Personnel e.bulletin – March 2017

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Be Careful with These 5 ‘Lightning Rod’ HR Terms

Prepared by SESCO Management Consultants

Layoff or firing? Probationary or “permanent” employee? Using the wrong employment related terminology with an employee can expose your organization to costly lawsuits. Here’s a look at five of the most common examples:

 1.  “Permanent employee”

“Employment at-will” is the rule in most states. That means you can fire an employee at any time, for any reason (except an unlaw­ful one), as long as you don’t promise a job for a specific period of time. But many managers don’t realize that labeling someone a “permanent employee” essentially promises a job for life, or at least until retirement age, and can destroy this at-will status.

Managers often make the mistake of referring to employees as “permanent employees” when they pass their probationary period. Advice: Start using the term “regular employee.”

2. “Layoff”

Use the term “layoff” only when you end an employment relationship due to lack of work. If you end the relationship for any other reason, call it a “discharge.”

Can this little word become a big deal? You bet. For example, if the unemployment office is told the employee was “laid off,” even though you fired him for stealing, the employee could be deemed eligible for unemployment compensation … a part of which your company may have to pay. Even more costly is misusing the term when dealing with a government agency investigating a discrimination charge.

3. “Independent contractor”

The consequences of improperly classifying an employee as an independent contractor can be huge, including large back-pay awards, workers’ compensation, tax liabilities and employment discrimination rulings.

But simply labeling someone an independent contractor won’t cut it. Determining a worker’s status as an “independent contractor” or “employee” hinges on various factors. Most important: the degree of control. The more control you exert over the person’s schedule and duties, the more likely he or she will be deemed an employee.

4. “Exempt employee”

Managers often fail to classify employees accurately as “exempt” or “nonexempt” when determining who is eligible for overtime pay. (Exempt workers are not eligible for overtime, nonexempt are.)

The government has rules, albeit confusing ones, that try to help you decide which bucket to put each worker in. Find details at:

When determining exempt or nonexempt status, look at the actual work performed by the employee, not the job title. Also, just because a person is paid by salary doesn’t mean that he or she is automatically exempt.

5. “Disability”

Is an employee who qualifies for short-term disability insurance or workers’ compensation benefits considered “disabled”? Is an employee who has frequent migraine head­ aches disabled? Depending on the facts presented, the answer could be yes or no.

Unfortunately, there is no laundry list of medical conditions that qualify as disabilities under the federal ADA. If an employee qualifies as disabled, your organization must make “reasonable accommodations” for that disability, which may include anything from new furniture to a new schedule.

Don’t guess at whether an employee is disabled. Consult a professional human resources consultant.

Also, don’t informally refer to a worker as “disabled” until you have the facts. Federal law says that if you perceive an employee to be disabled, the law covers him or her.


This content was developed by SESCO Management Consultants ( Please consult your HR professional or attorney for further advice, as laws may differ in each state. Any omission or inclusion of incorrect data is unintentional. Please note this article is not intended to provide legal advice or to substitute for supervisor employment law training. Contact SESCO by calling (423) 764-4127 or emailing [email protected] to discuss this topic or any Human Resource or Employee Relations question.

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