Bye-Bye Franchisee

August 2014
By: Walter J. Liszka, Esq.

The first "nail in the coffin" in doing away with the franchisor/franchisee relationship and jeopardizing a vast number of small business operators in this country (estimated at a little over 85% in the restaurant industry), has been "nailed" by the National Labor Relations Board (NLRB) General Counsel. Robert F. Griffin, Jr., who was sworn in for a four (4) year term as General Counsel of the NLRB on November 4, 2013 and, as an aside, was a NLRB member from January 9, 2012 through August 2, 2013, has issued notifications to various NLRB Regional Offices that they are authorized to proceed with forty-three (43) complaints of Unfair Labor Practices against not only the franchisees of the locus of the dispute but, as well, against McDonald's, USA as a "joint employer." While there were a vast number of complaints filed against McDonald's franchisees and McDonald's since November 2012 (a total of 181 complaints), in his own authoritative way, General Counsel Griffin has authorized not only the issuance of the aforementioned forty-three (43) complaints but continuing investigation of sixty-four (64) other cases by his office to see if complaints should issue in these cases.

It is extremely interesting to note that the General Counsel's action runs parallel to the consideration by the NLRB in a separate and distinct matter (Browning-Ferris) as to whether or not the current standard used by the NLRB (currently legally separate and distinct business entities that in unison exert a significant and direct degree of control over employees and their essential "terms and conditions of employment" are considered as joint employers) should be changed. Under the approach being taken by the General Counsel, he wants to change that standard even though there is in place a very distinct and currently legally enforceable franchise agreement between McDonald's and its franchisees that requires the franchisees to comply with certain requirements dealing with food purchases and preparation of foods to protect the McDonald's brand, but cedes to the individual franchisees all control over hiring, firing, and determining the terms and conditions of employment of their employees.

While the directive of the General Counsel of the NLRB is not law and, in fact, does not have to be followed by the NLRB itself, it is indeed curious that it comes out in parallel to the current pending of the Browning-Ferris case. There may be other very serious issues for employers, be they a franchisor or franchisee, with regard to the actions of the NLRB General Counsel.

As everyone is well aware, there is afoot a ground swell of employee protests against McDonald's and various other fast food entities for an increase in the minimum wage. This effort is being strongly supported by the Service Employees' Union. Companion to this effort to increase the minimum wage through employee protests, the "all omnipotent President Obama" has seen fit to issue another of his numerous Executive Orders increasing the minimum wage for employees of all federal contractors. Are these merely concentric circles that are spinning on their own axis in the night with no connection? If any reader of this article believes that, the author has some real cheap land in Florida because it is under water!

There is no doubt in the mind of the author that should NLRB General Counsel Griffin's approach on joint employer status gain traction, it will quickly be adopted by other federal governmental agencies (EEOC and USDOL Wage and Hour Division) with regard to their investigations of "joint employers." Certainly the next few years of the Obama Administration and his "lap dog" appointees in all government agencies are going to be very interesting.

 
Questions? Contact Walter J. Liszka, Managing Shareholder of Wessels Sherman's Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com .

NLRB Overreach?

October 2013
By: Walter J. Liszka, Esq.
The National Labor Relations Board, the primary government agency entrusted with the responsibility to "control and oversee" labor management relationships, is undergoing a 21st century makeover. With the substantial decrease in private sector unionization (set, by some surveys, at less than 7% of the nation's private sector workforce), the NLRB has seen fit to extend its regulatory authority to protect and promote the Section 7 rights of individuals arising under the Act into the social media venue.

Section 7 of the National Labor Relations Act gives to the employees the right to form, join, or assist labor organizations; and also guarantees employees the right to engage in "other concerted activities" for the purposes of collective bargaining or other mutual aid or protection. Even in the absence of a collective bargaining relationship and/or union-employer context, an individual employee who is complaining about "wages, hours or other terms and working conditions" on behalf of himself and other similarly situated employees cannot be disciplined or discharged for this type of conduct under Section 7 of the National Labor Relations Act. Over the last few years, there have been a number of cases dealing with social media (i.e. Facebook, etc.) where the Board has concluded that employee discipline outside the context of a collective bargaining agreement violates Section 7.

Inquiries by an employee asking co-workers on the individual's Facebook page for their reaction to another employee's complaints about work quality and staffing levels has been protected by NLRB action. A complaint by employees, posted on Facebook, about an employer's failure to withhold sufficient amounts of money to pay state income taxes, which resulted in employees receiving a demand for additional tax payments when filing their returns, was protected. In the latter part of January, 2012, the Board, while conducting an examination of employers' social media policies, underscored two (2) major points dealing with social media:

• An employer's policy should not be so sweeping and overbroad that it prevents employees from discussions of wages, working conditions, and terms of employment.
• An individual employee's comments are not protected if they are "mere gripes" not made in relationship to activities involving other employees (i.e. concerted activities).

What guidance, if any, does an employer have with regard to "employee social media issues"?

Based on a review of cases, the following seems to be true:

• The most bright line distinction in all of the cases is that the legality of disciplining an employee for social network conduct will hinge on the individual facts of each case.
• An employee's use of profanity with regard to company matters or personnel is not axiomatic proof exposing the individual to discipline. Profanity-based postings may find protection under the National Labor Relations Act especially when those postings have occurred outside the workplace and during non-work time. While every employer will take umbrage at such type of behavior, management must be aware that if they choose to discipline an individual for outside-the-workplace and non-work-time postings because of profanity, they may be creating a situation of future NLRB action.
• The Board will, more than likely, protect all communications that have some reference and basis in workplace terms and conditions of employment or pay due to the fact that it will affect more than one employee even if the post shows a certain level of disrespect to company management.
• Is the posting dealing with some regulated behavior which exposes an employer to potential legal liability? If the individual, in their social media posting, is complaining about workplace discrimination or harassment which can and will expose an employer to potential legal liability, this probably will not be protected. An employee has an obligation (?) to report wrongdoing to the employer and exposing "these wrongs" publicly and not reporting them to the employer will not be protected.
• In almost all of the cases, the Board has focused on the "when and where" of the social media posting. If the social media posting occurred while on company time and using company equipment, the greater the chance that the NLRB will find in the employer's favor. This, in and of itself, is somewhat confusing. The "when and where" of the activity should not control, but a number of cases, the NLRB spends a great deal of time analyzing the "when and where" (i.e. more discipline leeway if on company equipment and time).

No one knows where the NLRB's involvement in social media will finally go. As stated above, each individual case will expand or contract this net. Everyone knows that in the use of social media, less and less common sense is being used. Once the send button is hit, it cannot be taken back and more often than before, that "send" can cause employer/employee conflict.

 

Questions? Contact Walter J. Liszka, Manager Shareholder of Wessels Sherman's Chicago, IL office at (312) 629-9300 or waliszka@wesselssherman.com .

DOL-Technology Witch Hunt?

July 2012
By: Walter J. Liszka, Esq.

As technology improves and more of the workforce becomes conversant with Smart Phones, iPhones, and Touch Pads, the chance of the ever-expanding litigation dealing with Wage and Hour claims becomes greater. In an article that appeared in our June 2011 entitled "A Bridge to Justice - A Bridge Too Far?" the author discussed the unprecedented collaboration between a Federal Government Agency [Department of Labor (DOL) - Wage and Hour Division] and the American Bar Association (ABA) Standing Committee on Lawyer Referrals and Information Systems. That article detailed the fact that the DOL and the ABA had entered into an approved attorney referral system that would allow the DOL to refer cases that they could not handle to "qualified counsel." It is now becoming quite clear that the DOL - Wage and Hour Division is expanding its ability to interface with both employees and the consuming public.

The DOL recently created a Smart Phone app "Eat, Shop and Sleep" which allegedly allows users to search for places to eat, shop, and sleep, and also to review customer reviews of the entities providing those services. However, this Smart Phone app goes a little bit further in that it provides to its users (consumers) information with regard to DOL enforcement issues (i.e. health issues, safety issues, and labor law violations). It permits the user to report a company name, any health or labor law violations, and furthermore, permits the user to find out if a "company name" indicates previous Fair Labor Standards Act (FLSA) violations.

By hitting the "take action" button that permits a user to report violations to the DOL, the user is also directed to DOL contact information such as the phone numbers and office locations; a link to an online complaint form; a link to online workers' rights; and the Occupational Safety and Health Administration (OSHA) data. Obviously, the DOL thinks its Smart Phone app of "Eat, Shop and Sleep" can lead to the discovery of Wage and Hour issues.

As well, the DOL has also developed a free time sheet app that allows employees a simple way to track their hours worked and wages owed. According to DOL Secretary Hilda Solis, this application will not only "empower workers" to protect their interests but also will be "an invaluable source of information that the Wage and Hour Division can use in investigating employers who have failed to maintain accurate records." This app is compatible with iPhone, iPad, iPod Touch, and is available as a free download at the DOL site. As any employer who has become embroiled in an FLSA litigation matter clearly knows, it is the responsibility of the employer to maintain, keep, track, and provide accurate and complete information with regard to an employee's hours of work and compensation. A failure to keep and provide this type of information is, in and of itself, a violation of the FLSA.

In any FLSA litigation, it is the employee's initial burden to prove that the employer had committed a violation. An employee may satisfy this burden by proving that he/she has performed work for which he/she was not compensated by producing sufficient evidence to show the amount and extent of that work as a matter of reasonable inference. Once the employee has established their initial burden, which, based on case review, is not very difficult, the burden of persuasion shifts to the employer to dispel or disprove the employee's position. Assuming, solely for purposes of discussion, that the employer's records are inaccurate or inadequate, the reasonable inferences of the employee will be accepted. One must wonder if this new DOL time sheet app may bolster an FLSA claim by an employee for a wage claim. Will a court find this type of evidence "more compelling" than records kept in a notebook? As Director Solis stated at the American Society of Safety Engineers Conference in 2009, "make no mistake, the DOL is back in the enforcement business." Certainly, the enhanced use of technology by the DOL is proof of that fact.

Obviously, the technological age provides great advances for dissemination of business information. As suggested in this article, it may also provide the DOL with a chance to further intensify their "enforcement" for FLSA violations.

 

Questions? Contact Walter J. Liszka, Managing Shareholder of Wessels Sherman's Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com  

The Bane of the Technological Age

February 2012
By: Walter J. Liszka, Esq.

Over the last twenty years, the workplace has been the beneficiary (?) of a vast number of technological advances. This has made it much easier to not only amass information, but to sort, structure and "play" with it. But one of the major downsides of this technological advance has been that a recalcitrant employee, or an employee who is leaving for a competitor, now has a much easier time to appropriate confidential information (trade secrets, customer or client lists, pricing information or other sensitive data); harass co-workers; spend the day looking at some of the "more interesting" Internet sites (i.e. pornography); get involved in gambling; or engage in other nefarious conduct.

With a thumb drive, an employee can amass the same amount of confidential information that would be equivalent to 20,000-inch thick notebooks "walking out the door" in the 1950s or '60s.
An employee can use company-owned equipment to "check out" another employee's address or personal data.

A "hook-up" to the Cayman Islands for a much-needed wager on the NFL is very handy and easy.

It is an absolute necessity for employers to begin to develop plans and incorporate these plans into their operations to stave off the data merely walking out the door or the other avenues of abuse.

It is crucial that employers create policies within their organizations on the how-and-why of employees using their electronic devices and on what sort of privacy workers can expect in their organizations. Workers must be told very clearly in a straight-forward policy that any information on their work-owned computers or phones is subject to being accessed by the company for any reason whatsoever. This access of information must include personal texts or e-mails that may be sent through a company network. It is also crucial that workers be clearly advised that the use of their personal computers and personal phones at work is subject to the same scrutiny. It is an absolute necessity that employees understand the reach or breadth of any employer technology policy.

Should an employer become concerned that confidential information is being removed from the company or company-related technology is being used for "other than business purposes," a thorough and complete digital investigation must take place. This digital investigation (i.e. computer forensic investigation) must involve information technology staff, human resources professionals and outside counsel. The employer must identify what rules may have been broken and what sort of privacy an employee can or should have under its forensic policies. As in every other case of alleged employee wrongdoing, documentation of the problem must be amassed and protected.

Often when a question arises with regard to technological misuse, a key factor is whether or not a company will use "inside" or "outside" personnel. In many cases, the use of outside experts is extremely beneficial. Very few companies have the financial wherewithal or expertise to make sure an investigation is handled pristinely. Outside experts have the tools and experience to make sure that all possible sources of data are found and - more importantly - that these sources of data are not accidentally corrupted or destroyed as part of the investigation. Outside investigators also document very clearly in their reports at the conclusion of an investigation what has occurred and how it occurred. This outside report can be extremely beneficial in substantiating the inappropriate or bad behavior of an employee during an investigative inquiry (i.e. EEOC; Department of Labor; etc.) or litigation scenario. In addition, if the case is handled correctly through the investigation, there will be less chance of possible invasions of employee privacy and the loss of employee morale.

There is and has been extensive litigation also regarding the clash of an employer's rights to protect its company equipment and property versus the invasion of employee privacy. This is truly a very unsettled area. What rights, if any, does an employee have to his/her "personal e-mails" on company computers? Does the employer have an absolute right to see everything? In fact, the United States Supreme Court in the case of City of Ontario v. Quon said it was difficult for it to make a broad ruling on the topic of technological advances because of the "rapid pace of technological change" and how this would impact workplace norms in the future.

As technology further advances in the 21 st century, the workplace will undergo even more significant changes. The employers who are able to incorporate and make the correct use of technological advancements while protecting their business assets in the workplace will be the ones that will be the most successful going forward. 

Questions? Contact Walter J. Liszka, Managing Shareholder of Wessels Sherman's Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com 

Your Government at Work

March 2014
By: Walter J. Liszka, Esq.

With the fiscal year of the United States Government ending as of September 30, 2013, various government agencies have issued their "Fiscal Year Reports" with regard to what they have been able to accomplish during Fiscal 2013. Two of the most important agencies as far as their effect on business entities are the Equal Employment Opportunity Commission (EEOC) and the United States Department of Labor, Wage and Hour Division (WHD).

With regard to the EEOC, they indicate that during Fiscal 2013, they received a total of 93,727 Charges of Discrimination in the private sector and, during that same time period, were able to resolve a total of 97,252 charges. Obviously, the "difference in numbers" represents charges that were in existence and filed with the EEOC prior to the commencement of Fiscal 2013. It should also be noted that the EEOC's Performance and Accountability Report for Fiscal 2013 indicates that the EEOC was able to obtain $372.1 million in relief from private companies through administrative enforcement activities including litigation, mediation, settlement, and conciliation. This figure represents approximately a $6.7 million increase over the last fiscal year (Fiscal 2012) which was in itself a record breaking number at approximately 365.2. These "EEOC benefit recoveries" were obtained for more than 70,522 people. It should be noted that in Fiscal 2013, the EEOC was focused on systemic investigations and, based on their Report, in these systemic investigations, there were a total of 63 settlements or conciliation agreements that recovered approximately $40 million of the previously referenced $372.1 million.

With regard to the WHD enforcement ending as of September 30, 2013, the Wage and Hour Division was able to recover $249,954,412 in back wages that impacted more than 269,000 workers. The WHD since approximately the beginning of Fiscal 2009 has been able to close 145,884 cases nationwide which has resulted in more than $1 billion in back wages for over 1.2 million affected individuals.

Obviously, the EEOC and WHD are hard at work protecting private sector employees. There is no doubt in the writer's mind that Fiscal 2014 will continue much of the same on behalf of the EEOC and WHD.

Questions? Contact Walter J. Liszka, Managing Shareholder of Wessels Sherman's Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com

What Employers Face in Calendar Year 2014

January 2014
By: Walter J. Liszka, Esq.

At the beginning of every New Year, all of us have strong hopes of continuing successes and growth, both in our personal lives and business pursuits. For any employer, these "hopes of growth and success" can be related to potential legal issues that have been stirring in the previous year(s) and continue to mount challenges as 2014 opens its doors. Here are some of the potential challenges that will exist in 2014.

1. Continuing problem with misclassification of non-exempt employees as exempt. For many years, employers have concluded that "if I pay someone a salary," they are exempt from overtime pay. This is an absolutely fallacy and has caused innumerable employers to face legal challenges and pay substantial amounts of money. Whether an individual is exempt from the overtime requirements of Federal or State Laws relates to the actual duties that the employee performs and whether those duties qualify that individual for an exemption. Because misclassifications as non-exempt can expose employers to a minimum of two (2) years of back pay (three (3) years of back pay for willful violations) and, as well as double damages and attorneys' fees, this continues to be a problem for all employers. Take a step back and take a look at your "exempt employees" and consult with counsel as to whether or not the exemption is valid.
   
2. The ongoing dilemma of independent contractors. Because of the economic downturn, and to avoid (?) employer-related taxes assessed on the employer/employee relationship, many employers have delved into the area of "independent contractors." Whether an individual is an independent contractor or an employee is a very fact-specific determination and must meet stringent requirements of the Internal Revenue Code, the United States Department of Labor and, in the State of Illinois, the Illinois Department of Employment Security tests. Just because someone can say that the "independent contractor is free from direction and control" is not the end of the discussion. The employer must bear the burden of proving that the "alleged independent contractor" is truly not an employee. That proof may relate to the actual work performed by that individual and whether or not it is outside the employer's usual course of business; if it (the work) is performed outside of the employer's normal place of business, and whether or not the worker is engaged truly in an independent and established trade or profession.
   
   It also should not escape consideration that a recent bill introduced into the United States Senate - the "Payroll Fraud Prevention Act of 2013" if passed will amend the Fair Labor Standards Act and impose penalties on employers who intentionally misclassify workers as independent contractors. It is no longer such an easy decision to employ an "independent contractor."
   
3. FICA tax and its effect on severance pay in a workforce reduction. The question of whether severance payments that are made in a workforce reduction are considered as "normal wages" is an issue that the United States Supreme Court will soon decide. If, in fact, the Supreme Court decides that the severance payments are, in fact, wages, then an employer will be responsible for deducting Social Security and Medicare taxes on those wages paid as severance pay. If the Supreme Court should decide that these severance payments are exempt from FICA taxes, employers and employees may be entitled to refunds and the employer certainly may be responsible for reimbursing its former employees for those payments. Employers should consult with their accountants or tax counsel for further guidance on this issue and how to protect themselves and get refunds if, in fact, the Supreme Court decides that "severance pay" is not treated as wages.
   
4. Continuing legalization of marijuana for medical use. As of January 1, 2014, Illinois becomes the twentieth (20 ^th) state to legalize marijuana for medical use. With almost two-fifths of the states of the United States of America now allowing use of marijuana for medical purposes, employers are bedeviled by how this can and may impact day-to-day employment decisions. If an individual reports to work "under the influence of marijuana," can that individual be prohibited from working? If the individual employee states that, "I have to use my medical marijuana prescription during working hours," must the employer allow it? Must an employer consider accommodating an employee because of the use of medical marijuana and what is the interplay that will affect an employer with regard to the Americans with Disabilities Act versus, for example, the Illinois Human Rights Act? Just because a state has legalized marijuana for medical use, this does not mean that the possession and use of marijuana is not still a federal violation. There is no doubt that there will be a number of cases on this issue in the near term.
   
5. National Labor Relations Board (NLRB) and non-union workplaces. In the opinion of the writer, the NLRB has delved into the expansion of the impact of the National Labor Relations Act because of the substantial decrease in union activity over the last few years. Obviously, the NLRB must justify its existence and its continued budget application. The Board's actions over the last few years have impacted employers' requirements of confidentiality during workplace investigations and certainly have made a "big splash" in the arena of employers' actions as a result of their employee's social media posts. One can expect the NLRB to continue its trailblazing in the non-union workplace and draw more employers into coverage.
   
6. Affordable Care Act - ObamaCare. While the deadline for compliance for many of the Affordable Care Act employer initiatives were delayed until January 1, 2015, this is just a short-term escape for the potential impact of this law. Numbers of clients have indicated that there are substantial increases in medical costs on the horizon and, the writer has been advised by one client that they were told by their insurance carrier that they face a 90% increase in 2015. Hopefully wiser heads will prevail and do some massaging of this law (a recent survey indicates that less than 15% of the Americans surveyed are in favor of ObamaCare), but the politics in Washington are impossible to predict. Take the respite of 2014 and become aware of the potential impact and become aware of the potential obligations you face as of January 1, 2015.
   
7. Criminal background checks. All of us are well aware that there have been extensive actions by the Equal Employment Opportunity Commission (EEOC) with regard to limitations of criminal background checks because of their alleged discriminatory impact. Regardless of the number of commentaries questioning the EEOC's actions, the Agency continues to aggressively pursue this arena. It is suggested that the continued use of the past practice of asking job applicants generic questions about their criminal convictions or activities is just that, a thing of the past.
   
8. Tipping in the hospitality industry. Effective January 1, 2014, the concept of automatic gratuities attached to a customer bill, for example, parties of six (6) or more, will not be considered as tips but will be considered as "service charges wages." This will impact employers not only in recordkeeping and reporting requirements, but also potentially with compliance under the Fair Labor Standards Act and various state laws with regard to overtime rules - mandatory tips need to be included as part of the employee's regular rate of pay in order to properly calculate overtime rates. Employers in the hospitality industry should review their practices and gear up for the impact of this change.
   
9. Restrictive covenants. Over the last number of years, the writer has observed serious problems with regard to an employer's ability to enforce non-compete/non-solicitation restrictive covenants. Some of this has resulted from the fact that some employers had all employees, including the janitor, signing restrictive covenants and it became a silly concept to try to enforce. Just as importantly, many states, including the State of Illinois, have taken a jaundiced view of restrictive covenants and have limited more and more their expanse. In fact, in the summer of 2013, the Illinois Appellate Court First District imposed a rule that new or continued employment of a signer of restrictive covenant must last at least two (2) years after the employee signs the covenant for it to be enforceable. The rules of the game have been and are changing, and enforcing restrictive covenants is becoming even more difficult!
   
10. Social media - employer use. There are grave risks with an employer's viewing of social media of its employees - once you become aware of that individual's situation (religious beliefs; disabilities; other protected class memberships), you cannot deny your knowledge and it can and will come back to haunt you. Social media is an absolute and continuing element of our society and will continue to impact the workforce. Certainly the NLRB has taken a very aggressive posture in the area of social media and that will continue. As the law of social media continues to develop and, states continue to legislate in an effort to protect employees from their employer's intrusion into social media, this will be another area ripe for continuing disputes in litigation. 

Questions? Contact Managing Shareholder Walter J. Liszka of Wessels Sherman's Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com

The Birds and the Bees

May 2015

By: Walter J. Liszka, Esq.

In springtime, it is a very good time for employers to give consideration of how to manage “office romances” and avoid potential liability that may result from them.  Remember that in the current and constantly changing work environment, these “office romances” may not just involve the traditional male and female (they may involve two members of the same sex), but all office romances must be treated the same way.

Over the large number of years that the author has practiced labor and employment law, I have seen numerous employers attempt to eradicate this problem of office romances by an outright ban on those relationships.  In my experience in any workplace, “office romance” relationships are inevitable, regardless of the policies of the employer.  To have a policy that outright bans these relationships is not only unrealistic but totally ineffective – such policies merely force the employees to go “underground” and hide their relationship and lie to their employer and fellow employees to cover their tracks.  This leads to a less productive and unhappy workforce.  If you have a policy banning any relationships, once you as the employer become aware of these relationships (rest assured that your employee staff has been aware of the relationship for a lengthy period of time prior to your knowledge), you have to turn around and fire both employees.  If you do not fire them, you give the clear impression that “you pick and choose” when to enforce rules – never a good impression for your employees and a potential morale killer!  This is a completely backward situation and must be avoided.  

Here are a few suggestions for dealing with “the birds and the bees”:

1. Rather than banning the workplace relationships, establish a policy that encourages employees to disclose these office relationships but prohibits them when there is a supervisor – subordinate relationship.  Once the workplace relationship is disclosed, the employer can make very clear to the involved employees how they are to behave in the workplace (leave personal issues for non-work hours; no public displays of affection in the work place; etc.). Once a relationship is in fact disclosed, there are potentially heightened legal risks – potential sexual harassment claims if the relationship should go south or complaints from other employees with regard to perceived favoritism especially in supervisor-subordinate situations.  As a result, the employer must view its workforce needs to determine if a transfer or schedule change for either or both employees is appropriate.   If such an accommodation cannot be made, the involved employees should be advised that they will have a brief period of time to determine who is going to stay and who is going to leave.  Such drastic action is necessary because if a relationship between a supervisor/subordinate goes south, there is an absolute liability for the employer with regard to any and all actions taken by the supervisor vis-à-vis the subordinate.  This will enhance any sexual harassment claim because the employer will be held strictly liable for the actions of its supervisor.
   
2. The author first became aware of this concept arising in the State of California – no surprise.  Some employers may want to take the additional step of requiring the involved employees to enter into a Consensual Relationship Agreement or, as brought to the attention to the author in California, a “love contract.”  The aim or intent of the “love contract” is to create additional evidence to limit the employer’s liability in the event that the romantic relationship sours.  It is somewhat analogous to a prenuptial agreement but, instead of dividing the marital assets ahead of time, it protects the employer and provides that if or when the relationship goes south, neither employee will blame the company and further establishes that both employees acknowledge that their relationship is voluntary and without any type of coercion or duress.  It also requires them to agree that they will not engage in any conduct that will affect their work performance and/or obligations to the business (it is a good idea to also put in that if, in fact, their work performance or obligations to the employer are affected by the relationship, they are subject to discipline).  Also remind them of the company’s anti-harassment and anti-discrimination policies (it is suggested that these polices be set forth verbatim in the “love contract”).  While the author is not convinced that an arbitration clause is appropriate for the resolution of any all problems arising under the love contract, I give deference to the employer regarding this matter.

In closing, I strongly recommend that all employers consider polices that require full disclosure of personal romantic relationships and, just as importantly, update their anti-discrimination and anti-harassment policies to cover this situation. 

 

Questions? Contact Walter J. Liszka, Managing Shareholder of Wessels Sherman's Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com.