code, and for health care worker applicants and “conditional employees” in nursing homes, medical care facilities, homes for the aged, in-home care, hospices, hospitals with swing bed services, mental health facilities and adult foster care facilities who are not being hired and coming from a covered facility under certain time, employment duration and residency conditions.

3. Defamation

Michigan court cases have long recognized that an employer is qualifiedly privileged to comment about an employee’s or former employee’s behavior and work performance, provided it is done in good faith. In 1996, MCLA 423.452, MSA 17.63(2) was enacted. This Michigan statute provides that an employer who in good faith discloses information relating to job performance to a requesting prospective employer is shielded from legal liability, provided that the information disclosed relates to job performances and, you guessed it, is documented in the personnel file. An employer is presumed to be acting in good faith in the disclosure, unless:

• · The employer knew the information was false or misleading;
• · The employer disclosed the information with a reckless disregard for the truth; or
• · A state or federal statute specifically prohibited the disclosure such as, perhaps, the Bullard-Plawecki Right-To-Know Act prohibiting disclosure of discipline files or personnel file information to third parties that is older than four (4) years, except of course if court ordered).

Per se defamation adversely affects the person in his or her profession or trade or imputes that the person (a) committed a criminal offense involving moral turpitude; (b) is infected with a contagious disease that would exclude him or her from society, or (c) is unfit to perform the duties of an office or employment or lacks integrity in performing those duties. Words imputing a lack of chastity to a female or male are statutorily actionable per se. MCLA 600.2911(1), MSA 27A.2911(1). Accusations about dishonesty, stealing and similar actions involving moral turpitude are also “per se.” Special damages need not be proved for defamation per

se. Truth is an absolute defense to defamation claims.

4. Reference Checks

a. The Problem of Reluctant References Due to defamation lawsuits brought by former employees who claim that their past employers provided unfavorable and untrue references, past employers are often reluctant to provide information other than the applicant’s date of hire, date of termination and salary/rate of compensation.

b. Approaches to Obtaining the Information that You Need

• · Create a systematic approach to reference checks, ideally conducted by well-trained individuals following a checklist of consistent and relevant questions.
• · Ask specific questions. Many former employers will not criticize an employee’s job performance when only asked general questions, but will be honest when asked if the employee had problems with respect to a particular job-related duty.
• · Obtain a written release from the applicant, in the employment application, authorizing former employers and references to disclose all information.
• · Ask the former employer whether he or she knows anything that would indicate that the applicant is unfit for the positions.
• · Ask the former employer to share the applicant’s prior job application. Then the employer can compare the applications and check for inconsistencies.

5. FCRA – Consumer and Credit Reports

a. In General

Employers seeking information about potential employees often hire outside firms to conduct background investigations. As a result of these investigations, employers sometimes obtain consumer or credit reports on the applicants. Employers who receive these reports must comply with the federal Fair Credit Reporting Act (FCRA).

b. Consumer Reports

i. Prior Notice – Where the employer may or will obtain a consumer report on an applicant or employee, it must notify him or her of this in writing. This notice must be provided on a separate, stand-alone document, not on the employment application alone. A duplicate notice on the application may be provided.

ii. Written authorization – The individual must authorize the employer to procure the report. This authorization can be included on the employment application.

iii. Pre-adverse-action disclosure – Two documents must be given to the applicant or employee before any adverse employment-related action, such as rejection for employment, is taken against him or her based in whole or in part on the consumer report. They are:

• · a copy of the consumer report the employer used
• · the summary of consumer rights prescribed by and available from the Federal Trade Commission. iv. Post-adverse-action notice – After taking any adverse action against the applicant or employee based in whole or in part on the consumer report, the employer must give him or her the following orally, in writing (recommended), or electronically:
• · the name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by a national agency) that provided the report
• · a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to give the consumer the specific reasons why it was
• · a statement of the consumer’s right to obtain under FCRA Section 612 a free copy of the consumer report from the consumer reporting agency by making a request within 60 days (for example, “Your consumer report reviewed by [employer name] has already been provided to you, but you may obtain an additional copy free from the consumer reporting agency if you request it within 60 days.”)
• · a statement of the consumer’s right under FCRA Section 611 to dispute with the consumer reporting agency the accuracy or completeness of any information in the report

v. Certification accompanying request for report – Before obtaining consumer reports, the employer must certify to the consumer reporting agency that the prior notice and written authorization procedures described above have been satisfied and that the adverse action disclosure and notice (also described above) will be complied with if any adverse action is taken.

c. Investigative Consumer Reports

i. Definition – Investigative consumer reports consist of information about a consumer’s character, general reputation, personal characteristics, or mode of living obtained through personal interviews of such people as neighbors, friends, or associates. Investigative consumer reports do not include specific factual information on a consumer’s credit record obtained directly from a creditor of the consumer or from a consumer reporting agency if the information was obtained directly from a creditor of the consumer or from a consumer reporting agency if the information was obtained directly from a creditor of the consumer (or from the consumer).

ii. Prior notice – Same as requirements for Consumer reports.

iii. Written authorization and notice – when such a report is requested, he employer must inform the applicant or employee in writing that an investigative consumer report, including information about his or her character, general reputation, personal characteristics, and mode of living, may be made.

As with a consumer report, the applicant’s or employee’s written authorization must be obtained. The employer must also notify the employee or applicant of his or her right to request (in writing) the following disclosures from the employer:

• a complete and accurate disclosure of the nature and scope of the investigation the employer requested (to be provided within five days of the employee’s request or the receipt of the report,

whichever is later)
· the summary of FCRA consumer rights prescribed by and available from the Federal Trade Commission

• This notice must be given to the applicant or employee no later than three days after the employer requests the investigative consumer report. Therefore, an employer has the option to provide this notice with the prior notices on the same paper. This prior notice approach will require that the employer be prepared to comply timely with any additional requests about the nature and scope of the investigation and FTC FCRA rights, as described above.

Alternatively, the employer may separately provide the investigative consumer report notice after and within three days of requesting it. This approach would be administratively easier under most circumstances, particularly if investigative consumer reports (as opposed to consumer reports) are not requested for all applicants under consideration.

iv. Pre-adverse-action disclosure; post-adverse-action notice – Same as requirements for Consumer reports.

v. Certification accompanying request for report – The information that must be provided the credit reporting agency, in addition to that certified for consumer reports above, includes these facts:

• The employer has given the notice described above.
• The employer will comply with any requested additional disclosures concerning the nature and scope of the investigation and FTC FCRA rights.

d. Penalties

Applicant- and employee-consumers have a private right of action against an employer who willfully violates the FCRA. Actual damages, punitive damages, costs, and attorney fees are provided for.

e. Other FCRA and Related EEOC Developments

Until recently, the FCRA was being interpreted as requiring FCRA compliance when an employer used outside investigators, such as the employer’s legal counsel, consultant or private investigator, to investigate workplace harassment. See, e.g., Federal Trade Commission (FTC) Opinion Letter 4/5/99. In 2003, the Fair and Accurate Credit Transaction Act (the “FACT Act”) was enacted to exclude from the meaning of “consumer report” and “investigative report” communications made to an employer relating to an investigation of (i) suspected misconduct relating to employment; or

(ii) compliance with federal, state or local laws and regulations, the rules of a self-regulatory organization or any preexisting written policies of the employer. Therefore, employers may use outside consultants, investigators or law firms to investigate a variety of workplace issues without having to satisfy most of FCRA’s notice and consent requirements. In these circumstances, if adverse employment action is taken, a summary of the investigative report is required to be given to the employee. Nevertheless, investigations of applicants for employment and employees (“consumers”) regarding credit standing, worthiness and capacity remain subject to these FCRA requirements. Like criminal history, the EEOC in 2012 has issued guidance on preemployment checks because of its concern about disparate impact on minorities and women. Like criminal history checks from outside sources, the cautious (and more economical) approach is to select specific job positions where credit and financial history are fundamental to the work and run the background checks for either all applicant finalists or once a conditional job offer has been given.

G. Medical and Related Inquiries, Testing and Exams

1. Medical Exams

a. Pre-Employment Medical Examinations – An employer may not conduct or require a pre-employment pre-job offer medical examination of a job applicant.

i. The Americans With Disabilities Act (“ADA”) prohibits discrimination against otherwise qualified individuals with disabilities who, with or without accommodation, can perform the essential functions of the job.

(i) A disability does not include personality traits such as poor judgment, quick temper, or irresponsible behavior. 29 CFR § 1630.2(h). If these personality traits, however, result from a “mental impairment” which is a “disability”, the employer may have to determine whether the individual can perform the essential functions of a position, with or without reasonable accommodation.

(ii) The ADA regulations, 29 CFR § 1630.10, permit the use of tests to determine qualifications, e.g., personality tests, such as the MMPI. But, remember, if the employment test, or other selection/qualification criteria screen out an individual with a disability, or class of individuals with a disability, the employer must show that the selection criteria were job-related and consistent with business necessity.

(iii) Psychological testing, in contrast to mental health evaluations, directed to measure honesty, tastes, habits, etc., is not medical testing and is not a prohibited pre-job offer medical examination. Such testing, however, must be validated under EEOC requirements (See Section I.G.3. below).

b. Post-Offer Medical Examinations - After making an offer of employment and before the applicant begins work, an employer may require a medical examination provided all entering employees in the same job category are subjected to such an examination.

• The offer of employment may be conditioned on the results of the examination
• The post-offer/pre-employment examination need not be limited to obvious or suspected disability and it does not need to be job-related

c. Medical Examinations of Current Employees – An employer may not require that a current employee submit to a medical examination unless the examination is truly “job-related and consistent with business necessity.” Employers should be prepared to show that there are objective grounds for the belief that the employee may be unable to perform the essential job functions or presents a direct threat to others or him/herself.

i. Mental and physical health examinations of an employee are lawful and may be conducted under the ADA if jobrelated without risking a finding that the employee was “regarded as” disabled. Sullivan v River Valley Sch. Dist., (6th Cir 1999); see 29 CFR § 1630.14(C).

ii. Individuals with disabilities are not required to be accommodated if they “…pose a direct threat to the health or safety to themselves or other individuals in the workplace.” 42 USC § 12113(B). A direct threat is defined as “…a significant risk to the health or safety of others that cannot be eliminated by reasonable accommodation.” 42 USC § 12111(3). Further factors to consider in determining “direct threat” are:

• Duration of the risk;
• Nature and severity of the potential harm;
• Likelihood of the potential harm; and
• Imminence of the potential harm. 29 CFR § 1630.2(r).

2. Drug Testing

a. Legal Framework and Considerations

i. Public vs. Private Sectors

In the public sector, where privacy concerns and legal restrictions are greater than in the private sector, due to constitutional law restrictions, the United States Supreme Court and lower courts have usually upheld substance abuse testing where the employer has reasonable suspicion or cause that an employee is or may be impaired at work or in violation of employer policy. E.g., Skinner v Railway Labor Executives’ Assn., 109 S Ct 1402 (1989). It follows, therefore, that reasonable cause testing in and of itself is lawful in the less legally restricted private sector. In the public sector, other than in specific federal workplaces and in safety sensitive jobs, random and mandatory testing are prohibited under most circumstances. These are not per se prohibited in the private sector.  Federal and state government contractors have additional legal requirements and restrictions. E.g., the federal Vocational Rehabilitation Act of 1973, 29 USC § 791 et seq.

ii. Americans With Disabilities Act

The ADA expressly excludes current illegal drug users, Sections 104(a) and (b). However, the Act does not exclude rehabilitated drug addicts from its discrimination protections, Section 104(b). Importantly, the ADA does not prohibit (or encourage or authorize) drug testing, Section 104(d)(2), and is silent on random and mandatory substance abuse testing. Under the ADA,

employers may (1) prohibit the illegal use of drugs or use of alcohol at the workplace, (2) require that employees not be under the influence of drugs or alcohol, (3) and require employees who use illegal drugs or are alcoholics to meet the same job-related qualifications as other employees Section 104(c). Employers may not, however, discriminate against an individual who is not using illegal drugs and who (1) has successfully completed a supervised rehabilitation program or has otherwise been rehabilitated, (2) is currently undergoing supervised rehabilitation, or (3) is erroneously regarded as using illegal drugs. Section 104(b). Note, in its EEOC Informal Discussion Letter of August 12, 2011, the agency considers shy bladder syndrome a disability requiring accommodation such as being given a hair or saliva drug test if urine testing was otherwise being used and the employee or applicant was unable to provide a sufficient (or timely) specimen.

iii. Michigan’s Persons with Disabilities Civil Rights Act

This statute prohibits discharging, refusing to hire or otherwise discriminating against alcoholics if it cannot be shown to have affected job performance. Current illegal drug use, as under the ADA, is not protected.

iv. Family and Medical Leave Act (FMLA)

FMLA leave for substance abuse treatment is protected, so long as treatment fits within the definition of “serious health condition” (such as inpatient care or continuing treatment by a health care provider is required). But, absences due to use (as opposed to treatment) of substances don’t qualify. The fact that an employee is seeking treatment does not prevent the employer from applying an established substance abuse policy to the employee. The policy must be applied in a non-discriminatory fashion and have been communicated to the employee. 29 CFR §§ 825.11(g), 825.114(d). Mandatory testing upon leaves of a certain duration are not prohibited, provided all type leaves—FMLA and otherwise—are treated the same.

v. Title VII and Michigan Elliott-Larsen Civil Rights Act

The antidiscrimination provisions of Title VII of the Civil Rights Act of 1964, 42 USC § 2000 et seq., do not extend to drug dependents, since the mere fact of drug dependency does not afford a person protection under the statute. A testing program, however, which targets protected classes, such as women or minorities, would constitute disparate treatment and, therefore, would constitute a violation of Title VII and Michigan’s Elliott- Larson Civil Rights Act.

Moreover, claimants in several cases have claimed that drug screen programs have had an adverse impact on minorities. E.g., New York City Transit Auth. v Bearer, 440 U.S. 568 (1979). In Bearer, the United States Supreme Court held that a policy against the employment of narcotics users did not violate Title VII, despite a statistical impact on blacks and Hispanics. Significantly, the Court found that the policy was “job related” because of the “safety sensitive” nature of the available jobs, and that costly and timeconsuming monitoring was not a reasonable alternative. This showing of “business necessity” made any showing of adverse impact on minorities immaterial. See Griggs v Duke Power Co., 401 U.S. 424 (1971). Nevertheless, an employer should make sure that testing is uniformly and fairly administered pursuant to the employer’s policies, and, where random testing is legally permitted and used, that women and minorities are not being tested more frequently than non-minorities. These precautionary measures should decrease the chances of Title VII or state fair employment practice claims attacking the testing program.

vi. State Law. There are several common law claims related to substance abuse testing that have been used, and they usually arisefrom: (1) the manner in which the testing is conducted; (2) the

disclosure of the results; or (3) the circumstances related to the resulting discipline or discharge. Michigan does not per se prohibit any kind of substance abuse testing in the public or private sector. However, the same type federal constitutional claims, in addition to privacy protections, may apply under Michigan’s Constitution. Many years ago a lawsuit involving private sector employment and challenging drug testing as a violation of Michigan’s Constitution’s broad protection of privacy (whether public or private entity or employee) did not prevail. Common law claims may include negligence, defamation, invasion of privacy, intentional infliction of emotional distress, assault/battery, and implied or express contract, for example.

3. “Pencil-and-Paper Tests” –