A Smart Resolution: 10 Measures Employers Should Take in 2008 to Improve Employment Practices and Reduce the Risk of Litigation
It is sometimes said that the difference between a good organization and an excellent one is its commitment to constant improvement and its willingness to take action. In that spirit, discussed below are 10 effective measures employers should take to establish "best practices" and reduce the risk of employment-related litigation:
1. Take a Fresh Look at Hiring Procedures and Job Descriptions.
Many personnel problems can be traced to bad hiring decisions. Successful employers understand the importance of conducting lawful and effective interviews and appreciate that a uniform, objective hiring process which evaluates candidates on job-related criteria increases the likelihood of a successful hire, and reduces the chances of future lawsuits. Employers should assess why certain employees were successful and why others failed. Success leaves clues. It is my experience that in many, if not most instances, success or failure hinge not on technical competencies, but rather upon personal characteristics, including passion, integrity, dedication, loyalty, willingness to be part of a team, and initiative.
Employers should develop hiring procedures that train managers how to (1) interview, (2) determine what qualities to look for in a candidate, (3) ask the correct interview questions and to avoid the wrong ones, (4) evaluate a candidate’s responses, (5) rank candidates, and (6) obtain meaningful references. Employers should also strive to avoid morale and other problems that arise over misperceived job expectations, which can often be traced to an employer’s failure to clearly define job positions. Job descriptions help employers reduce these misperceptions, properly assess their personnel needs, and establish the necessary technical educational and "emotional" competencies for each position.
2. Train Managers How to Identify and Document Personnel Problems and Why Their Acts and Omissions Can Create Liability.
Time and again, I have found that mid-level supervisors and managers (and often more senior executives) fail to understand how their actions and omissions can expose their organizations to significant liability. Most supervisors, I have found, are afraid to admit what they do not know. Successful employers understand this aspect of human nature and attempt to foster an environment where supervisors can acknowledge their shortcomings and, just as importantly, be taught the best practices for dealing with employees. In this regard, successful organizations have measures in place to evaluate performance based on objective criteria, document employee problems contemporaneously, communicate company concerns with employees, and take measured disciplinary actions. They also train managers how to identify personnel issues before they become larger problems, how to use performance plans, and how to properly discipline employees and avoid retaliation claims. Employers should evaluate supervisors on how well they are managing. Remember, not all employees are suited to be managers.
3. Conduct Anti-Harassment Training for All Employees.
Several years ago, the Supreme Court issued several decisions impacting employers’ ability to protect themselves from sexual harassment-related lawsuits. The Supreme Court held that an employer can be held liable, even though it is not negligent or otherwise at fault, for a hostile work environment created by a supervisor. An employer can defend such a lawsuit, provided that there has been no tangible adverse employment action taken against the employee, by establishing the following: (i) that it exercised reasonable care to prevent and promptly correct any supervisor harassment; and (ii) that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to otherwise avoid harm. The principles set forth in these Supreme Court cases have been applied to other forms of discrimination and harassment.
The Supreme Court explained that this affirmative defense is not available where the supervisor’s harassing conduct resulted in a tangible employment action, such as discharge, demotion or undesirable reassignment, and possibly where the employer does not have an effective anti-harassment policy. Employers should consult with counsel to review their current anti-harassment policy or, if a policy does not exist, to implement one. Employers should also conduct anti-harassment training sessions for all employees and all supervisors/managers; screen applicants for supervisory jobs to see if they have a history of engaging in harassment; and maintain harassment complaint records, checking them whenever a harassment complaint is made to uncover any patterns of harassment by the same individual.
Effective anti-harassment training for all employees is no longer a luxury (if it ever was one). Rather, comprehensive anti-harassment training is becoming the standard of care expected of employers.
4. Review Employee Classifications in Light of Overtime Regulations.
Several years ago, Congress amended the overtime regulations in an effort to resolve much of the confusion that has existed for years regarding whether and when certain types of employees are exempt from the overtime laws. Generally speaking, the new overtime regulations are evolutionary rather than revolutionary, and raise nearly as many questions as they answered. That said, it is nevertheless critically important that employers review the job descriptions and actual duties of employees to determine whether they fall within one or more of the primary exemptions to the overtime regulations – administrative, professional or executive – and to insure that they are being appropriately compensated. In addition to attempting to clarify the criteria for making these determinations, Congress also clarified when deductions could be made to the salary of exempt employees without jeopardizing their exempt status and, in that regard, created certain “safe harbors” if mistakes are made. Consequently, in addition to reviewing and revising job descriptions, employers should revise and update employee handbooks to take advantage of the "safe harbors" created by the new overtime regulations.
5. Review Compensation Plans and Practices.
In addition to assessing the exempt status of employees, employers should also review commission, bonus, and other compensation policies for clarity and to make sure that they comply with applicable law. Commission and bonus plans which condition payment upon an employee being employed with the employer on the date that a payment is to be made are suspect. Furthermore, compensation policies and provisions which fail to specify how a commission/ bonus is to be calculated, when it is to be paid, and when it is earned often result in confusion which can lead to significant employment claims.
6. Review and Revise Technology Policies.
In light of the ever-increasing use by employees of employer-owned computers and other equipment such as cell phones and pagers, it is critically important that employers have policies that protect their legitimate interests. Among other things, computer policies should specifically state the employer's right to monitor the use of employer-owned equipment and state that employees do not have an expectation of privacy when they are using the employer-owned computers even when they access personal e-mail accounts from the office. This policy should also include language regarding the appropriate use of computer systems, and identify the types of behavior that are prohibited (such as using electronic mail to harass other employees).
7. Review and Update Restrictive Agreements.
Restrictive agreements - - including non-competition, non-solicitation and confidentiality agreements - - can be a very effective way for employers to maintain confidential and propriety information and safeguard the goodwill and business interests of an organization. Unfortunately, employers are often penny-wise and dollar foolish when it comes to these agreements -- they often borrow agreements from friends and acquaintances. Restrictive agreements particularly non-competition and non-solicitation agreements, need to be narrowly tailored to the reasonable business interests of the employer. Among other things, such agreements should carefully define the length and scope of the restriction and, in the case of non-solicitation agreements, what is meant by a "client." These agreements should also contain carefully considered remedies and special attention should be paid to selecting the appropriate governing law.
8. Update Employee Handbooks.
A well drafted employee handbook that is properly implemented, distributed and updated can provide many benefits. First, the handbook can affirm the at-will relationship between employee and employer. Second, a handbook acts as a primary information source for employees about company policies including anti-harassment, equal employment opportunities, benefits, job performance expectations, and discipline. Employers should regularly review their employee handbooks at least once a year to ensure that the policies are current with the ever-evolving employment laws. Policies which may be missing from handbooks include an anti-violence policy; a comprehensive anti-harassment policy which prevents harassment on any prohibited basis (i.e., disability, race, religion and not just upon sex); a confidentiality policy; and a computer and technology policy.
9. Consider Utilizing Mediation Early in the Dispute Process.
Despite the adoption of even the best employment practices, employers, if they are in business long enough, may eventually find themselves in a situation where an employee has brought a claim or threatened to bring a claim in connection with some real or imagined hurt or injury. Successful organizations understand this fact of business life and increasingly are willing to consider mediation -- which is a voluntary non-binding process - - as a means of resolving disputes early before positions harden and before employees become emotionally vested in their positions. There are many compelling reasons why mediation is such an attractive and viable option for prospective litigants, including the following: (1) it allows the parties to control the outcome of their dispute in ways that courts and juries are unable to do; (2) it allows individuals to take another look at the problem in a calm and more reflective setting with the help of a trained impartial observer; (3) it enables parties to reveal the pros and cons of their respective cases with a nonjudgmental mediator and in an environment which is conducive to resolving disputes; (4) it allows parties to vent which can often go a long way at arriving at a resolution; (5) it is informative as mediation by its very nature allows parties to shed light on what is truly in dispute and determine whether litigation is justified, economically or otherwise. Finally, in an age where litigation costs are escalating by the day, mediation allows parties to craft their solution to their own problem before the economics of their dispute make an amicable resolution difficult if not impossible.
10. Evaluate Insurance for Employment Claims.
In recent years, insurance companies have begun to offer employment practices liability insurance in response to growing concerns about employer exposure to employment-related claims. Given the recent explosion of employment litigation, employers should consider this type of insurance. As with other types of insurance, employment practices liability insurance requires employers to exert great care to avoid jeopardizing an insurer’s obligation to defend and/or indemnify such claims. At a minimum, employers should pay special attention to (1) documenting when a lawsuit is filed and contacting the insurance carrier immediately, (2) maintaining all relevant records, (3) denying wrongdoing or liability, and (4) establishing a procedure for monitoring the litigation.
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Successful companies understand the importance of identifying workplace performance issues and the value of retaining good employees. They realize that professional opportunities, a collegial environment, and mentoring relationships mean a great deal to good employees and that for them money is not "the end all and be all." Successful employers do not need to be reminded that employees are their most important assets and that employees who feel challenged in their jobs and appreciated by their employer produce better results. They also appreciate that lawsuits are often a response to perceived mistreatment. These same employers are attentive to employee needs, seek input and suggestions from employees, take prompt action to address employee concerns, and commit themselves to constantly improving their employee relations.
In summary, the expression “an ounce of prevention is worth a pound of cure” is particularly never more true than when it comes to taking appropriate measures to reduce the likelihood of employment-related lawsuits. Employers who take this expression to heart and act on it can achieve benefits that translate far beyond the bottom line. In other words, the "resolutions" in this article are well worth keeping.
Marc Engel, an employment attorney at Lerch, Early & Brewer in Bethesda, Maryland, co-chairs the firm’s Employment & Labor group and is a member of its Litigation group. He brings nearly 25 years of wide-ranging civil litigation and counseling experience to his practice, and has represented clients in state and federal courts and before administrative agencies and various arbitration panels. He can be reached at (301) 657-0184 or firstname.lastname@example.org.