Labor and employment-related legal actions are weighing heavily on the minds of many senior executives. By focusing on proactive and preventative steps, employers can avoid liability and the resulting claims. Employers often make choices and decisions that have consequences; but we can learn from our mistakes. The following are a few of the mistakes employers commonly make and how to minimize, and even avoid, the risks of employment-related litigation.
Mistake 1. Relying on the “At-Will” employer status. The mistake is believing, and acting on the belief, that the employer has a right to safely hire and terminate an employee “at-will,” with or without a cause, so long as the employer’s decision or action does not violate a law protecting applicants and employees. In most states and in most situations, the employer usually does have “at-will” rights, provided they are communicated to applicants and employees. A disclaimer that the employment is “at-will” should be clearly stated in the employment application or employee handbook.
The trap: Failing to properly declare your at-will rights. The trap is not listing the proper disclaimer in the application form or employee handbook. Then when an employee is fired and an employer asks us to defend them, we ask, “let’s see the application; let’s see the employee handbook that has a disclaimer.” Make sure you have these at-will disclaimers in the application form and the employee handbook, and make sure that employees actually sign them.
Mistake 2. Being vague about the rule or policy violated. Often employees get terminated “for violating a company rule” or for”failing to follow a company procedure.” Then, when the employer is pressed at a deposition to point to the language the employee violated,the employer has difficulty citing an exact rule or policy.
In one recent case a company fired someone because they violated an employee discount policy. I asked, ‘Where is the policy?’ I was told, ‘Everybody knows it.'” That kind of response is not enough to stand behind in court. When you terminate someone for violating a policy, that policy ought to be in writing.
The trap: Many times the failure to have a policy in writing results in the inconsistent application of discipline, which is how people win discrimination claims.
Mistake 3. Talking too much. What you say will get you into trouble. Remember the World War II slogan for keeping home front secrets from the enemy, “Loose lips sink ships.” In recent years, this mistake has made its way into electronic comments that management and supervisors make about employees and applicants. Often, some one will say of an employee, “He’s close to retirement,” and then a month later the employee gets laid off or restructured.
The trap: The point is that nothing is truly confidential. If you tell someone, they tell someone, or someone forwards an e-mail that you sent to me, and I’ll forward it to someone else. Now what you thought was personal or private is the basis of a lawsuit.
Mistake 4. Letting emotions, rather than rational analysis, drive your actions. The mistake is letting your emotions or personal stake in a situation drive your decisions. If it doesn’t make sense to your lawyer, it’s not likely to make sense to a judge or jury.
A classic example is when an employee is fired for poor performance. When we looked at the evaluations, they were all satisfactory or above. This was the quote from the manager, ‘Well, satisfactory doesn’t really mean satisfactory.’ Would you like to explain to a judge or jury why a word doesn’t imply its own definition?
Mistake 5. Digging in, stonewalling, never settling… until forced to do so. This is another example of Mistake 4. When an employer is hit with a legal action, it’s a mistake to react with the knee-jerk decision, “We’re never going to settle this; we’re going to fight it all the way.”
When you’ve made a mistake, take ownership of it.
The trap: The failure to not have an impartial and objective analysis of what you’ve done can be highly detrimental in court. This failure will cause you to ultimately settle and give up on the case, sometimes shortly before trial—gaining you nothing more than an often-costly expenditure of both time and legal fees. Honesty and the quick resolution of a legal dispute involving an applicant or employee may actually be the best remedy.
Mistake 6. Documenting to the extreme. This is a significant liability caused by some supervisors and managers who are super conscientious about writing down every little supposed transgression of an employee and putting all these notations in the employee’s file. You can take “document everything“ too far.
Oftentimes, people who are not lawyers write people up extensively, and they’re often factually and legally wrong about what they write. If you’re going to document something, make sure that you’ve got all of the facts straight and that you stay away from opinions and emotional stereotypes—especially in e-mails, texts and even comments on your MySpace or Facebook account.
Mistake 7. Trying to disguise what looks like a retaliation. Timing is everything. A typical example involves an employee who makes a complaint about a violation of a state or federal regulation or law. Then three days, or a week, or a month later, the club terminates the employee. This has the appearance of retaliating against the complaining employee—a trap that may trigger litigation.
Mistake 8. Misusing the English language. One example is firing an employee for “a bad attitude” when in fact the problem isn’t attitude at all … the cause would more accurately be disruptive behavior at work that interferes with work performance.
A classic example is the incorrect use of the word insubordination as the reason why an employee was terminated. Make sure that the word you use accurately describes the employee’s actual conduct. Not following safety procedures or running equipment incorrectly is not insubordination.
Mistake 9. Taking “good will” too far … or “fear of firing.” In other words, failing to terminate an employee even long after the employee has outworn his or her welcome. It happens, for example, when you give a poor-performing employee not just one or two more chances to shape up, but five, six, eight or nine more chances, and still put off terminating him or her.
When someone is not performing and not doing their job, objectively and meaningfully address it. Too many second chances can end up being the supervisor’s enemy.
Mistake 10. Hiring on the fly. Some people hire employees without careful thought. What are you hiring this person to do? Does this person meet your needs? Are you doing a background check? Did you have them fill out a job application? Were they really qualified for the job?
We’ve had several cases in the last few years where people were relying on the applications for accurate information about the person’s skills and education. Then problems developed. The classic comment among the managers is, “I knew I shouldn’t have hired him.”
Of course, there are an incredible number of things of which employers need to be wary, but hopefully you’ll be a bit more aware of some of the most common mistakes employers often make. Being watchful and proactive can help prevent your club from falling in to some of the most common, and often easily avoidable, traps that trigger litigation.
Information and guidance in this story is intended to provide accurate and helpful information on the subjects covered. It is not intended to provide a legal service for readers’ individual needs. For legal guidance in your specific situations, always consult with an attorney who is familiar with employment law and labor issues.
Michael W. Hawkins is a partner at Dinsmore & Shohl in Cincinnati, Ohio, representing private and public sector employers, as well as public and private membership groups in all aspects of employment law including defense of claims before the EEOC, state fair employment practice agencies and in state and federal court.
Sidebar: Still More Litigation Traps
By Michael Hawkins
New laws and subsequent developments in recent years have created additional risks for employers, with new mistakes triggering new labor-related and employment-related litigation traps. Consider some of the additional traps that could trigger claims against your club:
Having inadequate or no job descriptions. Not defining specific Essential Functions and Essential Qualifications in a job description can be a litigation risk.
How are you going to demonstrate that a person can or can’t perform essential functions of the job if you don’t have a job description? You need to be able to answer this question: What exactly are you hiring someone to do? A job description forces you to have a checklist, and an answer to the question, “Can this person do this job?”
Remote, telecommuting, at-home employees. Telecommuting, remote employees may create difficulty in ensuring compliance with wage and hour pay requirements for nonexempt employees.
An employer who is having individuals work from home, on the road, or in a nontraditional work setting needs to establish clear policies on work time and have the employee reporting actual hours worked. That way the employer can be in a position to monitor abuses or excessive hours worked. We often see employers who don’t have a policy or any reporting, and just pay a salary. The law requires that you, the employer, keep a time record for non-exempt employees.
Nonexempt employee use of electronic communications. If someone is performing work through the use of a laptop or other electronic communication devices, and they’re nonexempt, the law requires you to compensate them for those hours. We’ve advised some employers, where the company has issued a Blackberry or a laptop, that they specifically instruct employees not to use them during non-working hours.
Oftentimes, employees are receiving and responding to e-mails or leaving numerous voice messages. The supervisor has to document the policy and remind the employees that this type of activity outside of work hours is not allowed.
Sidebar 2: Top Areas of Litigation
The “Litigation Trends Survey Report” finds that 26 out of 100 employers expect to face an increased number of legal disputes in 2011. The annual survey from the law firm Fulbright & Jaworski, LLP, reported results from 403 respondents: 275 in the United States and 128 in the United Kingdom.
Respondents in the U.S. identified the following top areas in which litigation is currently pending: (Percentages add up to more than 100 because respondents could pick more than one type of litigation.)
- Contracts, 53 percent;
- Labor and employment, 49 percent; and
- Personal injury, 27 percent.
Which three areas of employment litigation create the most financial exposure for a company? The respondents chose these:
- Wage and hour, 33 percent;
- Age, 33 percent;
- Race, 31 percent;
- Harassment, 24 percent; and
- Gender, 23 percent.