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Outside Employment and Conflicts of Interest

 

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Employers typically expect employees to be loyal and think of the needs of the employer first. Although they can’t expect the employee to not have outside interests, they also want them to be available as needed and not involved in things or expressing opinions that negatively impact the employer.  These expectations can and often do run head-on into the employee’s freedom to express themselves (freedom of speech) and to their right to have a life outside of their employment; rights provided by the first amendment of the U.S. Constitution.

State laws protecting the rights of employees outside the workplace are varied and do not exist at all in most states. In states where there is no specific protection, the “employment-at-will” doctrine will apply: an employer is free to end the employment relationship with an employee at any time, for any reason, with or without prior notice….and likewise, the employee is free to end the relationship with the employer. However, even if there is no specific state law protecting an employee’s rights outside of the workplace, there are plenty of exceptions to employment-at-will (see the discussion of this doctrine in my previous post).

The best practice for employers is to give employees advance notice of the potential for job loss due to the outside activities and an opportunity to correct the problem. If termination is necessary, the employer should have solid reasons for the termination, such as that the outside activities are adversely affecting their performance or are in conflict with the employer’s business interests.  Here are examples of such solid reasons:

  • there is a requirement that certain employees be available on call on certain days; such immediate availability requirements may make moonlighting at another job problematic for the employer;
  • absenteeism and tardiness in reporting to work;
  • lack of availability for overtime work as needed by the employer.

Conflict of interest is a conflict between your personal interests and those of your employer. In the context of outside employment, this comes up most often when your outside employment is for a competitor or potential competitor, supplier or contractor of the employer.

Taking all of this into account, I have advised employers as a best practice to create a written policy such as the following:

Employees may hold a job outside the company as long as they meet the performance standards of their job here and as long as there is no conflict of interest.  You should consider the impact that outside employment may have on your health and physical endurance. You will be judged by the same standards and will be subject to the same scheduling demands as all other employees, regardless of any outside work requirements.

If we determine that your outside work interferes with your ability to meet your responsibilities, or if there is a conflict of interest that exists due to your outside employment, you may be asked to terminate the outside employment in order to remain employed here.

I believe that this policy is fair in that it balances the business needs of the employer with the employee’s life outside of the workplace. It puts the employee on notice of potential termination of the employment relationship and in what circumstances that would be necessary.

Even More on Age in the Workplace

The headline of the Ops page of the Plain Dealer on January 5, 2019, reads “Age discrimination more common than you think”.  The author, Helaine Olen, proposes that older workers are not choosing to leave the workplace voluntarily to retire to a life of leisure…they are being forced into that decision because “they are likely victims of age discrimination”.

In a previous post regarding Boomers and Age Discrimination, it was noted that in recent years the courts have made it more difficult for employees to win age discrimination claims against their former employers. At the same time, older workers are running into barriers in seeking new employment, competing with younger workers for those opportunities.

The graphs below tell the story pretty explicitly.  The chances of prevailing in a claim for age discrimination through the EEOC have been dropping steadily in the last 10 years.

 

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I have been involved with a group called Encore NEO for the past 4 years or so, including serving as a board member.  Our mission is to assist individuals age 50+  to craft meaningful careers and satisfying lifestyles for the second halves of their lives. Part of the work we do is to educate employers on the value of the older worker.  We also work with individuals to explore “gig work”, as independent contractors, freelancers, which can be a solution to age discrimination in employment…..be your own boss.

I have found part-time work (“gigs”) to supplement my fixed income since leaving my career in HR, which leaves me the time to devote to other interests, such as this blog and Encore NEO. So far this has proven to be a good mix, and I encourage other “boomers” to explore this as well.  The key is to stay involved as long as you can.

 

Background Checks

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Background checks for new hires have historically been one of the administrative maintenance items that are relegated to the HR department. More recently, much of this task has been outsourced to third-party background check firms, due mainly to (1) lack of internal resources to devote to this task and (2) complexity of the compliance issues that have developed in the applicable laws.

According to a CareerBuilder survey from 2016, 72% of employers run some type of background check on every new employee. Of the employers using background checks, 82% are vetting new hires for criminal history as well as employment history.

Why do them? What happens if I don’t do them?  Potentially a lot of bad stuff.  Background checks improve the chances of not making a bad hire.  They can be a very valuable tool in your selection process toolbox if done properly.  But there are rules that you need to follow to avoid landmines that can be stepped on.

The first landmine is the requirements under the Fair Credit Reporting Act (FCRA).  This Act was intended to provide protection to individuals from overly aggressive debtors/collection agencies. These protections have spilled over into the employment arena, creating rules to be followed by employers when a third party is used for background checks, and not just for financial credit checks.

Employers using consumer reports to screen job applicants must follow specific procedures:

  • Get the applicants written permission;
  • Tell the applicant how you intend to use the report;
  • Not misuse the information;
  • Give the applicant a copy of the report if you decide not to hire the applicant; and,
  • Give the applicant an opportunity to dispute the information contained within your credit report before rejecting the applicant from consideration.

The notice requirements can be met by including specific language in the employment application to be completed by each applicant (see post on Employment Applications). Your outside background check provider can assist you with this.

Next landmine…. EEOC  Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions (released in April 2012).  Due to the adverse impact on certain minority groups in the application process, the EEOC has taken the position that safeguards are needed in the background check process to avoid discrimination against those groups. Although these safeguards are not legally required, they are highly recommended by the EEOC (which means that you should pay attention to the guidance).

The following are examples of best practices for employers in considering criminal record information when making employment decisions:

General

  • Eliminate policies or practices that exclude people from employment based on any criminal record.
  • Train managers, hiring officials, and decisionmakers about Title VII and its prohibition on employment discrimination.

Develop a Policy

  • Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct.
    • Identify essential job requirements and the actual circumstances under which the jobs are performed.
    • Determine the specific offenses that may demonstrate unfitness for performing such jobs.
    • Determine the duration of exclusions for criminal conduct based on all available evidence.
  • Train managers, hiring officials, and decisionmakers on how to implement the policy and procedures consistent with Title VII.

Questions about Criminal Records

  • When asking questions about criminal records, limit inquiries to records for which exclusion would be job-related for the position in question and consistent with business necessity.

Confidentiality

  • Keep information about applicants’ and employees’ criminal records confidential. Only use it for the purpose for which it was intended.

See https://www.eeoc.gov/laws/guidance/arrest_conviction.cfm#VIII for further information.

In summary, background checks are valuable in the selection process but must be performed correctly and the information obtained must be used properly.