Employment

• Contracts
• Guide to the Law-Employment Law

A doctor of optometry is hiring another optometrist and needs an employment contract. What should be included in the contract?

Subjects that typically must get considered when drafting employment contracts are the following:

1. Noncompete agreements (distance and duration restrictions for where a former employee can practice)
2. Payment of expenses such as malpractice insurance and professional society memberships.

Nos. 1 and 2 are highly state specific. A practice that employs a doctor of optometry would want to make sure that it keeps all the patient files and that a physician who leaves cannot set up shop across the street right away. The law mostly lets the employer do this, but there are limits.

Guidance for physician employment contracts are included in these links:

https://www.verondi.com/uploadedFiles/Harris_County_Medical_Society/Practice_Resources/Practice_Operations/Practice_and_Payment_Models/AMAemployment_agreement.pdf
https://www.acponline.org/system/files/documents/running_practice/practice_management/human_resources/employment_contracts.pdf

Can an independent contractor agreement include a noncompete provisions?

While independent contractor agreements and non-compete provisions do not logically seem to go together, there have been instances when courts have upheld non-compete provisions for contractors. Do not necessarily count on such provisions being unenforceable. One potential issue combining the two matters in the question is the contractor getting labeled as an employee by the Department of Labor, which creates liability. A different option is to enter into a contractor agreement with confidentiality provisions prohibiting the use of patient lists, but that type of arrangement is not ideal for the company. If a company is uncomfortable with utilizing a more watered-down noncompete provision, the business may hire the physician as an employee under some type of noncompete provision. You would need an attorney from the state in which employment took place to look at any agreement you wanted to sign.

What are the major considerations as it relates to the form of relationship selected between a business and a doctor of optometry (employee or independent contractor)?

This important decision is a personal one for someone’s business. A major consideration is compliance with the law / IRS / Department of Labor. Three macro factors to help in deciding whether a worker is an employee or independent contractor are behavioral control, financial control, and relationship. A worker should be labeled as an employee if they are working under supervision, are provided detailed instructions, formally evaluated, directed/controlled financially by the business, the hours are strictly controlled, provided employee-type benefits, and/or the relationship is labeled as an employee-employer relationship.

A worker should be labeled as a contractor if the hours are not specially dictated by the business, the worker does not need supervision, there isn’t training, the individual is generally free to look for other business opportunities, there is not the expectation that the relationship will continue indefinitely, there isn’t an evaluation system, and the written contract describes the relationship as a contractor relationship.

Here are the factors from the IRS to help decide: https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation.

A Doctor of Optometry’s Guide to the Law-Employment Law

What employment law issues can arise in a Doctor of Optometry’s office?

There are a variety of statutes and legal doctrines that apply in the Employment law area.  It is important that you are familiar with these concepts and statutes:

• Age Discrimination in Employment Act
• Americans with Disabilities Act
• At-will Employment
• COBRA benefits
• Employee Retirement and Income Security Act
• Equal Pay Act
• Fair Credit Reporting Act
• Fair Labor Standards Act
• Family and Medical Leave Act
• Federal Insurance Contribution Act
• Federal Unemployment Tax
• HIPAA and HITECH Amendments
• Independent Contractor versus An Employee
• National Labor Relations Act
• Negligent Hiring and Retention
• OSHA
• Pregnancy Discrimination Act
• Title VII of the Civil Rights Act of 1964, as amended
• Uniformed Services Employment and Reemployment Rights Act
• State Unemployment Compensation Laws
• State Worker’s Compensation Laws
• Worker Adjustment and Retraining Notice.
• Noncompliance Risk

These laws and legal doctrines are extremely complex and require that you consult your local attorney when seeking to confirm that your firm’s policies follow these various statutes and legal doctrines.  Most of the statutes profiled here are federal statutes.  In addition, many of the statutes profiled here may also have a state equivalent.  So, for example, most states have a parallel antidiscrimination statute.  Sometimes these state statutes will provide greater rights than the federal statute.  It is imperative that the Doctor of Optometry consult local counsel when working in this complicated area of the law.  Following this discussion, the Doctor of Optometry can find two drop down menus.  One drop-down menu will bring you to a copy of the referenced law.  The other drop-down menu will provide access to advice concerning the law from the regulatory agency tasked with enforcing the law.

Age Discrimination in Employment Act

The Age Discrimination in Employment Act (ADEA) protects certain applicants and employees forty (40) years of age or older from discrimination on the basis of age in hiring, promotion, discharge, compensation, or terms, conditions, or privileges of employment. This law also sets out specific requirements when an employer seeks to have his employee release any claim against the employer as a condition of the employee receiving his severance check.

Statute

Regulatory Agency Guidance

Americans with Disabilities Act

The Americans with Disabilities Act (ADA) prohibits discrimination against people with disabilities in several areas including employment, transportation, public accommodation, communications, and access to state and local government programs and services. Concerns respecting public accommodation are addressed in a different section of the legal questions and answers section. For purposes of this discussion, we will focus on Title 1 of the Act which is enforced by the Equal Employment Opportunity Commission. Employers must provide reasonable accommodations to qualified applicants or employees. A reasonable accommodation is any modification or adjustment to a job or the work environment that will enable an applicant or employee with a disability to participate in the application process or to perform essential job functions. There are several issues that typically arise in the application of this law. The first question is what is a disabling condition? Secondly, how does that disabling condition impact the applicant’s ability to participate in the job application process or to perform the essential functions of his or her job? Next, what are the essential functions of an employee’s jobs? (This is why having employment descriptions for all positions within your practice is so vitally important) Then, what steps need to be taken to allow the applicant to participate in the job application process or allow the employee to perform the essential functions? Finally, are these steps reasonable and do not place an undue burden on the employer?

Statute

Regulatory Agency Guidance

Employment at Will doctrine

Next, we will consider the doctrine of employment at will. Basically, the doctrine of employment at will means that an employer can terminate an employee at any time for any reason, except for an illegal one (i.e.: discrimination based on race, age, sex, national origin, or religion). Similarly, an employee has the right to quit a job and is not legally required to provide a notice period. Though, customarily most employees give a two week notice period. Employment will not be at will if the employment is pursuant to an employment contract. It is not unusual for highly paid executives to be working under an employment contract. In addition, union laborers typically work under a union contract. In both situations, employment is subject to the terms of the contract not the doctrine of employment at will.

Consolidated Omnibus Reconciliation Act

The Consolidated Omnibus Reconciliation Act (COBRA) “gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited period under certain circumstances, such as voluntary and involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost of the plan.” ¹ “COBRA generally applies to all private-sector group health plans maintained by employers that have at least 20 employees on more than 50 percent of its typical business days in the previous calendar year. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA.” ²

Statute

Regulatory Agency Guidance

Employee Retirement Income Security Act of 1974

The Employment Retirement Income Security Act of 1974 (ERISA) is a “federal law that sets minimum standards for most voluntarily established retirement and health plans. ERISA requires plans to provide participants with plan information including important information about plan features and funding, provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeal process for participants to get benefits from their plans; gives participants the right to sue for benefits and breaches of fiduciary duty; and if a defined benefit plan is terminated, guarantees certain payment through a federal chartered corporation, known as the Pension Benefit Guarantee Company (PBGC).” ³

Statute

Regulatory Agency Guidance

Equal Pay Act

The Equal Pay Act (EPA) provides that men and women in the same workplace be given equal pay for equal work. Job content determines whether jobs are substantially equal. All forms of pay are covered so in addition to salaries; overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits will be reviewed and considered. If a determination has been made that there is a disparity in pay for substantially equal jobs, the person with the lower pay should be brought up to the higher pay level. A company can not make a determination of a disparity in pay rates for equal work and then proceed to lower the salary of the person who was making more money.

Statute

Regulatory Agency Guidance

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is an important piece of consumer protection legislation. For purposes of this posting, we will examine the FCRA as it impacts the employment process. If an employer plans to use a credit report or an investigative credit report to assess the qualifications of an applicant, they must inform the applicant. Note dependent upon what state you operate in, it may violate state law to refuse to hire a qualified applicant because of his or her credit score. As always consult your local attorney before you decide not to hire someone based on their credit report.

Statute

Regulatory Agency Guidance

Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Covered nonexempt workers are entitled to a minimum wag of not less than $7.25 per hour effective July 24, 2009. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.” ⁴ Note many states have set a minimum wage higher than the federal minimum wage.

Statute

Regulatory Agency Guidance

Family and Medical Leave Act

The Family and Medical Leave Act (FMLA) is a seminal piece of legislation that entitles eligible employees of covered employers to take unpaid, job protected leave for specified family and medical reasons with continuation of group health coverage under the same terms and conditions as if the employee had not taken leave. The FMLA applies to employers who have fifty (50) or more employees. Leave can be taken in the designated amounts for the enumerated reasons:

“Twelve workweeks of leave in a 12-month period for:

• the birth of a child and to care for the newborn child within one year of birth;
• the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement.
• to care for the employee’s spouse, child, or parent who has a serious health condition.
• a serious health condition that makes the employee unable to perform the essential functions of his or her job.
• any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty;” or

Twenty-six workweeks of leave during a single 12-month period

• to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember’s spouse, son, daughter, parent, or next of kin (military caregiver leave).” ⁵

Statute

Regulatory Agency Guidance

Federal Insurance Contribution Act & Federal Unemployment Tax

The Federal Insurance Contributions Act (FICA) outlines the money that needs to be withheld from an employee’s paycheck to fund his or her social security. “For the past couple of decades, however, FICA tax rates have remained consistent. Employers and employees split the tax. For both, the current Social Security and Medicare tax rates are 6.2% and 1.45%, respectively. So, each party pays 7.65% of their income, for a total FICA contribution of 15.3%. To calculate your FICA tax burden, you can multiply your gross pay by 7.65%.

Statute

Regulatory Agency Guidance

Self-employed workers get stuck paying the entire FICA tax on their own. For these individuals, there’s a 12.4% Social Security tax, plus a 2.9% Medicare tax. You can pay this tax when you pay estimated taxes on a quarterly basis.’ Federal unemployment tax (FUT) is a payroll tax paid by employers on employee’s wages. The tax is 6% on the first $7000 an employee earns.

Statute

Regulatory Agency Guidance

Health Insurance Portability and Accountability Act & Health Information Technology for Economic and Clinical Health Act

The Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH) will obviously impact the patient data you have in your practice and this will be the subject of a stand alone posting to be submitted in the future. From an employment perspective, you will need to make sure that your employees are complying with HIPAA requirements. In addition, if you process any employee health information you would be recognized as a business associate under the law and required to abide by HIPAA regulations especially with regard to privacy and security of protected health information.

HIPAA Statute

HIPAA Regulatory Agency Guidance

HITECH Statute

HITECH Regulatory Agency Guidance

Independent Contractor versus an Employee

Whether an individual is classified as an employee, or an independent contractor is extremely important. Generally, an employee performs work under the direction and control of their employer on an on-going basis. The employer determines the hours, work location, and how work is done. Independent contractors run their own businesses and provide agreed services under a contract for those specific services. If an employer misclassifies an employee as an independent contractor, the employer will have failed to withhold the required tax deductions. An employer is also going to be responsible for the acts of an employer.

National Labor Relations Act

The National Labor Relations Act (NLRA) is another very important piece of legislation. “The NLRA is a federal law that grants employees the right to form or join unions; engage in protected concerted activities to address or improve working conditions; or refrain from engaging in these activities.” ⁷ “The National Labor Relations Act states and defines the rights of employees to organize and to bargain collectively with their employers through representatives of their own choosing or not to do so. To ensure that employees can freely choose their own representatives for the purpose of collective bargaining, or choose not be represented, the Act establishes a procedure by which they can exercise their choice at a secret-ballot election conducted by the National Labor Relations Board. Further to protect the rights of employees and employers, and to prevent labor disputes that would adversely affect the rights of the public Congress had defined certain practices of employers and unions as unfair labor practices.” ⁸ The National Labor Relations Act also established the National Labor Relations Board which serves as the administrative agency responsible for the enforcement of the Act.

Statute

Regulatory Agency Guidance

Negligent Hiring and Retention

Under the doctrine of negligent hiring, an employer is liable for harm its employees inflict on third parties when the employer knew or should have known of the employee’s potential risk to cause harm, or if the risk would have been discovered by a reasonable investigation. Steps that can be taken to avoid the legal risks attendant to negligent hiring or negligent retention include conducting adequate background investigations on applicants with a focus on convictions for physical or sexual assault. An employer should also keep track of how a new employee is performing and be prepared to take action when the circumstances warrant it.

Occupational Safety and Health Act

The Occupational Safety and Health Act (OSHA) established the Occupational Safety and Health Administration and sets forth a regime for the safety of workers. OSHA’s mission is to ensure that employees work in a safe and healthful by setting and enforcing standards, and by providing training, outreach, education, and assistance.

Statute

Regulatory Agency Guidance

Pregnancy Discrimination Act

The Pregnancy Discrimination Act forbids discrimination based on pregnancy when it comes to hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, such as leave and health insurance and any other terms and conditions of employment.

Statute

Regulatory Agency Guidance

Title VII of the Civil Rights Act of 1964, as amended

Title VII of the Civil Rights Act of 1964, as amended protects employees and job applicants from employment discrimination based on race, color, religion, sex and national origin. There are two types of claims that can be brought under the statute. One claim is called disparate treatment. In proving disparate treatment, the following elements must be proven (1) the employee is a member of a protected class (2) the discriminator knew of the employee’s protected class; (3) acts of harm occurred (4) others who were similarly situated were either treated more favorably or not subjected to the same or adverse treatment. The other type of claim rests in a disparate impact theory. In proving a disparate impact case, you need to show that a specific employment practice caused people in your protected class to be treated worse than people not in the protected class. The employer then must show that it had a legitimate business reason for this specific practice. The burden then shifts back to the plaintiff to prove that the proffered reason was merely pretextual.

In a sex discrimination case, the plaintiff will typically assert a quid pro quo theory or a hostile environment claim. Under a quid pro quo theory of sex discrimination, an employee’s supervisor, manager, or other authority figure offers or suggests that an employee will be given something, such as a raise or promotion, in exchange for some sort of sexual favor. Hostile work environment sexual harassment is any conduct directed at an employee because of that employee’s sex that unreasonably interferes with the employee’s work performance or creates an intimidating, hostile or offense work environment. In addition, sex was recently interpreted by the Supreme Court to include protection from discrimination based upon a person’s sexual preference or sexual identity. “The EEO-1 Component 1 report is a mandatory annual data collection that requires all private sector employers with 100 or more employees, and federal contractors with 50 or more employees meeting certain criteria, to submit demographic workforce data, including data by race/ethnicity, sex and job categories.” ⁹

Statute

Regulatory Agency Guidance

Uniformed Services Employment and Reemployment Rights Act

The Uniformed Services Employment and Reemployment Rights Act (USERRA) seeks to ensure that those who serve their country can retain their civilian employment and benefits and can seek employment free from discrimination because of their service. USERRA establishes the cumulative length of time that an individual may be absent from work for military duty and retain reemployment rights to five years.

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Regulatory Agency Guidance

State Unemployment Compensation Laws & State Worker’s Compensation Laws

Unemployment compensation and worker’s compensation are administered at the state level. Unemployment compensation is a benefit paid to people who have recently lost their job through no fault of their own. Worker’s compensation is a form of insurance which provides compensation to cover medical expenses, lost wages, and rehabilitation costs to employees injured in the course and scope of their employment in exchange for the required relinquishment of the employee’s right to sue his or her employer for the tort of negligence.

Worker’s Adjustment and Retraining Notification Act

The Worker’s Adjustment and Retraining Notification Act helps ensure advanced notice in cases of qualified plant closings and mass layoffs. This act will only apply to employer with 100 or more employees so it would have to be a very large practice with multiple offices.

Statute

Regulatory Agency Guidance

What laws do I have to comply with-Federal, State or Local law?

The short answer is that a business needs to comply with all federal, state, and local laws that are applicable to your situation. In our system of government, federal law is supreme, but federal law will preempt state law only where the federal law clearly evinces the intent to supersede state or local law regulating the same area. Many times, state, federal, and local law can all regulate the same area. State or local law can never restrict the rights offered under federal law, but they can grant more extensive rights under state law. So, you must comply with the federal law and state and/or local laws that provide additional or stricter requirements. For this reason, when considering federal law requirements (many of which have been set forth in this posting), realize that there are likely state and/or local laws that provide similar rights or protections. You will need to consult with an attorney in your state when dealing with employment matters because they may be aware of broader rights or restrictions granted or imposed under state or local law.

In addition, many of these laws go into effect dependent on how many employees an employer has so dependent upon the size of your practice not all these laws will be applicable to you. However, a corollary law at the state or local level may have a smaller threshold so those laws need to be checked as well. We recommend that you consult your attorney to stay current with what is required.

What is the risk of noncompliance?

If you violate employment law, you can be sued by your employee or former employee and you can be subject to investigation or suit by the government. Employment laws change through amendment or become clarified through judicial interpretation, so you need a professional who is keeping up with this area of the law. A claim or a suit by a current or former employee or a governmental agency can be very costly both monetarily and in terms of time and angst. Accordingly, it is very important to seek advice from employment counsel in your state who focuses on this area of the law as these laws vary from jurisdiction to jurisdiction and change over time.