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8 Steps Employers Should Take To Improve Personnel Practices and Reduce the Risk of Litigation

Lerch, Early Legal Update

In these demanding times, all employers can use the opportunity to take a fresh look at existing practices and to commit to new, proactive approaches to personnel matters. Eight actions that employers should consider taking immediately are:

1. Understand and respect the current reality.

Employers may acknowledge that stale, inaccurate or incomplete policies and procedures often are a prescription for morale problems, deteriorating profits, and an increased risk of litigation activity, but still fail to take action. Those who assume that all employees should be grateful to merely have a job may be literally correct, but they also may witness talented and valuable employees leave once the economy turns or the next best opportunity arises.

2. Keep current on employment laws and amendments to existing laws.

Since the 2008 election, there has been a wave of amendments to existing employment laws (including the Americans with Disabilities Act, the Family and Medical Leave Act, and COBRA), as well as the implementation of new employment laws, including the Lilly Ledbetter Fair Pay Act (the first bill signed by President Obama). Taken together, these amendments and new laws expand the rights of employees and magnify the challenges that employers face in disciplining and terminating poorly performing employees. Many states probably will adopt analogous laws and regulations that mirror what is transpiring at the federal level. Stay informed!

3. Review pay procedures.

Federal and state wage hour laws are an expanding trap for the unwary. Unlike many anti-discrimination laws, wage hour laws for employers contain relatively few defenses and can be unforgiving and expensive for employers. Wage and hour and wage payment claims are on the rise.

Employers should

(i) make sure that job descriptions actually reflect the work being performed by employees;

(ii) create (or revise) descriptions and the actual duties of the employees in light of the applicable federal and state exemptions to overtime requirements; and

(iii) develop clear and unambiguous compensation policies which specify, among other things, when a commission or bonus is earned and when it is due to be paid.

4. T rain managers (and continue to train managers).

Unfortunately, many managers are not skilled at managing employees, and are afraid to acknowledge that fact and seek assistance or support. Training helps managers to better understand, among other things,

(i) why employment matters arise;

(ii) the importance of addressing performance issues early, before they metastasize; and

(iii) the need to use human resource professionals as allies.

Successful companies realize that the cost of replacing employees can be very expensive and that training is an ongoing process that should be an organizational priority.

5. Learn how to conduct layoffs legally and with dignity.

Regrettably, even the best employment practices may not forestall the need for layoffs as the economic downturn continues. Too many employers wrongfully assume that because the vast majority of employees are “at will,” that layoffs can proceed with little thought. This is a dangerous misconception! Layoffs, if large enough, can trigger obligations at the federal level under the Worker Adjustment and Retraining Notification Act (WARN).

On a smaller scale, layoffs can and do trigger potential discrimination and other claims under various federal and state employment statutes, particularly if handled improperly. Employers, preferably with the assistance of counsel, should develop a layoff methodology that, among other things, accounts for a global analysis of the issues (i.e., Is there a need for layoffs? What departments will be affected?), as well as the specific impact of the layoffs on employees who are members of protected employment categories.

Just as significantly, employers should understand the importance of handling layoffs with grace and dignity. Many employees file claims, or threaten to do so, because they perceive that they have been treated unfairly or without respect.

6. Commit to regular anti-discrimination and anti-harassment training.

Employees continue to file discrimination and harassment claims at an alarming pace. To a significantly large degree, the principles associated with sexual harassment claims are increasingly being applied to harassment based on other forms of impermissible conduct (i.e., disability, race, etc.). Employers should have effective and sound harassment policies, and should commit to conducting regular and meaningful harassment training for all employees. Such training, if conducted properly, can be one of the most valuable forms of employee training.

7. Dispel the myth that “small” employers do not need written employment policies.

Among the popular misconceptions of business owners is that small employers do not need to have written employment policies. Nothing could be further from the truth! Local and state employment laws routinely apply to very small employers. For example, one of the anomalies under Maryland employment laws is that small employers often are exposed to higher verdicts than larger employers. Issues concerning payment of wages; allegations of discrimination and wrongful termination; and whether and to what extent restrictive agreements are binding, are common for small employers.

8. Act now!

The new White House administration and administrations in many states across the country have created initiatives for increased and vigilant enforcement of employment laws. Local agencies are increasingly receiving greater funding. In Maryland, for example, under relatively recent amendments to state anti-discrimination laws, employees now have the ability to bring employment claims in forums which they perceive to be much friendlier–namely, local and state courts.

Employers who commit to addressing employment issues head on and in a proactive fashion–even in this challenging economic climate–will reap the benefits of doing so. These benefits routinely include improved morale, fewer employment claims, the retention of valued and talented employees, and increased profitability.

Marc Engel advises clients on employment issues, litigates employment and business disputes, and counsels companies and organizations on litigation avoidance strategies. He also mediates employment and civil litigation matters. Marc may be reached at mrengel@lerchearly.com or (301) 657-0184.

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This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.

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