The old saying that “a stitch in time saves nine” is especiallytrue for employers. Preventive practices can minimize or eliminatemany employee lawsuits. An ounce of prevention can save millions ofdollars in damages and legal fees.

Following are relevant tips for the employers to help reduce thefrequency of all categories of employee lawsuits.

Recruitment and Hiring

All employers should strive for a “clean” hire, that is, onedone purely on the basis of job requirements, without consideringthe applicant's membership in a protected group, either pro orcon.

• Avoid discriminatory language when advertising jobopportunities. For instance, an advertisement stating “young” or“recent grad” might discriminate against older job applicants,while terms such as “highly motivated” would not. “Salesman” woulddiscriminate on the basis of gender, while “sales representative”would not.
• Have a specific job description providing the basic oressential functions of each position before advertising theposition or interviewing any applicants. This will show that theperson hired was the best qualified to perform the job in questionor that a rejected applicant would have been unable to perform thejob even with reasonable accommodation.
• In creating job descriptions, be sure they are reasonablyrelated to the specific abilities to perform the job at issue anddo not reflect the performance of the last person to hold thejob.
• When interviewing, whenever possible, use a standardized formand ask essentially the same questions of all applicants. Be surethat any questions have a reasonable relationship to the jobduties. Make a written record of each interview, and keep them in asecure location for at least five years.
• Do not ask applicants questions that would establish theirmembership in a protected class such as age, religion, or nationalorigin unless it is essential to the job. For example, a religiouseducational organization can ask about the religion of a potentialteacher, but perhaps not the religion of a potential maintenanceworker.
• Do not ask whether an applicant is married or pregnant, haschildren, or is planning to have children. If the job would requiretravel or late nights, it is acceptable to ask if the applicantwould have a problem meeting that requirement.
• Do not ask applicants about disabilities. Ask only job-relatedquestions about the applicant's ability to perform specific jobfunctions, and do not ask about things such as drug addiction,work-related injury, or use of sick leave. Employers can ask if anapplicant will need any “reasonable accommodation” in the workplaceto perform the essential functions of the job.
• Do not refuse to hire a person on the basis of presumedsusceptibility to injury, if the person is otherwise fit for thejob. However, employers are permitted to require physical abilitywhere it is a bona fide job requirement, such as the ability tolift a certain weight.

Background Checks

Thanks to the Internet, an employer can find out almost anythingincluded in a public record, with a few exceptions such as medicalrecords, transcripts or disciplinary educational records, militaryrecords, or records sealed by court order.

• An employer that conducts its own background checks shouldensure that the person doing the checking is aware of all state andfederal restrictions on the use of the information obtained.
• When background checks are performed, they should be done in auniform manner.
• Obtain an applicant's prior arrest record for a job only wheresecurity or personal responsibility for customers or clients isimportant or where the arrest may be related to the job duties. Forexample, if an applicant would be managing bank accounts, an arrestfor embezzlement could be relevant.

Employment Contracts andHandbooks

All employees have some form of employment contract. Theemployer offers the job, the employee accepts and gets paid fordoing it (offer, acceptance, and consideration – the basic elementsof a contract). Written contracts or offer letters that set forththe terms and conditions for employment, including a statement thatemployment is at will, are preferable because they minimize thepotential for disagreement regarding employer/employeeexpectations.

For employees at all levels, the best way to communicate anorganization's policies and procedures is through a carefullydrafted employee handbook that is updated regularly.

• Give each employee a copy of the handbook and require a signedand dated acknowledgement that the employee has read, understood,and agreed to its terms. Place the acknowledgement in eachemployee's personnel file.
• When the handbook is updated, include a statement thatagreement to the new terms is not necessary for them to beeffective. Obtain a signed and dated acknowledgement that theemployee has received the updated handbook. If an employee refusesto sign the acknowledgement, note the refusal and that the employeeis still bound by the new terms.
• If the employee handbook and policies are only availableelectronically, be sure to communicate that to all employees, notjust the ones with computer access at work. Consult withexperienced employment law attorneys to ensure that propernotification and access are provided.
• Dress codes that are rationally related to a bona fideoccupational qualification are permissible. For example, uniformsthat distinguish employees of an organization from the generalpublic, or from each other, are permissible. Requiring that allemployees with long hair keep the hair under hairnets for hygienepurposes is also permissible. However, requiring sex-specific dresscodes may lead to legal challenges. Employers also should be awareof any religious discrimination issues that may arise with dresscodes.

Complaint Procedures

Company-complaint procedures, job-termination procedures, andprohibited conduct are the most important policies to be spelledout in an employee handbook. For employees covered by acollective-bargaining agreement, complaint and grievance proceduresare provided in the agreement. The handbooks for employees who arenot part of the bargaining unit do not have to include the sameprocedures.

The typical complaint policy will state that the employer doesnot condone sexual harassment, discrimination, or other unlawfulemployment practices, and it will encourage employees to reportsuch acts immediately. The policy should also make clear that thecomplaint will be kept confidential as long as possible.

One or more persons should be designated as the individual towhom notices are given, for example, the employee's directsupervisor, the human-resource executive, or some othersenior-management person.

• Do not create unnecessary policies or standards, since riskmanagement best practices require employers to continuallycommunicate the standards and document compliance. For example,develop a written affirmative-action plan only if required bylaw.
• Do not list specific violations of policy as cause fortermination, because it implies that the employee can only beterminated for cause. On the other hand, it is perfectlyappropriate to indicate that certain behavior is unacceptable andmay lead to immediate termination.
• Do not state that certain policy violations will leadto termination, unless this will be uniformly enforced. Instead,list specific violations of policy that “may or could” lead totermination.

Performance Evaluation

Regular performance reviews (annually or more frequently) are anexcellent defense in virtually all employment suits. Theydemonstrate that the treatment of the employee was based on jobrequirements, not on membership in a protected class.

Performance evaluations are often flawed by not being frequentenough, not being timely enough, not being truthful enough, notbeing specific enough, not being consistent with treatment of othersimilarly situated employees, or not being consistent with the jobrequirements.

Lack of regular, candid evaluations serve neither the employernor the employee and can lull employees into thinking that theirjob performance meets expectations. It can bind the employer to anunsatisfactory standard of performance through apparentapproval.

• Evaluate facts, not feelings.
• Do not evaluate areas that are not legitimate job requirements.Use the same evaluation for all employees with the same jobs.Self-evaluations are often a good policy, and give the employee anopportunity for input to the process.
• Once an evaluation is completed, share the results with theemployee in objective terms. Recognize employee strengths andweaknesses, relate findings to objectives from previous appraisals,and set objectives for the next evaluation period. Finally, obtainthe employee's comments and signature on the evaluation.
• Do not give repeated satisfactory performance ratings to anunsatisfactory employee, but do give a problem employee areasonable opportunity to improve.
• If the employee doesn't perform adequately, don'tprocrastinate, terminate the employee. To do otherwise may beviewed as ratifying the unsatisfactory performance as satisfactory,which will make it difficult to fire the employee at a laterdate.
• Provide a Performance Improvement Plan (PIP) against which tomonitor improvement. This eliminates the argument that the employeewas surprised by the termination and was unclear about the specificareas needing improvement.

Progressive Discipline Policies

Many employers have a progressive discipline policy that spellsout increasingly harsh discipline for infractions such as unexcusedabsences or workplace violence. Some employee misconduct is sosevere (such as theft, assault, or public insubordination) that itrequires immediate termination. Provide examples in the handbook ofthose kinds of exceptions to the progressive-discipline policy.

• Be consistent in your treatment of employees. Do not toleratebehavior from one employee that is unacceptable from anotheremployee. This is extremely difficult to defend against.
• Do not make oral or implied promises that cannot or will not bekept to encourage improved employee behavior or performance. Oftensuch agreements by the employer are well meaning, used to encourageor reward an employee. However, they may result in a lawsuit ifthey are not kept.
• Before taking any adverse employment action, make sure theemployee's behavior is not legally protected.
• If the employee claims the inability to perform essential jobduties due to a disability, work with the employee to see whetherthere are any reasonable accommodations that will allow theemployee to perform all essential job functions. Document all theefforts to accommodate the employee's requests.

There are special issues in educational institutions regardingtenure, in government regarding civil-service rules, and undercollectively bargained employment agreements. In those situations,it is best to consult with in-house counsel or an employment lawattorney before taking any action.

Wage and Hour

Adopt a specific policy against working off the clock andcommunicate it to all employees in addition to including it in theemployee handbook. This policy should contain a complaint mechanismand assurances of nonretaliation for employees who registercomplaints.

Conduct periodic audits of the organization's wage and hourpractices.

• Review payroll practices to make certain that items such asbonuses and commissions are included when computing overtime payfor nonexempt employees and that any deductions taken against paydo not violate the FLSA or applicable state wage and hourlaws.
• If the hours in a particular department or division of thecompany suddenly decrease significantly, determine whether thedecrease is for a legitimate reason or whether some otherarrangement is being used to keep the hours from being recordedproperly.
• Review the work that is being performed by the employee in eachposition, especially those that are currently categorized as exemptfrom overtime to determine whether the nature of the position haschanged. In addition, ensure that the job title and the performanceevaluation forms for that position properly reflect theresponsibilities of the position as it has been classified underthe FLSA or applicable state laws.
• Employees should be required to sign off on or acknowledge thetime that is reported for them as being worked to confirm that alltime is being recorded.
• The employee discipline policy should be used to discourageuncompensated work. If an employee has worked “off the clock,” theindividuals who are involved in that arrangement should bedisciplined. However, an employee who complains about beingrequired to work off the clock should rarely if ever bedisciplined since such an action could easily be regarded asretaliation for having blown the whistle.
• Make certain that the recordkeeping requirements are being metand that those records are regularly maintained and readilyavailable.
• Avoid automatic time deductions if possible. When automaticdeductions cannot be avoided, have the employee acknowledge thatthe deduction taken is correct, with a notification that theemployee must record all time. For example, an automatic deductionof one-half hour for lunch without more is problematic. Thededuction should be accompanied by a detailed policy, signed by theemployee, explaining that any work performed during the time offmust be reported so that the time record can be adjusted. Inaddition, the policy should state that the employee is required tonotify the company of any adjustments.
• Provide training to the supervisors or managers of nonexemptemployees so that they are made aware of the potential exposure tothe company that might result from a systematic failure to payproper wages.
• When the employer has any question about a systematic change inpayroll or timekeeping practices that might impact a large numberof workers, the employer may request an official DOL opinion letterfrom the Wage and Hour Division Administrator. Any actions that aretaken in good-faith reliance on such a letter are entitled to agood-faith defense that would negate any finding of willfulness inviolation. However, the request will flag the issue for the DOL andthe response, if one is provided, could take years.

Privacy

Give employees a zone of privacy, and do not invade that zoneexcept for legitimate business reasons and by means reasonablyrelated to the ends. For example, what employees do on their owntime or in their homes is generally not reasonably related to jobrequirements. In the workplace, what an employee does during breaksor at lunchtime may deserve the protection of privacy. This is notabsolute, since behavior during off time that adversely affects jobperformance does become relevant to the employer.

As with all employee policies, provide written notice to allemployees of any “private” areas that may be searched, such aslockers, desks, computers, or e-mail so that employees have noexpectation of privacy in their workstations, cubicles, oroffices.

Electronic mail, in particular, presents numerous dangers to theemployer. Employees often misunderstand their right to privacyregarding work e-mail, and they often make statements in e-mailthat they would never write in a letter or say out loud. There isalso a false sense of security with e-mail, both that nonrecipientscannot access it and that it can be deleted. In fact, e-mail liveson in the electronic memory of the e-mail server and can even berecovered from the sender's or recipient's hard drive after amessage has been deleted.

• Develop an e-mail policy that the company e-mail system can beused only for business purposes, that there is no privacy or rightto privacy in business e-mail, and that any improper use of thecompany's e-mail system will not be tolerated.
• Develop an electronic-device policy that employer-supplieddevices can be used only for business purposes, and there is noprivacy or right to privacy on employer-supplied computers, cellphones, or other electronic communication devices. The policyshould remind employees that employer-supplied devices could besearched at any time and any improper use will not betolerated.
• Include rules on the use of social media on employer-owneddevices. Some employers permit limited use during meal breaks andrest periods while others prohibit access entirely.
• Include procedures for recovering employer-supplied devicesfrom employees who leave the company, especially those who workremotely. The policy should include restrictions on whatinformation employees may retain and what information is consideredproprietary.

Employers have the right to monitor business telephone calls forquality control, but not personal phone calls. Monitoring policiesshould be explained in the employee handbook. Before initiating anymonitoring system, employers should review their policies withemployment law attorneys to ensure that the monitoring complieswith state and federal regulations that apply to recordingtelephone calls. To minimize problems, some employers providetelephones, telephone booths, or other private areas, other thanbusiness telephones, for use by employees for personal calls.

Investigating Complaints

Upon notification of an employee complaint, the persondesignated by the employer must conduct a timely, thorough andimpartial investigation of the complaint. Often the complainingemployee will feel intimidated or uncomfortable in lodging acomplaint, especially if the complaint is being lodged against asenior manager or a person perceived to be in a position of powerand authority.

To avoid the appearance of bias, employers frequently outsourceinvestigations to experts in the field. Whether an employerconducts its own investigations or hires an outside investigator,there are some things to do and some pitfalls to avoid:

• Investigating complaints must be objective. The goal is not toprotect the company from a future lawsuit but to put a stop toinappropriate behavior. As such, the complaining employee isassumed to be telling the truth, but at the same time, the allegedwrongdoer is assumed to be innocent.
• Initially, be dispassionate; listen to all sides of the story.Find out specifics. Do not intimidate or retaliate against theemployee who has filed the complaint. Find out what was done, whowas told and what the response was. In most cases, at leastinitially, the identity of the complainer can be kept confidentialto minimize the fear of retribution by the harasser.
• Question anyone who may have useful information. Expect to findunresolvable factual conflicts. Even if all disputes cannot beresolved, the employer must respond by following its predeterminedcomplaint procedures.
• It is critical to promptly investigate sexual-harassmentcomplaints. There is no bright-line definition of sexualharassment; one person's provocative comment is another person'sharassment. The appropriate standard is whether a reasonable personin the position of the complaining employee would find the behavioroffensive.
• Minimize harassing conduct by outsiders, such as customers orsuppliers, by promptly investigating complaints and making thirdparties aware of the company's anti-harassment policies. In somecases, the employer can be held responsible to act on complaints ofmisconduct by others such as third-party workers, customers orsales personnel who visit the workplace.
• Investigate when there is credible evidence of off-siteharassment by employees to determine if the misconduct isemployment-related or a private matter.
• A thorough investigation must result in some conclusion, whichshould be rational, reasonable and, if possible, documented withstatements of other employees or other evidence. Conclusions shouldbe shared with both the complaining employee and the allegedwrongdoer, especially if the investigation fails to uncover anysupport for the allegation.
• If the investigation tends to support the allegations of thecomplaining employee, the employer should promptly discipline thewrongdoer, following the disciplinary measures set out in theemployee policy.
• All internal investigations must be documented. Documentationshould include information on how the investigation was conductedand the conclusions drawn, as well as any witness statements orother evidence.

A properly conducted investigation is a significant tool thatcan prevent an employment-related lawsuit. If a suit cannot beavoided, then the internal investigation will become the primarydefense for the employer.

Termination

The following comments relate to dismissal with or without causeand do not deal with complex employment agreements that mightinclude arbitration requirements, post-termination requirementssuch as retirement or disability benefits, or restrictivecovenants.

Even though an at-will employer may terminate an employee forany reason, termination actions always carry the risk of legalchallenges for “wrongful discharge.” Such claims are easier todefend when they are related to legitimate business reasons, suchas nonperformance, business reorganization, or fiscal exigency.Before terminating any employee, employers should consider thefollowing:

• Does the employee have any military leave rights under USERRAor rights to leave under the FMLA? Employees cannot legally beterminated while on leave and must be reinstated to their originalpositions or similar positions if the original is unavailable.Employers should be familiar with the technical provisions of theseacts, or consult an expert, before taking any action againstcovered employees.
• Does the employee have any pretermination rights? For example,employees under collective-bargaining agreements, those ineducational institutions with tenure or government positions undercivil service rules present special situations.
• Even though the conduct is undesirable, is it legallyprotected? Often employees may have a legal or legitimatebusiness-related defense for their performance problems.
• Is a termination decision premature? It may be more costly totrain a new employee than to rehabilitate a current employee.Employees have a reasonable expectation to be told whether theirperformance is substandard, and if so, what to do about it.Nevertheless, the employer should maintain the right to terminatean employee immediately in some serious or dangeroussituations.
• Are similarly situated employees treated similarly and is thetermination decision consistent with previous business decisions?Prior inconsistent conduct on the employer's part frequently leadsto claims of impermissible discrimination.
• What policy has been established regarding oral recommendationsor letters of recommendation? Many employers limit the informationthey provide to confirming the dates of employment, job title, andsalary. Some employers have begun to use a third party to confirmthe information to avoid any possible claims. A subsequentemployer, having hired an unsatisfactory employee on the basis ofan untruthful recommendation from a previous employer, may look tothe previous employer for defense of a claim of negligenthiring.

Most states give employees the right to examine their personnelfiles and dispute, but not remove, any information contained in thefile. Certain especially sensitive information or information thatwould be damaging to the employee may be confidential andinaccessible to the employee. Check with the organization's humanresources personnel to clarify what information terminatedemployees can access.

Similar to the preemployment screening file, for securityreasons, limit access to those who need to know and have someonepresent when terminated employees examine their files. Thepersonnel file should contain all information that was used to makeany employment decision relating to the employee. Rememberthat the best defense for any employment decision is gooddocumentation.

Confirm that all ERISA, COBRA, and employee benefit noticerequirements are in place, and follow those procedures with alldischarges. Also, consult with an employment law attorney orin-house counsel before terminating an employee who has assertedlegal rights.

Employment Practices Audit

The key to preventing employment suits is consistency. Audit allemployment practice areas: employment applications, re-employmentinquiries, interview forms, standard-form job-offer letters,legally required postings, employee codes of conduct, standard-formemployment contracts, OSHA compliance, training programs,termination procedures, separation and severance agreements, andall other policies and procedures designed to minimize therisk of unlawful employment practice claims.

Audits include an evaluation of how policies and procedures areapplied as well as a review of the communication and feedbackprocess. When practicable, audits should include all employees inevery position in the company.

• Consider retaining an independent risk-management consultant oran insurance broker to identify problem areas and recommendappropriate risk management methods, including employment practicesliability insurance. Independent consultants offer services on afee basis, not a commission.
• Small firms that cannot afford a risk management consultant'sfees may engage an insurance broker with industry-specificexperience on a fee basis, with commissions on insurance offsettingthe fees.

Working together, businesses and their liability insurers canreduce the risk of lawsuits. Claims prevention measures provide aninexpensive first line of defense. Careful selection of liabilitycoverages and claims management provides the second line ofdefense.

Disclaimer: This article is designed toprovide accurate and authoritative information in regard to thesubject matter covered. It is offered with the understanding thatthe writer is not engaged in rendering legal, accounting, or otherprofessional service. If legal advice or other expert assistance isrequired, the services of a competent professional should besought