Preventing Employment Litigation
If you are an owner or manager of a business, you undoubtedly have employees, or may have some in the future. That means that there is the potential for employment litigation. In Arizona, you are a covered employer for sexual harassment purposes if you have one employee. Generally, employers with five employees or more are covered by either local, state or federal laws.
So how do you prevent your employees from suing you? The short answer is: you can’t. When I use the term “sue,” I include charges of discrimination with agencies like the local human rights agencies, Arizona Civil Rights Division of the Attorney General’s Office (ACRD), the federal Equal Employment Opportunity Commission (EEOC), the U.S. Department of Labor (DOL) and the National Labor Relations Board (NLRB). To file a charge against you, the employee pays nothing. You, on the other hand, are faced with thousands of dollars in defense costs.
We know that preventing lawsuits is next to impossible. Yet many companies never get sued, while others seem to attract discrimination claims like a magnet. One reason is that many employees see their employer as generally unfair, playing favorites, not being consistent in application of policies, allowing a hostile work environment, etc. Many times, these perceptions are wrong. But, their perception is their reality.
Just by citing the above perceptions, you get a short answer on preventive strategies: consistently apply all policies; do not allow a hostile work environment with sexual or racial overtones; treat each employee the same in similar circumstances; and communicate frequently with your employees on company policies, especially as they change. Many companies provide an annual “overall compensation” report to their employees. This report consists of the employee’s salary, but also what the company pays for worker’s compensation, any benefits; monetary value of Paid Time Off (PTO), etc. Most companies contribute on average 25-30% of their employees’ base pay in benefits. This report is generally an eye opener.
Another way employers minimize litigation is to let every employee know what’s expected of them. That means accurate job descriptions, advance notice of policies and, of course, the actual practice of consistent application of the policies.
But let’s assume you are engaging in all the “best practices,” and you still receive a charge from the EEOC. Don’t panic, because you have everything accurately documented, right? Oh, you don’t? You let discipline slide; you didn’t document anything until you terminated the individual? You treated employees differently, but with no documentation? If your experience dictates a yes answer to some or all of these questions, your human resource practices need a makeover, starting with a concise handbook applicable to all equally – no favorites.
Documentation is the key to winning any lawsuit or charge. It is imperative. Let’s not forget who our jurors are in the employment trial; they are generally employees. And jurors/employees want to see that you treated your employees fairly. They almost always look for fundamental fairness in whatever action you took. That includes documentation of what, why and when you took the action complained about. Even a termination, if well documented, can be a winner in court.
Litigation is an extreme remedy for most employees. And for employers, litigation means that you have to produce every single piece of paper and electronic transmission regarding that employee to the employee’s lawyer. This is time consuming and expensive. Therefore, the best you can do is to engage in some employment practices that will minimize employee lawsuits:
Have policies and job descriptions and publish them to all employees, managers and owners – people need to know what’s expected of them.
- Do not play favorites (even with relatives), apply all policies consistently.
- Do not allow a hostile work environment. Even though it is not illegal, it is not all right to have a jerk for a boss. This is especially true if the hostile work environment is on account of the employee’s race, color, gender, age, etc. Enforce your EO policies.
- Document, document, document. The goal of every corrective action (aka discipline) is to change workplace behavior. It is not to “punish” employees. But every corrective action must be documented.
- If necessary, terminate employees who are not performing to your reasonable standards.
- Let employees know how they are doing in their job performance on a regular basis. Termination for poor performance should never come as a surprise to the employee.
- Treat your employees with respect — they are your greatest asset, but can turn into your greatest liability.
- Train managers and supervisors on your policies.
Following these simple rules will not “eliminate” employment lawsuits, but they will minimize the risk.