Publications
Employment Practices for Association
Many experts writing in the area of association living often refer to it as the "new local government." In addition to exercising legislative and police powers, an association board is also operating a business. Just as any other type of business, a board of directors must consider policies and procedures in dealing with contractors and in many instances, employees.
Initially, one must distinguish between an independent contractor and an employee. It is not always what is appears to be...! How does one classify a Board member who makes it their job to change the light bulbs, for no pay?
Anyone performing services for an association should be classified under a specific category, even if a written contract is not appropriate (they generally are...). A written memorandum of their job description, scope of authority, compensation, etc. should be prepared and kept on file.
Although an association may take some measures to establish an independent contractor relationship, the law may not view it in the same fashion. Many associations have what are legally categorized as employees and are not even aware of it. Sometimes efforts are undertaken to classify an employee as an independent contractor, but certain legal tests have to be met in order to qualify.
Associations and management companies should have a fundamental understanding of their obligations and responsibilities in order to minimize risks of related liabilities for failing to classify or mis-classifying a service provider
EMPLOYEE RIGHTS
In recent years, Illinois has followed a trend away from guaranteeing employees a right to a job and decreeing that policy manuals and employment agreements govern the relationship. Employees without written contracts are considered "at will" and continue to be employed at the discretion of the employer. However, any written policies must be followed to the letter. Failure to do so can expose an employer to a claim for damages if an employee is "wrongfully terminated."
Where an association must be cautious is the initial hiring process. Inquiries cannot be made into any of the protected class areas (age, race, family status, etc.) and all hiring practices must be open and non-discriminatory. All interviews must be focused on experience, ability and performance related questions. Care should be made to use an updated application form prepared by or reviewed by legal counsel and any comments should not be noted in writing.
APPLICABLE LAWS AND ORGANIZATIONS
There are voluminous Federal and State statutes and regulations governing rights of employees. Many of these disputes arise primarily in instances of discrimination, injury and/or termination.
Any employer should make every effort to keep the work place free from harm or hazardous substances. Cooperating with local governmental inspectors and insurance consultants should minimize the risks in this area. Injuries are common in the workplace and should be accepted as a cost of doing business, and cannot be the basis for termination.
Associations should be especially aware of their obligations under an agreement for collective bargaining, which is in effect on many properties, particularly for janitorial and maintenance personnel. If the association is not a party to a union contact, none of these laws would apply. If they do, an Association and/or manager is cautioned to consult with a labor specialist before any ill-advised moves. Applicants and existing employees cannot be denied employment, advancement or subject to unreasonable disciplinary actions on the basis of race, age, sex, etc. To violate these very basic common sense guidelines would open an employer to a civil rights claim, which is often not covered by insurance.
COMPENSATION
Federal law requires that many employees working over 40 hours per week are entitled to "overtime" benefits of at least "time and a half," (150% of hourly rate after 40 hours). Professionals and administrative/management-type employees are exempted from these requirements. However, this law may apply to other types of personnel, i.e., bookkeeping, receptionists, etc. Also, any group subject to a collective bargaining agreement would also be excluded from basic legal requirements because they are subject to the terms of the union contract, which may have stricter requirements.
INSURANCE
An employee that is injured on the job is entitled to reimbursement for (1) lost wages, (2) all medical expenses and (3) compensation for loss of use or disability. If an employer does not have insurance, they are legally deemed self-insured. This issue comes up most often when an association opts not to purchase Worker’s Compensation insurance. A diligent board member and/or property manager should insist on this type of coverage from associations. As previously stated, the law can deem certain individuals to be employees for liability purposes, when in all instances the board considered them to be independent contractors. Further, even if the law views the worker as an employee, the IRS may not. The board of directors should consult with its insurance professional on these issues.
An employer is not required to offer health and disability insurance. However, if a plan is in place, it cannot be discriminatory. All full time employees must have the same right to participate. Lastly, when an employee who is covered under a health insurance plan is terminated, the Federal Act known as COBRA (Comprehensive Omnibus Budget Reduction Act of 1985) requires an employer to keep the coverage in effect for 18 months or until replacement coverages are obtained.
EMPLOYMENT AGREEMENTS
For some employees, it is best to have the duties, terms and conditions of employment spelled out in a written contract. It is often difficult to resolve when the issue of "covenants not to compete" are included. Employers wish to restrict their employees from opening competing businesses in their backyard. However, these types of covenants are extremely difficult to enforce and should be drawn up by an attorney who is knowledgeable in this area. Otherwise, a court will look for any reason to throw it out.
FAMILY LEAVE
The Family Leave Bill requires employers to release certain employees for up to 12 weeks to handle maternity, illness and other related matters, without penalty. This law applies to companies with 50 or more full time employees and has certain exceptions. For the majority of associations and management companies, it is not applicable. In this instance, the employer can establish their own policy, so long as it is uniformly applied. However, recent legislative activity may tighten these requirements.
ADA
Effective July 26, 1994 for companies with 15 or more employees, the Americans With Disability Act prohibits discrimination in all phases of employment including hiring, firing, advancement, compensation, training, benefits, access, equipment, etc. For applicants and employees that become disabled, an employer must make reasonable accommodation to the workplace and equipment, so long as it does not impose an "undue hardship" on the operation of the business.
Since this is a relatively new area of law, it is important for managers and directors to check with legal counsel on what provisions of the ADA apply to specific situations. However, many of these questions may remain unsettled until regulations and case law are available.
TERMINATION BENEFITS
In Illinois, an employee is entitled to unemployment benefits if they are involuntarily unemployed (fired), able to work, actively seeking work and not subject to disqualification as a result of resignation, termination for misconduct or failure to accept suitable employment.
Aside from the payment of benefits, an employer must be diligent in protecting themselves from a wrongful termination claim. It is important that a file be maintained for each employee. Any incident of misconduct or poor performance should be noted in writing, with a copy given to the employee and preferably signed for as received. An employer should meet with an employee when a problem arises and note the nature and scope of the meeting in written form. Lastly, if enough incidents are accumulated where the employer needs to terminate the worker, an exit interview should be conducted. If a written employment or policy manual is in effect, all procedures must be followed to the letter.
Although the foregoing may not stop a wrongful discharge action from being filed, it should be sufficient to defeat any claim.
Lastly, accrued vacation, unpaid overtime, back wages, etc. should be paid promptly to avoid a complaint being filed with the Department of Labor.
SEXUAL HARASSMENT
The workplace environment must be free of conduct perceived to be "threatening" or offensive and employees are entitled to work in a "non-hostile" environment. Federal laws govern statutory damages for claims of harassment and conscientious employers should educate their management and staffs regarding permitted conduct and obtain insurance to cover possible claims.
CONCLUSION
By taking reasonable precautions in administering an association, or operating ones business, employer liability claims can be minimized. By checking with qualified experts and legal counsel, other risks and liabilities can be avoided. This will result in smoother operations as well as reduced insurance costs and legal fees.