Non Profit Report - June 2013

Date: June 12, 2013

Top 5 Issues In An Employment Agreement
By: Eileen Morgan Johnson, Esq.

This article originally appeared in the December 2012 issue of Associations Now, the journal of ASAE: The Center for Association Leadership.

The top 5 issues to address in an employment agreement will differ depending on whether you are the employee or the employer and the level of the employee within the organization. But in general, these are five of the most important issues to include in an employment agreement:

There should be a detailed position description of what is expected of the employee. For a CEO, this includes management duties, number and title of direct reports, fundraising, lobbying, board relations, volunteer relations, and travel. A vague reference to the position as “described in the association’s bylaws” or “general duties of the position” are insufficient to adequately communicate to the employee and the supervisor what is really expected. The position description may refer to another document such as a strategic plan or annual goals. The position description should be reviewed and edited each time a contract is renewed or replaced with a new contract.

Compensation is more than just the annual salary. Compensation includes the base salary, any bonus opportunities and all benefits that the employee will receive. Sometimes contracts will specify the percentage of base salary increase that the employee can expect to receive each year. It is important to identify any fringe benefits which will be taxable to the employee.

The agreement should explain the supervision structure, explaining who the employee reports to and what the expectation is in terms of frequency of reporting and format. A CEO agreement should specify whether the CEO reports to the entire board, the executive committee, or the board chair/president

The review process to be followed should be briefly explained. If the employee’s performance is to be measured against specified goals or achievements, that should be stated in the agreement along with a statement that the goals or targeted achievements will be revised each year.

All employment relationships end at some point. A good employment agreement will cover termination including how both parties may terminate the agreement with and without cause. It should also state whether the employee will receive the association’s typical severance package (if there is one) or if a special severance package has been negotiated.

Executives should not be shy about discussing the terms of their employment with the hiring committee or board and requesting a written agreement. Taking the time to fully document the expectations of both parties can save trouble and money down the road.

D.C. Circuit Nixes NLRB Posting Requirement
By: David M. Stevens, Esq.

In a long-awaited decision, the U.S. Court of Appeals for the D.C. Circuit has struck down the National Labor Relations Board’s mandate that all employers covered by the National Labor Relations Act post a notice of employee rights under the law. This article examines the controversy surrounding the Board’s unprecedented posting requirement and the impact of the D.C. Circuit’s decision.

As readers of past issues of this newsletter will recall, in 2011 the National Labor Relations Board (“NLRB”) issued a regulation mandating that all employers subject to the National Labor Relations Act post a notice summarizing the rights of employees under that statute. The notice, which was drafted by the NLRB, includes information regarding employees’ rights to form or join a union and instructs employees about remedies available for certain employer conduct prohibited by the statute. The regulation generated significant controversy, both because a notice-posting requirement was unprecedented in the more than seventy-year history of the NLRB and because the notice posting requirement would apply to nearly all U.S. employers regardless of whether or not their employees were unionized.

The regulation became the subject of court challenges immediately upon its adoption by the NLRB. The Board twice delayed the scheduled implementation date of the regulation due to the pending litigation. In the first judicial decision on the issue, the U.S. District Court for the District of Columbia issued a ruling on March 2, 2012, upholding the NLRB’s authority to require employers to post the notice. Yet the court found that a related portion of the rule –declaring that the failure to post the notice would itself be considered an unfair labor practice – exceeded the NLRB’s authority.

The groups leading the challenges to the posting requirement subsequently petitioned the Court of Appeals for the D.C. Circuit to issue an emergency injunction to keep the posting requirement from taking effect pending an appeal of the District Court’s decision. The D.C. Circuit granted the requested injunction on April 17, 2012. The fate of the notice posting requirement has thus been on hold for the last year as the D.C. Circuit considered the legality of the NRLB’s action.

On May 7, 2013, the D.C. Circuit issued its opinion, which struck down the notice posting requirement. Although much of the argument on this issue focused on a statutory provision granting the NLRB the authority to issue certain regulations necessary to implement the Act, the D.C. Circuit focused its analysis on another portion of the Act – Section 8(c). Section 8(c) was added to the National Labor Relations Act as part of a group of amendments passed in 1947, and directs that an employer’s expression of views or opinion on workplace issues cannot be considered a violation of the Act, or considered as evidence in support of any other violation. The D.C. Circuit deemed that the mandated notice (and the associated penalties for failing to post it) amounted to a violation of an employer’s right under Section 8(c) to express, or refrain from expressing, an opinion.

Takeaway for employers: The D.C. Circuit’s decision represents a significant blow to the NLRB’s efforts to require employers to post a notice advising of the rights protected by the National Labor Relations Act and the potential benefits offered by collective bargaining. The NLRB may seek to have the case reheard by the entire D.C. Circuit, or may petition for review by the Supreme Court. Additionally, challenges to the notice posting rule remain pending in other federal courts. It appears, however, that the notice posting requirement is unlikely take effect at any time in the near future.

Employers Now Required to Use Revised Form I-9 When Verifying Employment Eligibility
By: Peter D. Guattery, Esq.

On March 8, 2013, the U.S. Citizenship and Immigration Services (“USCIS”) published a revised Employment Eligibility Verification Form I-9, which contains some slight modifications to the familiar form used by employers when verifying the eligibility of newly hired employees to work in the United States. While employers were given a sixty-day grace period to begin using the revised form, as of May 7, 2013, the failure to use the revised form will subject an employer to statutory penalties. This article examines the revisions made to Form I-9.

Employers have long been required to complete U.S. Citizenship and Immigration Services (USCIS) Form I-9 upon hiring any new employee. Completion of the form requires the employer to review identification documents in order to confirm that the individual being hired is eligible for employment in the United States. On March 8, 2013, the USCIS issued a revised version of Form I-9 which must be used by employers in lieu of the existing version of the I-9.

The most visible aspect of the revision is that Form I-9 has been expanded from one to two pages. The instructions published in conjunction with the form have also been significantly expanded. Section One of the form, which is to be completed by the employee, has been revised to include additional fields, such as for the employee’s telephone number and email address. The remaining substantive content of Form I-9 remains unchanged, as does the list of acceptable documents that may be used to verify employment eligibility.

Takeaway for Employers: Although the revisions to the Form I-9 are relatively minor, use of the revised form became mandatory as of May 7, 2013. Failure to use the new version of the form will be treated by USCIS as a failure of compliance, exposing employers to a range of civil, and potentially criminal, penalties. Employers can obtain the revised I-9 form at the USCIS website. In viewing any Form I-9, an employer should look for the publication date in the lower left-hand corner of the form. The new Form I-9 has a publication date of March 8, 2013.

Employers should take note that there is no requirement that the revised Form I-9 be completed by current employees for whom a properly completed Form I-9 is already on file, unless an event occurs which necessitates re-verification under the provisions of the Immigration and Nationality Act. To the contrary, an unnecessary verification can expose an employer to liability under the Act’s antidiscrimination provisions.