Rising fuel and insurance costs. A slowdown in the economy. Increased competition. The day-to-day tasks of attracting customers and servicing their needs. With all your responsibilities, it is little wonder certain nuances of employment law sometimes slip through the cracks. But this does not have to be the case—many violations can be avoided with a little forethought. What follows is advice for avoiding 10 of the most common mistakes employers make regarding their employment practices.
1. Questionable wage and hour practices
Class-action lawsuits related to wage and hour violations now outpace lawsuits involving employment discrimination claims. This trend has been fueled by recent changes to federal overtime regulations and state wage and hour laws, resulting in a dizzying number of costly wage actions for employers.
Employees (and their lawyers) are becoming increasingly aware of their rights under applicable federal and state wage and hour laws and suing to ensure they are paid properly. Such suits are particularly costly because many employers are ill-equipped to disprove an employee's claim and the law requires employers to foot the bill for any successful action by an employee.
Now more than ever, it makes business sense for you to learn about the potentially far-reaching and costly consequences of failing to comply with applicable wage laws. The best way to do this is to conduct an audit to examine existing pay policies and practices to ensure compliance. Whether comprehensive or targeted to a particular issue, an audit should, at a minimum, ask and answer critical questions such as:
Finally, make sure all employees accurately record their hours worked and their paychecks match the hours recorded. Not only are these records required by law to be made and kept (in most instances, two years for time records and three years for payroll records), they also are the cornerstone to mounting a successful defense in a wage and hour lawsuit. In sum, spend the time and resources necessary to ensure your company complies with applicable federal and state wage and hour laws—it will pay huge dividends in the long run. (For more information, see "Beware of the wage and hour investigator," April 2006 issue, page 42.)
2. Administering union contracts
If a union represents your employees, be sure to negotiate a collective-bargaining agreement that will allow your company to operate in the most efficient, flexible manner to provide quality services. Once a contract is negotiated, it should be applied aggressively to protect management rights retained by the agreement.
Supervisors must become and remain familiar with the agreement terms and, through training, learn how to address union stewards and representatives. Obvious contract violations should be remedied promptly. But if no violation has occurred, grievances should not be settled or compromised simply to keep the peace. More important, try to resolve employee problems or concerns before they become formal grievances. A fair but principled approach to contract administration will result in fewer grievances and more saved dollars.
3. Disregarding potential union organizing
If your company is union-free, the potential for a union-organizing drive always is present. The best protection against a successful unionization attempt is to make the union unnecessary. Although employees frequently feel the need for a union to represent them because of uncompetitive wages and benefits, most organizing drives occur when employee dissatisfaction results from a lack of communication, feelings of insecurity, perceptions of unfair or discriminatory application of rules or policies, lack of respect or recognition for contributions, or ignored complaints or grievances. Therefore, paying close attention to employees' social needs is just as important as addressing their economic ones.
Supervisors play a critical role in protecting against unionization because they typically are equated with the company and most employees do not see any other management representatives daily. Make sure supervisors consider issues from employees' perspectives, regularly talk to employees, ask employees' their opinions and listen. Showing a little appreciation and respect can make supervisors the best representatives your employees could have and eliminates the need for a union.
4. Letting performance evaluations fail
Many employers—probably most employers—view performance evaluations as a once-a-year ordeal, producing piles of paperwork, a steady stream of endless meetings and difficult discussions addressing performance issues. Yet, properly used, an effective evaluation process can be a valuable tool for good communication, positive reinforcement of good performance and positive behavior modification.
Performance evaluations should help employers and employees. They can be used to commend and inspire good employees and firmly guide poor employees toward better performance or a rock-solid termination.
How is this accomplished? By putting careful thought into each evaluation; making certain evaluations advance your company's dual goals of rewarding positive performance and identifying substandard performance; and coupling each evaluation with a specific plan for supportive or corrective action.
Even more specifically:
In addition, meet with supervisors just before employee evaluations to introduce these points, discuss how best to use the process and brainstorm about particular employee evaluations. The results will be evaluations that truly are useful in terms of defending against employment claims and establishing a happier, more stable group of employees. (For more information, see "Evaluating employees," September 2001 issue, page 16.)
5. Using unlawful interview questions
Questions as innocent as "Where do you live?" or "When did you graduate from high school?" or "What happened to your ankle?" asked during an interview or on an employment application can spawn a failure-to-hire claim.
Rather than subject yourself to potentially costly litigation, take control of the hiring process. Review every form you use in the process (from applications to interview evaluations) to make sure there are no unlawful questions. The best way to ensure an interview question is proper is to tailor it so it only seeks information that bears on the candidate's job-related qualifications. Questions that stray from this basic mission are much more likely to be unlawful.
Hiring often is left to managers or others who know little about the laws that regulate workplace interviews. Select interviewers who have been trained in the niceties and nuances of conducting meaningful, lawful interviews by a human-resources representative, outside consultant or trainer, or attorney or other qualified provider.
In addition, ask interviewers to take notes during interviews or make brief notes of impressions and decision points after the interview. Documentation often can be your saving grace when it comes to avoiding liability. (For more information, see "An early paper trail," July 2005 issue, page 45.)
6. Not conducting background checks
As an employer, you want to make sure your employees have not provided false credentials or information during the hiring process concerning their work histories, education or criminal records. But background checks are rife with legal pitfalls, and you need to take the necessary precautionary steps to bring them into compliance with applicable laws.
The law controls background checks in two respects. First, the information obtained must be "legally useful." In other words, it must be information the law permits you to rely on when making employment decisions. Most states prohibit employers from relying on an applicant's arrest record, and some even limit the types of conviction information that can be used.
For instance, some states bar information outright for convictions that are "too old" (five to seven years) or contained in records that have been expunged, sealed or impounded. Other laws prohibit employers from freely using information about bankruptcies, wage garnishments or other legal liabilities. It is critical for you to know what is and is not a lawful basis in your state for rejecting an applicant with a questionable past.
Second, the information must have been obtained lawfully.
If you use an outside agency to conduct a background check, the Fair Credit Reporting Act (FCRA) requires you, as an employer, to provide a specific written notice, among other things, to the applicant advising that the background check is being conducted by the third party. It also will entail personal interviews (if applicable) and be considered part of the employment decision. In addition, FCRA requires applicants be given copies of any report generated and of their rights under applicable law, as well as an opportunity to challenge or respond to the information gathered. Many state laws echo and further expand these requirements and frequently change.
With this in mind, review your background checking procedures periodically and make sure the procedures—for your company and any outside agency—and information acquired are up to date and lawful. (For more information, see "Be careful where you dig," September 2005 issue, page 42, and "Under the microscope," January issue, page 30.)
7. Not recognizing requests for protected leave
An employee's request for time off may be protected by federal or state law. More important, the employee does not have to identify or reference the law that protects the time off to gain that law's protection. The question, then, is whether you properly will recognize a request for protected time off.
For example, suppose an employee calls in sick to work on Wednesday, Thursday and Friday, saying she is not feeling well. Those three missed days may count as leave time protected by the federal Family and Medical Leave Act (FMLA) even if the employee does not ask for FMLA leave. If you (or one of your supervisors) proceed to take adverse action against that employee, it may serve as the basis for a wrongful or retaliatory discharge claim.
To avoid this potential liability, review and understand the terms and requirements of FMLA and your other leave policies. Make certain each of your supervisors also reviews and understands those policies and the types of requests that may trigger a protected leave.
Employee leave issues may seem daunting, but they simply are a matter of working through a request in a step-by-step process. Consider the law and the employee's eligibility under any applicable law, as well as your policies and practices. If you do so in every case, using a systematic process, you will be able to make leave determinations with confidence. (For more information, see "Lessons in employee leave," January 2006 issue, page 36.)
8. Ignoring the harassment-claim antidote
Many, if not most, employers have felt the sting of harassment allegations—employees who claim they were subjected to crude language, derogatory nicknames or demeaning slurs. Many employers even have found themselves battling litigation based on such claims. But only a few have taken the time and expended the resources necessary to truly prepare themselves for potential litigation and avail themselves of the "out" the law provides.
According to federal law (which is mirrored by most state laws), employers are allowed a solid defense to most harassment claims simply by adopting, distributing and following an effective policy against harassment and training employees and supervisors concerning its existence and application.
Admittedly, the policy itself must be tailored to the particular workplace; the training must occur at regular intervals; and the employer must be prepared to follow the policy, conduct the necessary investigations and appropriately discipline any violators. These steps take time, but the dividends are certain and many. The result is a more comfortable and professional work environment and effective defense to most harassment claims. (For more information, see "Protection from sexual-harassment claims," September 1999 issue, page R2, and "Understanding racial harassment," June 2002 issue, page 18.)
9. Disciplining without documentation
The most difficult action to defend—in legal and practical terms—is a complaint by an employee who was disciplined without appropriate backup documentation. Practically speaking, employees look for fair and uniform treatment. A supervisor who issues discipline without recording the reason and other details often is unable to recall these crucial details. This can make it extremely difficult to impose uniform, fair discipline for the next employee or offense.
Legally speaking, though there is no requirement that disciplinary action be documented, a proper paper trail often is critical to proving the discipline was imposed for legitimate reasons. Documentation particularly is important because most employees have up to 300 days to complain about any discriminatory or other unlawful action they claim to have suffered. Not surprisingly, the absence of documentation often leads to sketchy reconstructions and "what ifs" that are far less believable than simple but timely recorded data.
So what should you document? Consider the following:
Although you need not have an airtight case in every situation, you should feel confident you adequately can explain the reasons for discipline before an arbitrator, judge or jury. (For more information, see "Making discipline stick," July 2006 issue, page 36.)
10. Disregarding policy
How often do you act based on what your gut tells you as opposed to what a policy might say? Too often, attorneys find themselves defending claims that could have been prevented if an employer merely had paid attention to policies and practices.
Before making any employment-related decisions, check whether your company has a policy that addresses the situation at hand and dictates a certain response. Or, in absence of a policy, is there a way in which similar situations have been handled in the past? In any event, make sure the action you are about to take adheres to the policy or practice or that any deviation is justified.
Keep the 10 in mind
Reading an article cannot absolve you of all your employment woes. But by guarding against common pitfalls, you can save yourself headaches and, most likely, time and money.
Victoria L. Donati and Jason C. Kim are partners in the employment law group with the Chicago-based law firm Neal, Gerber & Eisenberg LLP.
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