Employee loyalty has been on the decline due to the job market dwindling, benefit reductions, and opportunities for promotions becoming increasingly scarce. Fewer and fewer employees, especially the children of the baby boomer generation (“Generation Y”) feel a strong attachment or feeling of devotion toward their employers. As a result, employers who ignore the needs of these employees may see them leave for greener pastures.

Many employers, however, are heeding the call and taking proactive steps toward not only recruiting, but retaining today’s generation of young employees. Employers are acknowledging that Generation Y values a personal work/life balance, and many companies have begun offering employees flexible working options, such as alternative scheduling and telecommuting. Additionally, employers are focusing on offering more perks to retain Generation Y employees, such as subsidizing continuing education, meals, and gym memberships (see more on this under “Get Well Soon”).

“I Work for Me, Myself and I”

Whether referred to as freelancers, consultants or independent contractors, it is clear that employers are increasingly turning to these self- employed workers. The benefits to employers of retaining independent contractors are clear: employers are able to avoid payments associated with Federal Insurance Contribution Act (FICA) tax, Federal Unemployment Tax Act (FUTA) excise tax, state unemployment and workers’ compensation insurance, travel and entertainment, and employee benefit plans (including pension plans, sick leave, vacation, and health insurance). In addition to basic monetary benefits, the ability to hire independent contractors allows employers to swiftly react to changes in business needs and the demands of the marketplace.

Employers, however, should be cautioned — misclassifying employees as independent contractors can result in costly investigations and audits by the Internal Revenue Service or the federal Department of Labor (or state equivalent). For an additional review of the risks inherent in using independent contractors, visit our website at and view our March 2008 newsletter entitled “Independent Contractors — A Cost/Benefit Analysis,” which can be found in our “newsletter archive.””

“Get Well Soon”

“Major U.S. employers’ use of incentives in health and wellness programs is on the rise, growing to 71 percent in 2008 from 62 percent last year,” according to a survey conducted by the Washington-based ERISA Industry Committee and National Assn. of Manufacturers. (“More Employers Using Wellness Incentives,” Business Insurance, Joanne Wojcik, June 27, 2008.)

These programs promote weight loss, a healthy diet and regular exercise in the hopes of decreasing employers’ health care costs. To increase employee involvement, many employers have begun offering incentives to employees such as reductions in insurance premiums conditioned upon continued participation in the program.

Employers are also subsidizing gym memberships, “the patch” and hypnosis sessions for employees who are trying to quit smoking, and installing hand sanitizer dispensers throughout their office buildings.

“Better Safe Than Sorry”

Post 9-11, companies have been taking greater measures toward ensuring safety and security in the workplace. Such measures include, but are not limited to:

  1. Pre-employment screening (including reference and background checks);
  2. The use of arrest and conviction records in making hiring and other employment decisions;
  3. Video surveillance;
  4. Increased office security personnel; and
  5. Monitoring employee use of the Internet, e-mail, and Instant Messaging. This includes tracking content, key strokes, and time spent at the keyboard, as well as reviewing employees’ computer files.

There exists, however, a myriad of local, state, and federal laws and agencies which restrict or regulate an employer’s ability to use such safety and security measures. For example, the use of a “consumer reporting agency” to conduct background checks is regulated by the Fair Credit Reporting Act, a federal statute, as well as any similar state statutory counterparts. Likewise, the use of video surveillance and Internet/e-mail monitoring raises privacy issues, many of which have not yet been addressed by the courts.

“Beauty and the Boss”

Employers have been relaxing their “anti-romance” or “anti-fraternization” policies, and it is easy to understand why. With many people working longer hours than ever before, the most popular place to meet people has become the workplace, and declaring “all office romantic relationships strictly prohibited” is often unrealistic. As a result, many employers have abandoned the typical “all-or-nothing” policy prohibiting office romances in exchange for a more “understanding” alternative.

One alternative is to prohibit relationships where one employee has supervisory authority over the other, and to transfer or remove one of the employees from the supervisory chain once such a relationship is discovered.

As a general rule, employers should ensure that such policies are carefully crafted, narrowly tailored, and neutrally applied.

At Halpern Employment Law Advisors, we understand that maintaining your company’s competitive edge is of paramount concern to all business owners/employers. In addition, staying current on both HR and legal issues is key in today’s highly dynamic, but heavily regulated work environment. Our next newsletter will complete our series examining the latest trends in the workplace.

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