The Employer Good Faith and Safe Harbor Act Exposed

The Employer Good Faith and Safe Harbor Act was considered by ALEC's Civil Justice Task Force at the Annual Meeting on August 5, 2011. This bill was part of the ALEC task force agenda between 2010 and 2012, but due to incomplete information, it is not known if the bill passed in a vote by legislators and lobbyists at ALEC task force meetings, if ALEC sought to distance itself from the bill as the public increased scrutiny of its pay-to-play activities, or if key operative language from the bill has been introduced by an ALEC legislator in a state legislature in the ensuing period or became binding law.

ALEC Bill Text

Section 1.

As used in the employer good faith and safe harbor act:

A) “Employee” means any person who is employed by an employer in consideration for direct or indirect monetary wages or profit;

B) “Employer” means any person, partnership, corporation, association, organization or other business entity which employs four or more individual persons;

C) “Mediation” under this act is the process by which a neutral mediator appointed by the court, or by a hearing officer, assists the parties in reaching a mutually acceptable agreement as to issues of employment. The role of the mediator is to aid the parties in identifying the issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise and finding points of agreement;

D) “Supervisor” means any individual having authority to hire, transfer, suspend, lay off, recall, promote, discharge, discipline and handle grievances of other employees, by exercising independent judgment.

Section. 2.

A) Any employer seeking to be granted safe harbor certification shall implement an employee awareness and training program in accordance with this act.

B) A certified evaluator shall issue a certificate of safe harbor status upon the employer's satisfactory showing that the requirements for certification set forth in subsection (C) have been met.

C) To receive certification of safe harbor status, an employer shall:

1) Include an equal employment opportunity disclaimer in all advertisements for hiring;

2)implement and maintain in written or electronic form:

a) A company-wide equal opportunity statement;

b) a job description for each position;

c) selection criteria for each position, which shall include required experience, education and skills;

d) a standardized interview process, which shall include acceptable interview questions for each position;

e) job performance standards for each position, which shall be used in semi-annual job performance evaluations;

f) a standardized employment agreement, which shall be signed by the employee;

g) an employment at-will acknowledgment form, which shall be signed by the supervisor and employee;

h) a mediation agreement signed by the employer and the employee;

i) a process to avoid and resolve:

i. Wrongful or unlawful termination or discharge claims, equal pay claims, breach of employment contract claims, long term employee claims, employment settlement negotiations and other employment related claims;

ii. age, disability, gender, national origin, race, sex or sexual orientation discrimination;

iii. noncompliance with Americans with disability act and age discrimination in employment act;

iv. sex, gender, sexual or discriminatory harassment;

v. retaliation and retaliatory termination;

vi. whistle-blowing;

vii. failure to pay wages, including overtime wages;

viii. termination without good cause;

ix. meal and rest periods;

x. employee misclassification as exempt;

xi. unlawful termination or discharge due to serious medical condition;

xii. failure to pay work expenses and unlawful deductions from employee pay or salary;

xiii. severance negotiations; and

xiv. employer bad faith;

j) an employee behavioral counseling and corrections process, which shall require a written acknowledgment form signed by the employee and supervisor;

k) a process to handle employee complaints;

l) a training program for:

i. All personnel involved in the interviewing process;

ii. orientation and on-boarding new employees;

iii. all new supervisory and management staff, which shall cover all aspects of employment law; and

iv. management on sensitivity, discrimination, workplace safety and employment law, which shall occur at least every three months;

m) a process to establish exempt and non-exempt status; and

n) a company downsizing plan.

Section 3.

A) The department of commerce shall establish a program to certify evaluators of employer safe harbor certification. The secretary of commerce shall accept applications for evaluator certification on a form to be supplied by the secretary's office. The application for evaluator certification shall be accompanied by a fee of $25. Upon acceptance of such application for certification and the receipt of the fee, the secretary may issue to such applicant a certified evaluator certificate. Such certification shall expire one year after its issuance. The secretary shall adopt rules and regulations to implement this program on or before January 1, 2012.

B) Certified evaluators shall review the applications of employers seeking safe harbor certification and determine whether such employers have met the requirements of subsection (c) of section 2, and amendments thereto. Upon determination that an employer has met the requirements for safe harbor certification, the evaluator shall issue to such employer a certificate of safe harbor status.

C) Such certification shall expire one year after its issuance.

D) The application for certification may be rejected and denied if the applicant does not supply all the information deemed necessary or if the applicant's establishment does not meet the requirements of subsection (c) of section 2, and amendments thereto.

E) Upon issuance of a certificate of safe harbor status to an employer, the evaluator shall send a notice of certification to the secretary of commerce. Such notice shall contain the name, address and phone number of the certified employer and the issuance and expiration dates of such certificate of safe harbor status.

F) The department of commerce shall prepare and keep a record of employers certified as having safe harbor status.

Sec. 4.

A) There is hereby established in the state treasury the employer safe harbor fund which shall be administered by the secretary of commerce. All expenditures from the employer safe harbor fund shall be for expenses of implementing the evaluator and safe harbor certification program. All expenditures from the safe harbor fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the secretary or the secretary's designee.

B) All moneys received for evaluator certification shall be deposited in the state treasury in accordance with the provisions of K.S.A. 75-4215, and amendments thereto, and shall be credited to the employer safe harbor fund.

Section. 5.

A) Upon written agreement between an employer with a valid certificate of safe harbor status and an employee, as required in subsection (c) section 2, and amendments thereto, the parties shall submit any disputes that may arise during the course of employment to mediation as provided in such agreement, prior to the filing of any civil action in district court. In the absence of such agreement, the court or hearing officer shall order mediation of any employment dispute upon motion of either party and shall appoint a mediator.

B) A mediator appointed under subsection (A) shall:

(1) Inform the parties of the costs of mediation;

(2) advise the parties that the mediator does not represent either or both of the parties;

(3) define and describe the process of mediation to the parties;

(4) disclose the nature and extent of any relationships with the parties and any personal, financial or other interests which could result in bias or a conflict of interest;

(5) advise each of the parties to obtain independent legal advice;

(6) allow only the parties to attend the mediation sessions;

(7) disclose to the parties' attorneys any factual documentation revealed during the mediation if at the end of the mediation process the disclosure is agreed to by the parties; and

(9) inform the parties of the extent to which information obtained from and about the participants through the mediation process is not privileged and may be subject to disclosure.

(C) The mediator may, with the consent of the parties, meet with other persons.

(D) The mediator shall make a written summary of any understanding reached by the parties. A copy of the summary shall be provided to the parties and their attorneys, if any. The mediator shall advise each party in writing to obtain legal assistance in drafting any agreement or for reviewing any agreement drafted by the other party. Any understanding reached by the parties as a result of mediation shall not be binding upon the parties nor admissible in court until it is reduced to writing, signed by the parties and their attorneys, if any, and approved by the court. If the parties are not represented by attorneys, the mediator shall provide to the court or hearing officer the written summary of any understanding signed by the parties, which, if approved by the court or hearing officer, shall be incorporated in the order of the court or hearing officer.

(E) The mediator may act as a mediator in subsequent disputes between the parties. However, the mediator shall decline to act as attorney, counselor or psychotherapist for either party during or after the mediation or other proceedings unless the subsequent representation, counseling or treatment is clearly distinct from the mediation issues.

(F) If the parties involved in the dispute reach an agreement, the agreement may be reduced to writing and signed by the parties. The agreement shall set forth the settlement of the issues and the future responsibilities of each party. If a court referred the case, the agreement as signed and approved by the parties may be presented to the court as a stipulation and, if approved by the court, such agreement shall be enforceable as an order of the court.

(G) At any time after the second mediation session, either party may terminate mediation ordered under subsection (A). The mediator shall terminate mediation whenever the mediator believes that:

(1) continuation of the process would harm or prejudice one or more of the parties or

(2) the ability or willingness of any party to participate meaningfully in mediation is so lacking that a reasonable agreement is unlikely. The mediator shall report the termination of mediation to the court. The mediator shall not state the reason for termination except when the termination is due to a conflict or interest or bias on the part of the mediator.

(H) All verbal or written information transmitted between any party to a dispute and a mediator conducting a proceeding under this section shall be confidential communications. No admission, representation or statement made in the proceeding shall be admissible as evidence or subject to discovery. A mediator conducting a proceeding under this section shall not be subject to process requiring the disclosure of any matter discussed during the proceedings unless all the parties consent to a waiver. Any party and the mediator conducting the proceeding, participating in the proceeding has a privilege in any action to refuse to disclose, and to prevent a witness from disclosing, any communication made in the course of the proceeding. The privilege may be claimed by the party or the mediator or anyone the party or the mediator authorized to claim the privilege.

(I) The confidentiality and privilege requirements of this section shall not apply to:

1) Information that is reasonably necessary to allow investigation of or action for ethical violations against the mediator conducting the proceeding or for the defense of the mediator or staff of an approved program conducting the proceeding in an action against the mediator or staff of an approved program if the action is filed by a party to the proceeding;

2) any information that the mediator conducting the proceeding is required to report under K.S.A. 2010 Supp. 38-2223, and amendments thereto;

3) any information that is reasonably necessary to stop the commission of an ongoing crime or fraud or to prevent the commission of a crime or fraud in the future for which there was an expressed intent to commit such crime or fraud;

4) any information that the mediator conducting the proceeding is required to report or communicate under the specific provisions of any statute or in order to comply with orders of a court; or

5) any report to the court that a party has issued a threat of physical violence against a party, a party's dependent or family member, the mediator or an officer or employee of the court with the apparent intention of carrying out such threat.

(J) The costs of any mediation ordered under subsection (A) shall be taxed to either or both parties as equity and justice require, unless the parties have reached a reasonable agreement as to payment of costs.

Section 6.

(A) Notwithstanding any other provisions of law, it shall be a defense for any civil action based on an employment dispute that the employer has a valid certificate of safe harbor status. To overcome such a defense, the plaintiff has the burden of proving by clear and convincing evidence that the safe harbor certification requirements of subsection (C) of section 2, and amendments thereto, were not met.

(B) Punitive damages shall not be recoverable in any civil action against an employer with a valid certificate of safe harbor status. Actual damages may be awarded.

(C) Nothing in this act shall be deemed to grant immunity to any employer causing damages by willful or wanton misconduct or intentionally tortious conduct.

Section 7.

This act shall apply to all civil actions that allege an employment dispute that are filed on or after the effective date of this act.

Section 8.

If any provision of this act or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provisions or application, and to this end the provisions of this act are severable.

Section 9.

If any provision of this act or the application thereof to any person or circumstance is held to be preempted by federal law, the preemption shall not affect other provisions or applications of the act which can be given effect.

Section 10.

(A) Section 1 through 10, and amendments thereto, shall be known and may be cited as the Employer Good Faith and Safe Harbor Act.

(B) The provisions of this act shall be liberally construed to promote the protection of employers from the excessive costs and burdens of frivolous or retaliatory lawsuits.