Episode 088: HR Issues: Compensation Laws and Workplace Harassment

Speaker 1: You're listening to Your Practice Made Perfect; support, protection and advice for practicing medical professionals, brought to you by SVMIC.

J. Baugh: Thank you for joining us in this episode of Your Practice Made Perfect. This is the second of three episodes with attorney Scott Hickman in which we discussed HR issues that practices can face. So you want to make sure and go back to listen to that first portion of the conversation, which you can find a link to in the show notes for this episode. Now let's pick back up with attorney Scott Hickman who practices in the area of employment law and business dispute resolution as he continues to share his experience with HR issues and employment compensation.

So as we continue to talk a little bit about employees, one of the terms that I hear sometimes when physicians or practice managers call me to ask various questions is they use a term called contract employee. And so what are the differences between a contract employee and a regular employee, and isn't hiring someone on contract a good way to avoid benefits and overtime and benefits such as that?

Scott: Well, of course in the first instance, contract employee is a misnomer because if a person is being treated as an independent contractor, they're not an employee at all. So the first real difference is there's no such thing as a contract employee. But you are correct, an employer does not have to pay an independent contractor benefits or overtime or comply with a lot of other regulations. They don't have to provide worker's comp insurance, things like that. But it is important to note that there are significant regulations regarding when an employer can and cannot hire someone as an independent contractor rather than an employee.

There's a common misunderstanding that I think it's important that we address and that is that hiring someone as an independent contractor is not simply a matter of agreement between the employer and the contractor. If you're going to hire me as an independent contractor, it's not good enough, J., if you say, "I'd like for you to be an independent contractor." And I say, "Well, J., I'd love to be an independent contractor. Let's do that." The relationship must be legally permissible.

And as we just discussed regarding the decision whether to treat an employee as exempt or non-exempt, the decision whether a worker can be properly classified as an independent contractor is very tricky. So professional advice should be sought if you are at all unclear whether it's proper to hire someone as an independent contractor because again, the consequences of mischaracterizing workers in this context can be quite severe.

J. Baugh: So when we think about the subject of employment law in general, within that, there's a pretty significant portion of that that is independent contractor versus employee. And as you said, that is something that you want to get some advice about on the front end because there's a lot of law pertaining to that specific topic within employment law is the idea of independent contractor versus employee. It's not something that someone can just easily figure out on their own.

Scott: That's absolutely correct, and it's something that oftentimes you can't fix after the fact. If I could give you a quick example, if you have someone you're treating as an independent contractor, therefore you're not providing them with workers' comp insurance and they get injured. And they then decide, "You know, I think I should've been treated as an employee. I think I should have had workers' comp coverage. I think I should have medical benefits for the rest of my life, which workers' comp provides for." And they turn back to the employer and say, "I think you misclassified me. I want medical benefits for the rest of my life."

Well, the employer, if they've misclassified that person could be judged liable for those lifetime medical benefits, but guess what? You don't have insurance. So again, the consequences of these decisions, while it may seem wise in the short term to say, "Oh, I'd love not to pay over time for this position, or I could save something on providing benefits." A misstep can have some fairly severe consequences. So it is absolutely worth the time as you indicated, spending a little bit of care on the front end and making sure that when you do make this decision that you've done it with a legitimate and defensible basis.

J. Baugh: Yeah, there are a lot of potential traps there that you want to avoid.

Scott: Unfortunately, there are, yes.

J. Baugh: Two or three decades ago I had a job in which one of the benefits that I had was comp time. That is time that I was given because I worked overtime in certain situations and so I was given comp time as a benefit. So how does comp time work?

Scott: Well, the short answer is usually it doesn't. Employers simply aren't allowed to give comp time in lieu of overtime pay, except in very limited circumstances that are very unlikely to apply to your insurance. While you can allow amendments to an employee schedule during the same workweek, that is to say you worked 10 hours yesterday, why don't you just work six hours today? If we're talking about Wednesday and Thursday. If an employee works more than 40 hours during one workweek, you're not allowed to give them time off during another workweek in place of paying overtime. This is another example where just pay the overtime. It's cheaper than having the DOL show up one day and knock on your door and say, "We'd like to see your records for the last three years," and decide that you should have been paying overtime for a very long time.

J. Baugh: Yeah, that sounds like a very difficult situation to work your way out of.

Scott: It does.

J. Baugh: I'm guessing then what you're saying is you can't have an employee who works 50 hours this week and just say, "Well, you can work 30 hours next week and we'll just call it even." It doesn't work that way.

Scott: It does not except, again, in very limited circumstances, which are unlikely to apply to our listeners.

J. Baugh: Okay. So we've talked some about pay, we've talked about hourly versus salaried, independent contractor versus employee, comp time and those areas of compensation. Let's talk about something a little bit different. And this is something that we hear a lot about today in the media and that's about harassment or bullying in the workplace. So how should our physicians handle those types of issues in the workplace?

Scott: Well, J., you're right. This is a topic that's getting quite a bit of interest in the media and otherwise, and it's because it's a very important question and a very difficult topic. So we don't end up with a two-hour podcast, I'll just make a couple of quick points here.

First, the easy part, have a clear written policy that these types of behaviors are simply unacceptable. Second, enforce that policy. I receive calls from clients often regarding employee behavior and they want to know, "What are our options or should we fire this employee?" And I will just say anecdotally that when this type of behavior is involved, my advice is almost without exception that the risk of retaining the employee is too great to bear. I usually will tell a client that there are simply some behaviors that are and should be incompatible with being employed by your company. And these types of behaviors are examples of those.

An employer's legal obligation is to provide employees with a workplace that is free from these types of behaviors. And more practically, they prevent employees from being productive and fulfilled in their jobs, which is a significant detriment to both the employer and the employee.

J. Baugh: You know, Scott, I've never been in a situation in which I had to make a decision about whether to continue to have an employee work for me or not, but I can see in listening to your answer to that question that that would be a very difficult decision to make because it seems that neither option is a good option. You run risk in retaining the employee. It's difficult to let an employee go, especially if it's an employee that you've been working with for a number of years. So it does sound like a very difficult topic and one that requires a lot of thought in terms of what you should do because it sounds like both options are not very good options.

Scott: You're exactly right J, and let me put it this way. It's very rare that the employee is someone that you were otherwise completely dissatisfied with and they have no merit whatsoever. That sort of makes for an easy decision, doesn't it?

J. Baugh: Right.

Scott: It seems to be more often it's someone with whom you have a good relationship who has brought some value to the employer and it makes it a difficult decision, which is why I go back to my first point and that is prevention. Have a clear written policy, do training, make sure that you've created an atmosphere where your employees understand in the first instance that this type of behavior is simply not the way things are going to be done. And hopefully by doing that you discourage the behavior, and you don't have to deal with the problem at all because that is obviously by far the more favorable outcome.

J. Baugh: Right. Well, that's some great advice about a very difficult topic. Let's change gears a little bit, and let's talk about something that you referenced earlier, which is the FMLA, the Family Medical Leave Act. That's a big topic for all employers, whether it's a medical practice or some other type of employment situation. So could you shed some light on maybe some tips and advice surrounding the FMLA?

Scott: Could I just say don't grow beyond 49 employees so you're not covered by the FMLA in the first place?

J. Baugh: Okay, so that's the cutoff then? It's between 49 and 50 employees. Okay. So if you stayed at 49 then you're okay.

Scott: Yes. It's a little more complicated than that, but in general terms because there are rules about when an employee counts and when an employee doesn't. But I certainly know employers who have been very aware as their companies have grown when they're about to reach that threshold because they understand that the FMLA places obligations on them, and it is a complex regulatory scheme that's hard to get right even when you're trying very hard. So assuming that we can't get away with simply saying, don't make yourself subject to it.

Let me point out that one thing about the FMLA is that it is very formulaic. The government publishes forms that you can get online that make it relatively easy to know what is to be communicated to the employee, when that must be communicated to the employee, as well as defining what information passes back and forth between the employee, the employee's healthcare provider, and the employer. So first, make sure that you have the most up-to-date forms, use them, and comply with the instructions that are contained in them.

J. Baugh: Yeah, that sounds like that would be really important because I can imagine something like the FMLA being a type of law that changes over time. And just because you had a form that was compliant with the law today doesn't necessarily mean that you would have a form that would be compliant tomorrow.

Scott: That is right. These laws are interpreted by the agencies that are given the task of enforcing them and those interpretations change from time to time. They change with different presidential administrations, for example. And so the forms do change from time to time, and it's important to make sure that you're using the proper and most up-to-date forms.

J. Baugh: So what is some other advice that you would give us about the FMLA?

Scott: Well, I would caution people to keep in mind that if you have an FMLA issue that relates to the employee's own medical condition rather than them caring for someone in their family, you may and likely do have obligations under other laws as well, such as the ADA or workers' compensation, if the serious health condition is a result of a workplace injury. So it's important not to forget that an employer has to comply with every relevant statute and regulation, and some of those place additional or different obligations on you than the FMLA does. So when you are dealing with an employee who has health issues, it's important to make sure you put on all of the relevant hats when you think through the problem. Put on your FMLA hat, and make sure that you're doing what you're supposed to do, but also put on your ADA hat and your workers' comp hat, etc.

Again, this is an area in which it can get very complicated and where outside support can be very valuable to someone who, as most employers do, want to do the right thing but in a complex regulatory environment may not be quite sure how to do that. I would add that more and more of my clients for that very reason are outsourcing FMLA compliance and similar issues. And if you find the FMLA overwhelming, this might be something worth considering.

J. Baugh: That's some really good advice because there are a lot of different kinds of issues that the medical practice has to deal with outside of just simply providing medicine. There's so many business issues that have to be dealt with in the office, so looking for some sort of outsourcing with some of these compliance issues might be a great option, especially for some of the smaller practices.

Scott: I agree.

J. Baugh: There is still a lot more to cover with Scott Hickman about HR issues in your practice. So join us in an upcoming episode for the final portion of this discussion where we wrap up with some helpful advice about maintaining a healthy work environment.

Speaker 1: Thank you for listening to this episode of Your Practice Made perfect with your host, J. Baugh. Listen to more episodes, subscribe to the podcast, and find show notes at svmic.com/podcast. 

The contents of this podcast are intended for informational purposes only and do not constitute legal advice. Policyholders are urged to consult with their personal attorney for legal advice as specific legal requirements may vary from state to state and change over time.