If you’re a manager in a big company with it's own Human Resources section, you may think you don’t need to know employment law. After all, if you get into any trouble, you have an entire HR department to back you up.
Alternatively, if you’re a middle manager in a small business with significantly fewer employees, you might believe employment law is irrelevant to you. It’s not as if you don’t have enough on your plate learning new skills and taking on extra responsibilities for the day-to-day running of your department, is it?
You’re not a lawyer or a HR specialist, so why should you ‘waste’ time learning employment law? Surely your job is ensuring employees are productive and helping the company to make money; nothing else really matters, especially if it’s going to take your attention away from that.
If you’ve said any of these things to yourself since being promoted to manager, I have to tell you that you’re wrong.. What’s more, you could be walking into a minefield of issues that could cost you and the company dear if you avoid them.
You see, employment law IS about the everyday. It should dictate how you treat each and every one of your employees, both at interview stage and beyond, every single day.
Whatever location you’re reading this in right now will dictate the exact employment laws that you and the company will have to live by, so I won’t go into those specifically. But let me list some areas employment law IS responsible for and you can have a think whether it intersects with your job or not.
So…. First, interviews; employment law dictates the sort of questions you can and cannot ask during an interview (hint: in some areas you can’t even ask a prospective female employee if she is married.) Asking the wrong questions might just leave you open to claims of discrimination if you then don’t hire that person, no matter what he or she was actually rejected for.
Knowing both company policy and employment law also gives you opportunities within a person’s employment contract to incorporate your desired terms before they actually start working. Here’s the best place to specify probation periods beforehand; if you don’t include it officially, legally it may not count.
Treating employees equally (or fairly, as we said before) is a crucial part of employment law, and contributes to morale as well as to a legally ‘safe’ working environment. In the U.S., for instance, in many states you as a manager can be held personally liable for any harassment in the workplace… meaning you may have to pay out of your own pocket if proved. In one past case, a manager was held liable for $1 million. Don’t you wish you knew more now?
Employment law also determines how you can remove under-performing employees; trust me, it’s certainly not a simple task no matter where you live and work. You can’t just fire someone without demonstrating progressive discipline, for instance showing that you’ve tried to tackle the problem and given the employee an opportunity to improve. Make sure you have a paper trail that no one can later contest.
Likewise, you may also need to know just how much discipline you are allowed to impose on employees who don’t come up to scratch but who you want to try to keep in the longer term.
All of the above are specified by employment law… and aren’t they all things that you as a manager will one day need to know? That day might even be today.
Trust me, not getting to know your company policy and employment law IS a mistake.
The Solution:
All companies should give their employees a copy of the employee handbook. It will usually state the sort of behavior expected from all members of staff. Make sure you read and get to know this. It will be your first port of call.
Some companies may also have specific written guidance for managers; again pay particular attention to this. It may also behoove you to seek formal training; ask your company if they offer outside training courses, for instance. If this is not available, petition to start such a training course in-house, perhaps run by the HR manager or one of his or her team members.
In the meantime, here are a few basic steps to ensure you keep on the right side of employment law…
Some practical steps:
Avoiding an employee lawsuit should be a priority for any business. Even when an employee lawsuit is unsuccessful it can be expensive and distracting. In the case of a successful lawsuit the results are sometimes devastating. Unfortunately employee lawsuits are an increasingly common occurrence. In the past 20 years the number of employee lawsuits has risen by 400%, according to a 2009 white paper by Legal Landminers. Small businesses are especially vulnerable to employee lawsuits. 41.5% of all employee lawsuits are directed at businesses with between 15 to 100 employees. Below you can find the steps you need to take to prevent a successful employee lawsuit.
Preventing Claims Of Unpaid Overtime
One of the most common employee lawsuits are claims for unpaid overtime. These cases often present themselves when a long time employee leaves the business. In order to avoid what is known as a “wage and hour” case, the employer needs to be fully informed about the requirements established by the Federal Fair Labor Standards Act. In addition they should have an understanding of the state, city and county laws that may also apply.
These lawsuits are usually a result of a misunderstanding by employers about the difference between non-exempt employees which are hourly or part-time, and those which are exempt which are salaried or full-time employees. In this case exemption means that the Federal Fair Labor Standards Act does not apply. Employees that are not exempt from the Federal Fair Labor Standards Act need to be paid time and half for any overtime performed.
Employees cannot agree to waive their rights under the Federal Fair Labor Standards Act. Even if the employee and the employer sign a contract, the agreement is illegal and non binding. Breaches of the Federal Fair Labor Standards Act will result in a double award and that the business will be required to pay the plaintiff’s legal fees as well. The best way to prevent these claims is to keep accurate records of employee’s hours and pay. Failure to keep accurate records can also open the business up to problems with the IRS who may be concerned that all tax revenue has not been paid.
Another common mistake is to fail to monitor the overtime that employees work. Just because an employer does not request an employee to work overtime does not mean that they cannot make a claim for compensation. As an employer it is your obligation to monitor employee’s work, which includes making sure they are not working early, late, through lunch or during the weekend without being compensated.
How To Prevent Discrimination And Harrassment Claims
70% of all legal cases against employers are for alleged violations of Title VII of the Civil Rights Act of 1964. This part of the act covers discrimination on the basis of sex, national origin, race or color. It should give some indication of how seriously discrimination in the workplace needs to be taken.
In order for a discrimination suit to succeed the employee needs to prove that an adverse action, such as termination or not being promoted, has taken place. Next the adverse action taken against them must be the result of their membership in protected class. The protected class includes gender, age, race and disability. They must also prove that they are a member of this protected class. Finally they must show that they are qualified and able to perform their job.
Make sure that you encourage all employees to report any cases of discrimination or harassment, even when they are not the victim. If you have received any complaint make sure that it is properly documented. Investigate the complaint in detail and if necessary involve your lawyer.
If there is any indication that there is a serious problem then you should get your lawyer involved as soon as possible. It is important not to let erroneous behaviour by an employee put your business at risk. If the conduct by employee is not corrected then you should explain that they will be discharged. It is never a good idea to be careless when it comes to harassment and discrimination. These cases must be taken seriously!
Sexual harassment cases need to be taken very seriously as they are often easy for employees to win and result in high payouts. Bear in mind, the worst thing that a business can do is punish the employee that complains about sexual harassment. For example, an employee who complains about sexual harassment from the manager and is then fired. In this case the company has opened themselves up for both sexual harassment and retaliation lawsuits.
Employees that complain about sexual harassment should not be fired. If the employee is truly a disruptive element in your company then should wait at least a year before they are dismissed and the reason for firing the employee needs to be legitimate and very well documented.
Health And Safety Issues In The Workplace
All employer’s have a duty of care to look after the health and safety of their employees while they are at work. The requirements of an employer’s responsibility for health and safety at work are detailed in the “Health and Safety at Work Act of 1974.” The premises needs to be ventilated and the work equipment properly maintained. The workplace should also be properly ventilated and provide a reasonable working temperature. The lighting needs to be appropriate for the work that is being conducted. Drinking water, toilets, hand basins, soap, hand towels and suitable waste containers all need to be provided.
In order to prevent any employee lawsuit as a result of breaches of the Health and Safety at Work Act, a risk assessment should be conducted to spot potential hazards and what has been done to minimize those hazards. If you have more than five employees you also need to keep an official record of what you find during this assessment and how you plan to deal with the problems that have been identified.
All employees must be trained on how to prevent accidents from happening, and this training needs to be documented that it has taken place so that in the unfortunate case of an accident occurring, one can produce evidence to say that duty of care had taken place, and that all employees were properly trained and informed.
Using An Employment Contract
An employment contract is a document which is signed both by the employer and employee. This document sets out the terms of the working relationship. It is good practice to ensure every employee signs a contract of employment before they begin their employment. A written contract details what the employee is going to do for the business and in return what the employer is going to provide to the employee. It sets out rules and regulations, standards of conduct that employees must follow.
This agreement will include details such as the duration of the work, what benefits are provided for, grounds for termination, what responsibilities the employee has, and finally how employment disputes will be resolved. Most employee contracts will state the terms by which an employer has the right to fire the employee. This could include establishing a set term for the employment or what grounds are suitable for termination.
An employment contract can sometimes make it easier for the employer to fire an employee. If there are written standards which if breached constitute grounds for disciplinary action or termination, then it is harder to make a case for wrongful termination. On the other hand an employee contract can also be potentially problematic if the employee can show that employer did not have reasonable grounds for termination. For example, if an employee contract states that the employee is employed on a three-year contract, and you decide that you no longer need them after two years, then you will not be able to let them go. This would constitute a breach of the terms of the contract. Or if the employer didn’t give the employee the necessary warnings before firing them (assuming the incident is not gross misconduct).
Create A Well Written Employee Manual
A well written employee manual can prevent you from being sued. A badly written one can actually help a successful lawsuit against your business. Remember that what you put in writing will be available to the plaintiff’s lawyer and so you want to make sure that you have gotten it right.
Each employee manual should have a disclaimer which states that this document is not a contract of employment. Employees will often bring a lawsuit which states that some part of the employee manual was a binding commitment that the employer has breached. You should state near the beginning of the document that both the employee and the employer can terminate employment at will. It should also note that only formal written agreement from a designated officer of the company can authorise a binding commitment.
On an annual basis you should provide the manual to your employees and then get a signed written acknowledgement from them that they have received and read the document and that they are aware of the information contained inside. If they have any questions or do not understand anything in the manual, then they should contact a designated officer of the company to receive a further explanation. Each year review the manual and make sure that as up-to-date and does not require any changes.
Using An Written Acknowledgment
An annual written acknowledgement has saved more than one employer from being successfully sued. The fact that an employee has recently signed an annual written acknowledgement will often prevent lawyers from even taking a case as they know it will be unwinnable.
Included in their annual acknowledgement should be in agreement that there hasn’t been any discrimination or harassment during their entire period of employment. This harassment or discrimination should include sex, religion, pregnancy, medical conditions, childbirth, color, race, mental disability, ancestry or marital status. If there have been any reported incidence of discrimination or harassment over the period, the employee should acknowledge that it has been recognized and reported to their employer and that they are all fully aware of company’s investigation into these matters.
The employee should also agree that there is no over time due and that there have been no promises of fixed tenure or advancement within the organization. At the beginning of the annual an acknowledgement should be a preamble which states that the employee is not obligated to sign any of the statements unless they are completely true and the employee agrees that they are accurate.
When preparing an annual acknowledgement form you should provide this to your lawyer to review to ensure that is not missing any appropriate details and it is complete. An annual acknowledgement form will not guarantee that you will not be sued. But if it is used in the annual basis it is one of the most effective ways of pre-empting a possible lawsuit
Obtaining A Written Release
As an employee leaves your company either because they have been fired of their own accord it is a good idea to get a written release. This can help to prevent claims of wrongful discharge or discrimination. The way to induce employee to sign this release is to include it as part of a separate agreement which will give employee benefits that he would not receive if they were not to sign the release.
The agreement should state that your company does not offer a formal severance package and is not obligated to provide one in any case. The severance package that your are offering should be detailed and if the employee wants to accept this offer then the should sign the agreement. The release needs to include general language which prevent future claims from being made. Have your lawyer look over the written release to ensure you are properly covered.
Using An Exit Interview
An exit interview should be done every time the employee leaves your company. An exit interview can provide protection for your company but they can also cause problems if performed improperly. The managers that are responsible for the exit interview to be properly trained and understand exactly what to cover.
Firstly the departing employee should be told that their employment has terminated and the reason for this should be given. Whenever an employee is fired you should be able to document in detail legitimate reason why this has taken place. If you let an employee go for a reason that looks and improper or is unsubstantiated then this can cause problems later on. You should provide your employee with a booklet which details the unemployment benefit that they are eligible for.
If your employee has any complaints that they want to make, then these need to be listened to carefully. If the employee has any reasons why they believe that their termination is improper, you should document these and then consult later with a lawyer. Do not take this opportunity to argue with your employee, just say that you do not agree with what they saying. Remind the employee that they have an ongoing obligation to maintain the confidentiality of your business is business after they leave. You should also request than any property owned by the company is handed over, such as client lists or records. If there are any disputes over the amount of compensation on when you should offer the amount that you believe that is appropriate.. Suggest that this matter will be investigated and you will get back to them about the disputed amount. This should be followed up on after the meeting.
The key thing when conducting exit interview with your employer is not to argue with them. Often the things said in the heat of an argument can be brought back up in a court and can cause serious problems. You should also not suggest that your employee is dishonest or that they are incompetent. These can be used as the basis for a case of unfair termination. You should also not offer a recommendation or any assistance with finding another job. Employers will often offer these as a way to “soften the blow”, but they can be the cause of a future lawsuit.
Summary
Employee lawsuits can be crippling for businesses. According to the Legal Landminds white report there is a 67% chance that a lawsuit that reaches Federal Court will result in a payout of at least $100,000. What’s worse 14% of federal cases result in a payout of over $1 million.
If you want to avoid a successful employee lawsuit of this magnitude then you need to take proactive steps. Employers need to be aware of the applicable laws and they must be taken seriously. Any claims of harrassment or discrimination need to be documentated and investigated. If there is any indication of a serious problem then legal advice needs to be sought immediately. Employers need to be very vigilant in the areas of unpaid compensation and dismissal as these are common causes of lawsuits.
By having systems in place such as annual written acknowledgements, exit interviews and employee manuals, you will ensure that the risk of a sucessful employee lawsuit is minimized.
The key thing is to be PROACTIVE rather than REACTIVE and spend the necessary time to assess situations accurately before they become major problems.
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