Contributed By Foulston Siefkin LLP
Similar to its impact throughout the country, the “gig” economy has made significant inroads in Kansas. Many people struggle to meet their financial needs working only one job, while others enjoy the flexibility commonly associated with these short-term or freelance-type employment arrangements. Entities that utilize workers on short-term or freelance contracts must be aware of the legal risks of doing so (see 2.1 Defining and Understanding the Relationship).
As the number of individuals taking on this type work continues to grow, so will the number of legal challenges associated with determining these workers’ rights and benefits. This trend is already playing out in federal and state courts across the country through a host of lawsuits challenging the classification of “gig-economy” workers for various prominent entities, such as Uber, Lyft, Postmates, and Grubhub. Going forward, there are still unresolved questions as to whether these workers are protected by federal and state anti-discrimination statutes, covered under state workers’ compensation laws, or eligible for healthcare benefits, among other employment-related benefits.
As the “gig” economy becomes more defined, Kansas or the federal government (or both) may take steps to more clearly establish what rights and benefits “gig-economy” workers hold. In October 2017, the New Economy Works to Guarantee Independence and Growth (NEW GIG) Act was introduced in both the US House and US Senate, providing objective criteria that, if met, would provide a safe harbor ensuring “gig” workers would be treated as independent contractors. While the companion bills ultimately stalled in committee, this is not likely to be the last effort to try and better define these types of alternative employment arrangements. The Kansas legislature has historically been open to passing pro-business legislation to encourage businesses to move to Kansas while at the same time retaining the companies that already have a presence in the state. This could make Kansas a desirable destination for entities seeking to utilize “gig-economy” workers.
With the ever-changing global economy, employers in Kansas must be willing to adapt. Technological improvements, artificial intelligence, cyberspace, and social media can all potentially redefine the traditional employer-employee relationship. Though not limited to Kansas, many entities have already used technological improvements and artificial intelligence to eliminate positions or restructure the duties of their workforce. As technology continues to improve, this trend is likely to continue.
In 2018, the #MeToo movement took the country by storm, and Kansas was no exception. The #MeToo movement seeks to raise awareness about the prevalence of sexual harassment and assault, especially in the workplace, and has resulted in numerous high-profile individuals being outed for predatory behavior nationwide. Sexual harassment and sexual assault are not issues limited to actors, politicians, and news anchors: such issues play out every day in workplaces across Kansas (and the rest of the country), with many victims afraid of the consequences of reporting workplace abuse, despite protections afforded under federal and state anti-discrimination laws.
In the wake of the #MeToo movement, it is worth tracking whether there is a significant jump in the number of sexual harassment charges filed with the Equal Employment Opportunity Commission (“EEOC”) and Kansas Human Rights Commission (“KHRC”). In each of the last four years, the EEOC saw approximately 215 sex discrimination charges against Kansas employers. The number of sexual discrimination complaints filed with the KHRC has steadily declined during the last few years, from 107 in 2012 to 65 in 2016. Post-#MeToo data is not presently available, but many speculate that, with the public outpouring of support for harassment victims, a significant increase in the number of sexual harassment complaints is coming. Entities doing business in Kansas should anticipate this trend by reviewing (and updating, if necessary) their anti-harassment policies, reminding their employees of the importance of reporting workplace harassment and how to do it, refreshing workplace harassment training or implementing it, and making sure that they have buy-in from top-level leadership.
In response to the #MeToo movement, the US House introduced a bipartisan bill titled the EMPOWER Act, which proposes ramping up efforts to curb workplace harassment by outlawing confidentiality and non-disclosure provisions in settlement agreements, requiring publicly owned companies to disclose settlements, establishing a confidential tip-line for reporting harassment, and reforming the tax code to ensure that victims of sexual harassment are not penalized. The Senate previously released a companion bill. Despite receiving bipartisan support, however, House and Senate leadership have displayed a lack of enthusiasm for addressing either bill.
Congress did address one issue on this topic in 2017, though, with the inclusion of Section 162(q) in the Tax Cuts and Jobs Act of 2017. This Section prevents employers from deducting the settlement payment and/or the attorney’s fees of a sexual harassment or sexual abuse settlement as a business expense if a non-disclosure provision is included in the settlement. However, ambiguous language in the Section leaves many unanswered questions regarding the practical effects of this provision – questions that will need to be resolved by the IRS, the legislature or the courts in the near future.
While not as prominent as the #MeToo movement, the “Ban the Box” movement has recently impacted Kansas. On May 2, 2018, Kansas Governor Jeff Coyler ordered that Kansas state agencies “ban the box”, which prevents them from asking applicants to disclose on an application whether they have been convicted of a crime. In doing so, Kansas joined a number of states and cities that have implemented “ban the box” policies to government hiring. Notably, however, “banning the box” does not restrict state employers from asking about the applicant’s criminal history later in the hiring process, such as at the post-offer stage. At this point, there is not significant traction in the legislature to extend this policy to the private sector.
Kansas has been a “right to work state” since 1958, when it passed an amendment to the state constitution (see Kan. Const. Art. XV § 12: “No person shall be denied the opportunity to obtain or retain employment because of membership or nonmembership in any labor organization, nor shall the state or any subdivision thereof, or any individual, corporation, or any kind of association enter into any agreement, written or oral, which excludes any person from employment or continuation of employment because of membership or nonmembership in any labor organization”). This prevents Kansas employers from denying employment based on union membership or non-membership. Traditionally, employers view “right to work laws” favorably, as they allow employees not to join a labor union or pay union dues as part of their employment.
Like the rest of the country, Kansas has seen a steady decline in union membership during the last few decades, with only about 8% of Kansas workers currently being union-represented, down from about 21% in 1968. Despite a recent uptick in the last few years, it is unlikely that Kansas unions will experience any meaningful gains in union membership without significant changes in the law, the composition of the Supreme Court and National Labor Relations Board, and/or public attitudes toward unions. This issue is not unique to Kansas; in recent years, the national attitude toward unions has soured, and there has been a litany of efforts by politicians and interest groups designed to diminish the role of private and public unions in this country.
President Trump’s election set the stage for yet another shift in the ideology of the National Labor Relations Board. With a Republican majority now in place, the NLRB has moved quickly to undo many Obama-era labor regulations and precedents. Though not necessarily specific to Kansas, going forward the NLRB as currently constituted will likely routinely reach pro-business decisions on contested issues. This marks a stark contrast from the Obama administration’s NLRB, which delivered numerous victories for unions and employees. This seems to be business as usual, as Democratic-majority Boards tend to skew pro-labor, while Republican-majority Boards typically favor employers. This does not mean employers will be always be victorious, but it signals that employers are likely to have additional leverage in collective bargaining negotiations and in day-to-day dealings with unions.
President Trump’s NLRB, however, may be more aggressive than previous Republican-majority Boards. In addition to swiftly undoing many Obama-era regulations and rulings, the NLRB’s general counsel, Peter Robb, has devoted significant attention to taking power away from the regional offices and instead centralizing it in Washington DC. Some commentators view Mr. Robb’s plans as a power grab catering to pro-business interests. Though not specific to Kansas, the more the Trump NLRB changes the way the agency operates, the more favorable to employers the agency is likely to become.
In Kansas, it is critical for entities to properly classify their workers. Employee misclassification can have serious consequences under a variety of federal and state laws, including laws governing payroll taxes and tax withholding, payment of wages, employee benefits, workers’ compensation, and unemployment benefits. Entities seeking to utilize independent contractors must be aware of, and comply with, federal and Kansas laws regarding worker classification.
In determining the proper classification of individuals, Kansas courts often look to the employer’s right to control the manner and means of performance, whether exercised or not, as the most important factor in determining the type of employment relationship. If an employer retains the right to control the manner and means of performance, this generally signifies an employer-employee relationship. This is true even when the employer and the individual enter into an agreement identifying the relationship as that of an independent contractor. Though “right to control” is typically the primary factor considered, depending on the statute or claim in question, there are somewhat different considerations for determining whether an individual is an employee or an independent contractor.
Under the Kansas Wage Payment Act, courts evaluate whether an individual is an independent contractor or an employee by using a 20-factor test, focusing on whether the employer retains the right to control the manner and means of performance. For workers’ compensation purposes, Kansas courts consider the particular facts of the case to determine the proper classification, including analyzing whether the employer retains the right to control the manner of performance, whether exercised or not. In some limited instances, an employer may be a “statutory employer” for workers’ compensation purposes.
Under the Kansas Employment Security Law, “employment” is defined as: “service ... performed by: ... (B) any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has a status of an employee subject to the provisions of subsection (i)(3)(D)...” (K.S.A. § 44-703(i)(3)(B)). Subsection (i)(3)(D) then provides that “[t]he term ‘employment’ shall also include: ... (D) Services performed by an individual for wages or under any contract of hire shall be deemed to be an employment subject to this act if the business for which the activities of the individual are performed retains not only the right to control the end result of the activities performed, but the manner and means by which the end result is accomplished” (K.S.A. § 44-703(i)(3)(D)). The Secretary of Labor determines the proper classification of workers for the purposes of Subsection 703(i)(3)(D) by looking at the totality of the circumstances. First, the Kansas Secretary of Labor determines whether the entity had a reasonable basis for its classification of a worker. If yes, the classification should be found valid; if no, the Secretary then analyzes an eight-factor test to determine the proper classification of the worker, with the right to control being the overarching consideration.
Kansas employers who misclassify their workforce face potentially significant liability under the respective laws governing employment taxes, tax withholding, wage payment, employee benefits, etc. As discussed in 1.1. "Gig Economy and Other Technological Advances, with the growing number of workers entering into alternative employment arrangements, entities doing business in Kansas need to ensure they properly classify such “gig” workers. Employers should also stay apprised of the trends in federal and state litigation across the country regarding the classification of “gig” workers. Preemptively seeking advice from knowledgeable legal counsel may alleviate some of the risks of misclassification.
Kansas is an at-will employment state, subject to a number of exceptions, including the following:
Employers in Kansas can always modify the presumption of an at-will relationship by entering into an employment contract with an employee. Employers can also encounter liability issues for breach of an implied contract related to provisions in an employee handbook, oral promises, and established policies, if such policies or promises make clear the employer’s intention to enter into an enforceable agreement. Employers can mitigate this risk by including a clear disclaimer in their handbooks stating that employment is at-will. Where employees are subject to a collective bargaining agreement, the terms and conditions of the agreement define the terms and conditions of the employment relationship.
In addition to consequences for failing to follow federal immigration laws, Kansas employers can face potential criminal penalties for knowingly employing illegal aliens. Such penalties, however, do not apply to aliens who initially enter the United States illegally but are then permitted to remain in the United States pursuant to federal law. Furthermore, it is not an unlawful practice for an employer to refuse to employ any person who does not meet federal or state security requirements under any federal or state statute, or pursuant to a presidential or governor’s executive order (see K.A.R. § 21-31-4). However, the Kansas Wage Payment Act, like the federal Fair Labor Standards Act, requires Kansas employers to pay undocumented workers all wages actually earned.
In addition to any requirements imposed by the National Labor Relations Act (NLRA) and other federal labor statutes, Kansas law guarantees private employees the right to organize, strike, and bargain collectively. However, as discussed in 1.3 Decline in Union Membership, Kansas is a “right to work” state, which means that employees cannot be denied employment based on union membership or non-membership. Entities doing business in Kansas need to recognize the rights of employees to collectively bargain and organize. This is an area of the law worth following, as some special-interest groups have made a renewed push to diminish the rights and capabilities of both private and public unions. Given the current composition of both the United States Supreme Court and the National Labor Relations Board, significant changes regarding the right to collectively bargain have begun, and are likely to continue.
Many of the restrictions and rules placed on the interviewing process in Kansas largely track federal requirements under the Americans with Disabilities Act. Under both Kansas and federal law, employers cannot make medical inquiries or ask about physical or mental impairments at the pre-offer stage, except where the applicant makes a request for a reasonable accommodation to participate in the hiring process. Employers can make medical inquiries after an offer is made, however, so long as they make the same inquiries for every applicant for the position. In the interview, employers are limited to asking whether the applicant can perform the essential functions of the position with or without a reasonable accommodation, including asking the applicant to give a demonstration or verbal description of how he or she would perform the essential job duties – again, so long as such questions are asked of every applicant.
In addition to the rules on drug and alcohol testing contained within the Americans with Disabilities Act, Kansas law permits public employers to test applicants for certain safety-sensitive positions, with notice, after a conditional offer is made. Likewise, once a conditional offer of employment is made, private employers may require applicants to take a drug test, so long as the employer requires everyone in the same job category to take the test and keeps the results confidential.
Kansas also places additional state-specific rules and restrictions on employers during the interview process regarding the types of tests and questions to avoid. For example, Kansas employers cannot do the following:
Except in very limited instances where gender is a bona fide occupational qualification, employers cannot ask questions about an applicant’s gender, including making hiring decisions based on gender stereotypes or relying on customer or co-worker preference. Employers must also refrain from asking applicants about their marital status, pregnancy, or family responsibilities, and should not ask applicants questions about their age or religion (absent a bona fide occupational qualification).
Private employers can ask applicants to submit to a background check, including arrests and convictions, to determine the applicant’s fitness for employment. Private employers may also decide to enter (or not to enter) into an employment relationship with applicants based on knowledge of their criminal history, so long as the conviction or arrest that led to the employment decision has a reasonable bearing on the applicant’s fitness for employment. However, employers are advised to refrain from asking about arrests during the interview. As discussed in 1.2 "Me Too" and Other Movements, Kansas public employers cannot ask applicants to disclose criminal history on their application.
It is generally permissible to use credit reports when hiring a new employee and/or evaluating employees for promotion, reassignment, or retention, if the employer follows the requirements of the federal Fair Credit Reporting Act of 1997. Even so, using credit reports to make employment decisions could open the door for a disparate impact action to be brought against the employer, depending on whether the use of such reports adversely impacts applicants within a particular protected category (eg, race, national origin, disability, sex, religion, etc). Employers are also restricted from asking applicants at the pre-offer stage of the hiring process whether they have made any previous workers’ compensation claims.
The hiring process is sown with potential landmines for employers, so an entity’s interviewers should be trained on the various federal and state legal requirements and come to the interview fully prepared.
Kansas courts will generally enforce a restrictive covenant in an employment agreement if it is reasonable under the circumstances. To be enforceable, the restraint against competition or solicitation must:
Generally, the attitude of Kansas courts is that parties have freedom to contract, and that a court should honor and enforce the contract when it is not illegal or unreasonable. Non-compete agreements are strictly construed against the employer. Kansas law authorizes courts to modify restrictive covenants to the extent reasonably necessary to make them enforceable and carry out the parties’ intentions. A non-competition clause is unreasonable and unenforceable if its sole purpose is to avoid ordinary competition; such a restraint must be justified by the need to protect a legitimate business interest. Examples of legitimate business interests include customer contacts, special training of employees, trade secrets, confidential business information, loss of clients, goodwill, reputation, seeing that contracts with clients continue, and referral sources. A clause preventing competition for two years has been upheld. Kansas courts consider that an employer’s continuing employment of an employee may be sufficient consideration for a non-compete agreement to be enforceable.
Kansas law defines a trade secret as information – including a formula, pattern, compilation, program, device, method, technique, or process – that derives independent economic value, actual or potential, from not being generally known, and is the subject of reasonable efforts to maintain its secrecy. If employers comply with federal law governing privacy, compliance with Kansas law should not be an issue. Kansas law governing eavesdropping and breach of privacy regulates employee monitoring. Kansas is a one-party consent state for recordings, does not regulate drug testing for private employers, and has no law limiting employer access to employees’ personal online accounts or personal electronic devices.
The Kansas Act Against Discrimination (KAAD) expands protections against discrimination based on race, religion, color, sex, disability, national origin, ancestry, or military membership to apply to all private employers with four or more employees. Similarly, the Kansas Age Discrimination in Employment Act applies to all private employers with four or more employees and protects all employees who are aged 40 or older. The KAAD also prohibits discrimination against married women and single mothers. There is no state law prohibiting discrimination based on sexual orientation or gender identity by private employers. Kansas law prohibits discrimination and retaliation against an employee who is a victim of domestic violence or sexual assault for taking time off work to obtain a restraining order, seek medical attention, obtain services from a domestic violence program or rape crisis center, or make court appearances.
By state law, the Kansas Department of Labor is authorized to visit any place of business to examine the sanitary conditions of the building and the methods of protecting employees from danger. The Department relies on OSHA regulations. If unsafe conditions are found, the Department is authorized to order appropriate safety measures, after notice and a hearing. Violations are subject to a fine of $25 to $100. The Department also provides employers with compliance assistance on request.
Workers' compensation benefits are paid at the employer’s expense in Kansas, with coverage beginning on the employee’s first day on the job. Kansas workers' compensation law covers all employers in the state, regardless of the number of employees, except for those in certain agricultural pursuits or those with a gross annual payroll of $20,000 or less. Employees who are disabled due to a job-related injury or illness are entitled to medical expenses and a portion of lost wages. If death results from a job-related injury or illness, benefits are paid to survivors. Employers must comply with the law by buying workers' compensation insurance, demonstrating they are self-insured, or joining a group-funded pool; intentional failure to comply is a misdemeanor, with a civil penalty of up to $25,000. Insurance premium rates are regulated by the Kansas Insurance Department based on several factors, including type of business, past claims, and payroll size. In 2016, Kansas had the 10th lowest premium rate among the states. Employers are entitled to choose the treating physician. Generally, the benefit for total disability is two-thirds of average wages, up to a lifetime cap of $155,000. For partial disability, the benefit is generally two-thirds of wages for permanent injuries, paid for a number of weeks as specified in the workers' compensation schedule.
Kansas courts recognize claims for breach of implied contract based on provisions in an employee handbook that signal the employer’s intent to create an enforceable agreement, such as clear entitlement to a progressive discipline policy or a policy providing for termination only for cause. Employers may avoid implied contracts by including a clear disclaimer of any intent to create a contract and a statement that employment is at-will. Handbooks should also state that policies are discretionary and subject to change at any time.
With respect to insurance continuation, Kansas law applies if there is no federal COBRA coverage, such as for employers with fewer than 20 employees. Kansas requires that an employee and dependents are entitled to continued health insurance coverage for 18 months after group coverage is terminated for any reason if the employee was covered for the previous three months. Continuation is required on hospital, surgical, major medical plan, and HMOs, but not for individuals covered by federal COBRA to the extent that COBRA provides better coverage. Unlike federal law, Kansas requires continuation even if group coverage is discontinued in its entirety. Employees may opt for a conversion policy at the end of the continuation period.
Kansas is an employment at-will state, unless an employment agreement exists. No severance pay is required, unless provided for by contract. Kansas has no state law similar to the federal WARN Act governing reductions in force. Kansas law requires food producers, clothing manufacturers, fuel mining companies, transportation companies, public utilities, and common carriers to apply to the Kansas Secretary of Labor for permission to limit or cease operations.
Generally, the attitude of Kansas courts is that parties have freedom to contract, and that a court should honor and enforce the contract when it is not illegal or unreasonable. Kansas law also recognizes oral contracts and contracts implied by an employer’s conduct or provisions in an employee handbook.
Before filing suit under the Kansas Act Against Discrimination, an employee must file a charge of employment discrimination, harassment, or retaliation with the Kansas Human Rights Commission or the Equal Employment Opportunity Commission, within 180 days. The damages available under the Kansas Act Against Discrimination do not differ significantly from federal law, although Kansas law limits damages for pain, suffering and humiliation to $2,000.
Claims for unpaid wages are governed by the Kansas Wage Payment Act. An employee may seek relief either by filing suit in any court of competent jurisdiction or by filing a wage claim with the Kansas Department of Labor. Willful non-payment of wages may be penalized at a rate of 1% of the unpaid wages per day, up to 100% of the unpaid wages. Kansas law does not provide for an award of attorney fees for a prevailing employee in a wage claim.
Kansas courts recognize a common law retaliatory discharge claim for whistleblowing. An employee has a valid claim if he was discharged because he made a report to law enforcement or management regarding a serious violation of a rule, regulation, or the law pertaining to public health, safety, and the general welfare. Even if the employer did not actually violate the law, an employee is protected if a reasonably prudent person would have concluded that a violation occurred. An employee must also show that the employment decision-maker had knowledge of the employee’s reporting of such a violation before discharging the employee.
The Kansas Human Rights Commission offers a third-party mediation program statewide through Kansas Legal Services for the mediation of charges of discrimination, harassment, or retaliation in violation of Kansas law. Early mediation is an alternative to the agency conducting a complete investigation. If the parties choose not to mediate, or if mediation fails to result in a settlement, then the complaint may be sent to the KHRC for investigation. The Kansas Division of Workers Compensation similarly offers professional mediation free of charge at any point during the workers' compensation process. Mediation is not mandatory, nor a prerequisite to a hearing, and is conducted by specially trained employees of the Division of Workers Compensation. Mediation may be done in person or by video conferencing. Many state court judicial districts have a local rule requiring alternative dispute resolution at the earliest appropriate opportunity. By local rule, federal courts in the District of Kansas will discuss mediation as part of the scheduling conference and, in most cases, will direct the parties to mediate their dispute with a private mediator at the earliest appropriate opportunity.
Kansas law does not differ significantly from federal law.
The Kansas Act Against Discrimination allows for reinstatement, back pay, front pay, court costs, and up to $2,000 in damages for pain, suffering and humiliation in claims alleging discrimination, harassment, or retaliation. It does not provide for punitive damages or an award of attorney fees in employment actions. The Kansas Wage Payment Act allows for an award of lost wages, plus a penalty of 1% per day for willful nonpayment, up to 100% percent. It does not provide for attorney fees for a prevailing employee.
There is no information relevant to this section.