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Why Community Associations and Property Management Companies Need to Be Concerned About Employment Laws and the Need to Establish Sound Written Employment Policies

Lerch, Early & Brewer's Community Association Update

One of the biggest, if not the biggest, myths that I hear perpetuated in my practice is that so called “small” employers (for purposes of this article, those with fewer than 15 employees), such as homeowners, condominium and cooperative associations who employ staff, are not subject to the applicable employment laws and, as a result, that they need not worry about establishing appropriate written policies. These assumptions are wrong, and dangerously so. Homeowners and condominium associations (as well as property management companies), and their advisors would do well to keep in mind the following:

1. There is no “safe haven” for small employers to discriminate. Insofar as the employment laws are concerned, for all practical purposes, there is no such thing as a “small” employer. To be sure, in order to be subject to certain federal employment laws employers must have a certain number of employees (i.e. employers must have at least 50 employees to be subject to the Family Medical Leave Act). That said, there are numerous analogous state and local laws to which small employers are subject. In short, there is no safe haven for small employers to discriminate or to fail to compensate employees appropriately.

2. Small employers face disproportionate liability. One of the anomalies of the employment laws is that in many instances, small employers face disproportionately greater liability than do larger employers. For example, “larger” employers are subject to Title VII where there are caps on compensatory damages based upon the size of the employer. There are no similar caps or ceilings on compensatory damages for smaller employers.

3. Employment documents are necessary for small employers such as homeowners, condominium and cooperative associations. The same holds true for management companies. Smaller employers tend to operate more informally, at least insofar as interactions with employees are concerned. Accordingly, many employers believe it would ruin their chemistry if written policies were implemented and adopted. Once again, in my experience, the myth does not match reality. The fact of the matter is that small employers do not need to have 50 page employment handbooks or ten page restrictive agreements in order to be effective. Rather, smaller employers can have handbooks in the 12 to 18 page range that can be perfectly effective depending upon the employers’ size and industry. The important point is that the existence of sound employment policies that are followed on a consistent basis can go a long way to defending against claims of, among other things, discrimination and harassment. By the same token, the opposite is also true; namely, the absence of these policies can often operate to prevent small employers from successfully defending many types of employment claims.

4. Training for employees on employment related matters makes good economic sense. It is no great surprise that small employers who believe that there is no need to have written employment policies likewise believe there is no need for training to be conducted for employees for such things as harassment, or manager training to address how to appropriately discipline employees. Once again, in my experience, the opposite is true. Increasingly, courts are expecting employers of all sizes not only to adopt sound employment policies, but to conduct basic training to ensure that the employment laws (and the employer’s policies) are being followed properly. A modest amount of time spent on anti-harassment training, for example, can be very effective in not only preventing harassment claims from being filed in the first instance, but also positioning small employers to defend such claims if they are filed. Similarly, employers that spend a modest amount of time training managers on how to interview effectively and lawfully, as well as how and when to appropriately document performance issues (and handle employment terminations if necessary) can improve employee morale and employee relations, both of which are important factors in preventing employment claims from being filed.

5. Insurance. Homeowners, condominium and cooperative associations should consider acquiring insurance to guard against the existence of employment claims that often are excluded from general liability policies. Of course, this is an issue which should be addressed with an experienced agent/broker to make sure that the policies which are considered are both appropriate and cost-effective. That said, associations (as well as management companies that work with these associations) should make consideration of insurance for employment claims a priority, rather than an afterthought.

In summary, the courts and administrative agencies are cluttered with employment claims made against “smaller” employers who assumed, incorrectly, either that the employment laws did not apply to them or that it was not necessary for them to adopt sound employment policies and conduct basic training on employment matters. In addition to saving thousands of dollars in attorneys’ fees and costs and untold tens of thousands of dollars in legal exposure, employers that establish sound employment policies and conduct training for employees on employment related issues will reap the additional benefits of (i) improving the retention of a valued employees; (ii) saving hundreds of hours of time which can be devoted more productively to their business and customer needs; and (iii) distinguishing themselves as dynamic, interesting, and rewarding places to work.
 

Marc Engel advises clients on employment issues, litigates employment and business disputes,and counsels companies and organizations on litigation avoidance strategies. For more information on how employment laws apply to homeowners associations, condominiums and property management companies, contact Marc at mrengel@lerchearly.com or (301) 657-0184.

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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