Retailers Facing Employment Law Vulnerabilities
Increased government regulatory activity has been on the minds of most employers for the past several years, and U.S. retailers are no exception. At a roundtable event tailored exclusively to their retail clients, lawyers from Epstein Becker Green discussed some of the key legal risks members of the industry are facing.
In an interview, Jeffrey Landes and Susan Gross Sholinsky, partners in the firms labor and employment practice, told CorpCounsel.com that certain features peculiar to the retail industry give rise to increased vulnerabilities on some fronts.
For instance, says Landes, the luxury retail world in particular can place demands on employees around the clock. When non-exempt employees communicate with clients via smartphones 24/7, he says, that can present problems from a wage-and-hour standpoint. Managers need to be trained so that theyre aware that substantial conversations count as work time that needs to be recorded.
Another wage-and-hour risk is use of unpaid interns. The general rule is that workers must be paid; employers relying on the trainee exception have been required by the Department of Labor to meet a six-factor test. But a recent case filed by Xuedan Wang, a former intern at Harper's Bazaar magazine, calls the test into question.
Wang sued publisher Hearst Corp., claiming unpaid interns were misclassified. The court denied Wangs motion for summary judgment, says Landes, ruling that despite the DOLs test, the totality of the circumstances should be taken into consideration.
The interns were also denied class certification, he says, because they couldnt establish commonality. They had common complaints, says Landes, but because Hearst was so large and had many different internship programs within their magazine units it wasnt enough for the plaintiffs to win a motion for class certification.
The lawyers dont recommend creating unpaid internships, but if retailers opt to do so, Landes says there should be multiple programs, run by different managers, within any organization. Its really all about observing and shadowing the designers, he says. Its not about doing things that are going to benefit the company. Its got to be an educational experience.
Retailers also face obstacles when hiring their paid employees. The reality is the workforce is fairly transient, says Landes, and retailers often hire unseasoned and inexperienced employees.
But before doing extensive Internet research on prospective hires, check with human resources. Employers who are looking around online will have ample opportunity to discover specifics about a candidates marital status and religious beliefs, for example. If you make an adverse decision based on anything you learn as part of the background check, says Landes, if its protected, that obviously poses a legal risk.
The Equal Employment Opportunity Commission released guidance last April regarding what to consider in connection with criminal background checks. Landes says that the EEOC makes clear that employers should not have blanket exclusion policies: In retail, if you are handling money, a conviction relating to embezzlement or theft of money can be a justification for a decision to not hire or to fire.
In New York, where the lawyers are based, state law goes beyond that of many jurisdictions if offering worker protections. The state requires employers to take into consideration factors such as how long ago the crime occurred, how old the employee was at the time, how related the crime is to the type of work, and how well the person has rehabilitated themselves. Sholinsky says, We recommend that employers use the balancing test thats propounded by New York State law, even though its not legally required.
Last month The New York Times reported that retailers across the country have used databases of information about workers accused of stealing when making hiring decisions.
Thats a bad practice, say Landes and Sholinsky.
The compiled information documents allegations, not convictions, and Sholinsky warns that the data isnt as reliable as conviction information. This is more like a list of arrests as opposed to convictions, she says. The EEOC in particular has come out and said its not fair to use arrest information in hiring.
And as retailers grapple with implementing the Affordable Care Acts rules about offering health insurance to employees, the part-time nature of the workforce will come into play. Landes notes that retailers tend to have a lot of seasonal and part-time employees. Employers now have to reexamine their workforce in terms of eligibility for health care benefits, he says. In the past, certain part-time employees might not have been covered. Now, if they work 30 hours, they have to be.