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- AVOIDING EMPLOYEE LAWSUITS
-
- Whether it's hiring, supervising or terminating an employee
- the risks are great that the employer is exposing himself
- to liability.
-
- Gone are the days when an employer could hire, promote and
- fire an employee only on the basis of what is best for the
- organization. Today's business leaders and organization
- heads must be equally concerned about a disgruntled employee
- who decides to take an employer to court. And employees are
- indeed going to court. Each year there are many more
- lawsuits than there were the year before. In fact, employee
- lawsuits are one of the fastest growing areas of litigation-
- -and one of the most serious problems facing employers. Why
- this frightening legal explosions of employee against
- employer? There are four reasons:
-
- 1. The American society is becoming more litigious
- generally. Employee lawsuits are only one more example of
- lawsuit-mania.
- 2. There are many more laws today that give employees added
- rights-and the opportunity to sue when those rights are
- violated. Equal opportunity, affirmative action, and OSHA
- are only three examples of rigid federal laws designed to
- protect employees and that give employees the right and
- incentive to sue employers who
- violate those laws.
- 3. There are many more complex social issues today than in
- the past. These social issues cannot always be resolved
- easily in the workplace. Drug abuse, AIDS testing, computer
- surveillance, genetic screening and polygraph testing are
- only a few examples of problems and technologies that
- employers of yesterday did not have to deal with. But
- today's employer must if he is to escape costly lawsuits.
- And tomorrow's employer will undoubtedly have to deal with
- still more issues.
- 4. Lastly, much of today's employee-employer litigation is
- the outgrowth of change in the legal relationship between
- employer and employee. No longer are employees looked upon
- as servants who can, with impunity, be dismissed. In the
- 1970's, courts began a rapid erosion of the employment-at-
- will doctrine. Now courts consider employees to have far
- broader rights and security in connection with their jobs
- and are not reluctant to find employers liable for wrongful
- discharge.
-
- Clearly, the trend is away from laissez-faire employment
- relationships. An employer, no matter how small must stay
- abreast of various legal pitfalls in dealing with employees.
-
- This guide will help you recognize and deal with many of the
- pitfalls that can, as an employer, cause you considerable
- liability and financial loss. More importantly, you will
- discover the preventive steps you can take to avoid
- lawsuits. Most importantly, you will learn the simple steps
- that can turn borderline mistakes into perfectly legal
- employment practices.
-
- No, this guide cannot cover every potential legal problem,
- but it does point out the common danger zones most likely to
- cause you to be sued.
-
-
- DANGER ZONE #1: JOB INTERVIEWS
-
- Your potential legal problems commence as soon as you first
- consider hiring someone to fill a position. There are many
- federal and state that control the hiring process. Your
- procedure for hiring, the questions you can ask an applicant
- and the criteria used to select employees can all present
- major legal problems.
- So what can you do and what can't you do?
-
- Most employers realize that they cannot consider age, sex,
- race, handicap or national origin as a part of the hiring
- process. Moreover, smaller organizations usually have less
- need to be concerned about the minority composition than
- does a large organization, but every organization must avoid
- discriminatory hiring practices. Hiring requirements are
- exceptionally strict on matters of discrimination. The way
- you ask for information may seemingly innocent employment
- questions can be evidence of discrimination. The way you ask
- for information may seem reasonable, but the manner question
- is phrased can be misconstrued as having an improper
- purpose. To avoid difficulties you must ask applicants
- questions in a legally safe manner.
-
- What areas can you safely delve into? There are ordinarily
- no problems with questions concerning an applicant's
- 1. Education
- 2. Work History
- 3. Job-Related Skills
- 4. Willingness To Assume Tasks
-
- It's also smart to review these pointers with other
- employees who may come in contact with a job applicant. For
- instance, a receptionist may unkowningly discuss an improper
- point with a applicant waiting for an interview.
-
- RACE: Race Cannot be a factor in the hire g decision. Never
- imply that a race category is needed, or is not needed. You
- must also avoid indirect references to race. For example,
- never ask a job applicant how the would fell working with
- employees of a given race, of that you are actively looking
- for people who are minorities or from a certain race.
-
- Also be on guard when an applicant mentions race. You can
- pretend you did not hear the comment or politely but firmly
- say that race will not be discussed.
-
- Religion: What was said about race applies equally to
- religion. Legal problems involving religious discrimination
- is not as common as those concerning race, but it is still a
- dangerous area in hiring practices. You can inadvertently
- stumble into this area by asking an applicant about his or
- her place of birth, origin of a surname or place of birth.
- These questions can always be asked after you hire an
- applicant but should not be asked during the hiring process.
-
- Religion can legitimately be a factor when hiring. Will the
- applicant work on certain religious days, for instance? But
- don't ask this question directly. Instead tell the applicant
- the required workdays and let the applicant decide whether
- this presents a problem.
-
- NATIONAL ORIGIN AND CITIZENSHIP: Like race or religion,
- discrimination on the basis of national origin can also be
- troublesome. You can as an applicant if he or she is a U.S.
- citizen, but you cannot inquire how the applicant obtained
- citizenship.
-
- It is best not to bring up an applicants cultural background
- even if you intend the conversation to be innocent. Your
- comments can be misconstrued, leading the applicant of
- believe that you have a cultural or nationality bias.
-
- AGE: Age remains the most common discrimination claim. It is
- perfectly legal to refuse employment to someone who is too
- young, but cannot discriminate against older job applicants.
- The protected ages are from 40 to 70.
-
- Avoid even in direct references to age. This can present a
- problem since you will want to probe an applicant's
- background and history and may thus appear to be an indirect
- way of determining the applicant's age.
-
- One exception to the law is your right to discriminate
- against older job applicants if the physical demands of the
- position require younger employees. However, it is not clear
- what position may fall under that category.
-
- SEX AND FAMILY STATUS: An applicants gender cannot legally
- be the basis for hiring. Moreover, you cannot refuse to hire
- an applicant because the person's gender does not seem
- compatible with the work requirements or because CO-workers
- will feel less comfortable in his or her presence.
-
- Another frequent problem is that references to family status
- are often construed as a form of sex discrimination. For
- example, you may ask a female applicant whether extensive
- travel or long hours would create problems with her family.
- You can inquire whether long hours or travel would
- constitute a problem but not whether family responsibilities
- would be the source of the problem. Nor can you ask an
- applicant about her child-rearing plans. Family size or
- children's ages should also be avoided.
-
- You can, however, discuss whether your company provides
- maternity benefits and child care. Conversely, you should
- not ask if these benefits would, one way or another,
- influence the employee in accepting the position. Nor should
- you discuss the firm's reason for these benefit policies
-
-
- PHYSICAL OR MENTAL HANDICAP: Physical or mental handicaps
- are treated similarly to age. The basic rule is that you
- cannot refuse to hire an applicant because of a handicap.
- However, you can refuse to hire if the handicap would
- clearly interfere with the applicant performing properly on
- the job. Interpret this exception narrowly. Court cases
- suggest that you must show a clear and convincing connection
- between the handicap and the job requirements, failing which
- can expose you to a serious lawsuit.
-
- CRIMINAL RECORD: Your employment application can ask only
- if the applicant has been convicted of a crime. Arrests, non-
- guilty findings, dropped charges and civil lawsuits cannot
- be considered in hiring. Where the applicant admits to a
- prior conviction, you can usually inquire about the facts
- surrounding the conviction. Still, laws on this point vary
- between states so you should check local law before
- proceeding.
-
- FINANCIAL STANDING: Some employers inquire about an
- applicant's financial affairs as they consider financial
- stability important to job performance. Nevertheless, it is
- illegal to use financial standing as a hiring criteria. You
- can, However, run a credit check on the applicant although
- you cannot inquire about property owned or debts owed. Nor
- can you dismiss an employee whose wages have been garnished
- unless it has happened two or more times.
-
- TESTING: This is a new and controversial area of employment
- law. You can test for skills connected to the job: For
- example, typing for secretaries. But other test can pose
- problems.
-
- Psychological tests, for instance, are not legal in all
- states or in all hiring situations.
-
- Polygraph (lie-detector) test may or may not be legal again
- depending upon state law. Only about half the states permit
- polygraph tests.
-
- Newer screening tests, including blood test and genetic
- testing, have even less certain status. Since these test are
- so new there have been few court cases and laws enacted
- concerning there legality.
-
- When faced with a testing question, the safest procedure is
- to check with an attorney specializing employment law in
- your state.
-
-
- DANGER ZONE #2: EMPLOYMENT CONTRACTS
-
- A major concern is the status of employment-at-will
- situations. Can you simply terminate the employment of an
- employee who is without a written employment contracts?
-
- In the past an employer-as well as an employee-could simply
- terminate the employment relationship for any reason at all.
- Over the past two decades there has been a gradual erosion
- of this right on the part of the employer.
-
- The employment-at-will doctrine applies only when no oral or
- written employment contract exists. An explicit agreement
- between employer and employee does control, but the problem
- with a verbal agreement is that it's difficult to prove its
- terms in court and may be unenforceable if the employment
- term is over a year. Be careful. Even a simple letter
- containing employment terms can be taken as a contract.
-
- There are, in any instance, a number of provisions that are
- implied as controlling the employer-employee relationship.
- One significant change in recent years is the trend toward
- incorporating provisions of the personnel manual in the
- employment agreement. As an employer, you are legally bound
- by all terms in these documents. What preventative steps can
- an employer take to protect himself in an employment-at-will
- situations?
-
- WATCH CONTRACT TERMS: Employers often make legally binding
- agreements without realizing it. Oral promises to an
- employee can be construed as a contract. Statements
- concerning employment security or promotion are particularly
- dangerous subjects. The safest policy: Never speculate on
- future personnel policies or make statements that may be
- interpreted as promises.
-
- PERSONNEL MANUALS AND WRITTEN POLICIES: In the past,
- written employment policies were not considered part of an
- employment contract. This view is rapidly disappearing. Now
- the courts assess each situation to decide whether the
- parties intended the manual to be legally binding. The
- trend, however, is for courts to conclude that the manual is
- binding upon the employer. While there is no obligation to
- issue a personnel manual, once it has been published, there
- probably is an obligation to adhere to its provisions.
-
- An employer can counteract this by explicitly providing that
- the manual will not be part of any employment contract, and
- that the employee can be fired-at-will. This is best stated
- on the employment application, hiring letter and policy
- manual itself.
-
- Cases involving personnel manuals most frequently arise
- concerning improper dismissals. The employee may complain
- that proper procedures were not followed or that the
- dismissal was not based on a "good cause" which was
- required.
-
- Even though an employee may be fired for good cause, it is
- still essential to follow the procedures contained in the
- personnel manual. This means complying with the "second
- chance" procedures which include initial warnings,
- suspensions, etc. The safe rule: Don't state firing
- procedures unless you intend to follow them.
-
- IMPLIED TERMS: If an employment contract is not written,
- the court will imply some of all of the terms. This does not
- suggest that verbal contracts are necessarily dangerous. The
- opposite may be true. First, any ambiguous language in an
- employment agreement is interpreted against the employer.
- Second, the agreement will list the employee's expectations
- and benefits. If there is an employer breach, the court will
- award those benefits to the employee. Third, a written
- agreement may be too one-sided in favor of the employer to
- be enforceable.
-
- Despite these drawbacks, a written employment contract for
- higher-level positions is recommended. The agreement will
- reduce misunderstandings and clearly control the length of
- employment as well as the grounds for dismissal. The
- agreement can also specify damages and severance pay in case
- of an improper termination by the employer.
-
- When hiring lower-rank employees, the contract can clearly
- state that it is employment-at-will. This negates any
- argument that employment for a fixed term was implicit in
- the hiring. State clearly that the employment can be
- voluntarily terminated by either party at any time, and
- that the agreement supersedes verbal understandings as well
- as appointment letters. Nor should you annualize salaries.
- This can be construed as an annual contract. State salaries
- on a per payroll period basis. Most importantly, while you
- want to encourage the idea of long-term employment to good
- employees, do not unwittingly make promises of long- term
- employment.
-
- Contracts for higher-level employees should be more
- detailed. It should, at a minimum, state the length of
- employment, the amount of notice required for termination,
- causes for dismissal, and the employees duties. Also add and
- arbitration clause and a clause limiting the employee's
- damages in the event of breach.
-
- ON-THE-JOB: Despite your detailed presentation of the job
- during the pre-employment process, your efforts could be
- wasted because of things done once employment actually
- begins. The overriding goal must be that the employee
- understands that the employment terms have not changed.
-
- The traditional "probation" period is one danger zone.
- Employees on probation for 30-60-90 days can always be
- terminated within that period-without notice. This, however,
- creates the implication that an employee who has made it
- through the probation period can be dismissed only for good
- cause, and after receiving at least one warning. For this
- reason the "probation" period may be better called the
- "introduction" or "orientation" period. More importantly,
- the employee must understand that he can be terminated for
- any reason after the introductory period as well as within
- this initial period.
-
- There should be a written evaluation of the employee at the
- end of the introductory period. Questionable performers
- should have their introductory period extended.
-
- PERSONNEL MANUALS: Your personnel manual is likely to be
- considered part of the employment contract. The threshold
- question then, is whether you should even have a manual. The
- number of personnel you employ normally provides the answer.
- Small business with ten or fewer employees may operate well
- without one. Larger organizations generally require a manual
- to communicate policy from the top.
-
- The primary role of the manual is to ensure that employees
- know both their responsibilities and rights, and that all
- employees are treated equally.
-
- To avoid liability you must take care in the writing of your
- manual.. Is there any reference to a "term" of employment?
- A provision that employees will be retained as long as performance is
- "satisfactory" is a contractual promise. There can be
- employer liability for a firing unless you can prove
- "unsatisfactory". Similarly, you may not escape liability
- for releasing an employee for other reasons-such as poor
- sales. Do you define possible causes for discharge? You may
- list 30 causes, only to discharge an employee for an unstated
- reason. A court may conclude that your list is inclusive and
- therefore, the firing was breach. When you list or define
- causes for termination, either 1) Make certain your list is
- all-inclusive, or 2) Use only examples of reason for
- termination, stating clearly that this is not all-inclusive.
- Do you reserve the right to amend your policies? Unless
- you do, a court may conclude the manual in existence is the
- one the employer is bound to follow throughout the employment.
- Do you state a disciplinary procedure? If so, you must rigidly
- follow that procedure. You cannot fire an employee-without
- liability-unless each step has been followed.
- Do you use too much vague language in your manual. Eliminate
- such ambiguous terms as "reasonable", "satisfactory" or
- "fair". Obviously, not everything can be precisely defined,
- but wherever you do use these terms you are inviting a court
- to define its meaning.
-
- Do maintain separate manuals-or at least separateprovision-
- for management and non-management personnel (or other
- classifications that are best served by different provisions)?
-
- Provide a disclaimer on the manual cover that clearly states
- that you are not providing an employee with legal or
- contractual rights by publishing the manual. State instead
- that the manual is published for reference or informational
- purposed only-and that they do not constitute conditions of
- employment. Also emphasize that employees without a written
- fixed term contract can either resign or be terminated-at-
- will.
- Review your manual at least annually. This will keep it
- responsive to your changing needs as well as to the ever-
- changing laws.
-
- PERIODIC EVALUATIONS: Employees expect periodic evaluations.
- Performance appraisals can also be an important defense
- against an improper discharge suit.
-
- All performance appraisals must be objective, in written
- form, and include observations or evidence to support the
- supervisor's conclusion. Overly broad and subjective
- conclusions can easily be interpreted as evidence of
- discrimination. Employees receiving poor appraisals must
- also be told of its possible consequences. Most importantly,
- the employee must be told what to improve.
-
- Supervisors responsible for appraisals must be told of its
- possible purposes. Is the review to be used as training
- tool, a way to improve performance, a device to support
- promotablilty, or a way to document reasons for
- termination's?
-
- Performance appraisals are no better than the instructions
- given supervisors in their proper use. There should be
- written instructions to explain review procedures. The legal
- consequences of a poorly performed appraisal must be
- explained.
-
- Employees must have the chance to respond to their
- appraisals, and should be required to sign an acknowledgment
- that has been review with him-not necessarily that he agrees
- with it. Appeal rights on appraisals should also be provided
- for.
-
- DANGER ZONE #3: DISCIPLINARY PROCEDURES
-
- Lawsuits arise form disciplinary procedures. You must have a
- system of progressive discipline for unsatisfactory
- employees. Oral or written warnings may progress to unpaid
- suspensions and finally to termination. Certain conduct-such
- as theft-would warrant immediate dismissal notwithstanding a
- previously satisfactory record.
-
- If you provide for a progressive disciplinary system in your
- manual, you must comply with that system. Rather than be
- bound by a fixed system, it may be preferable to delete the
- specific procedures in the employees manual-but provide it
- as a supplement to the supervisor's.
-
- Progressive discipline offers several advantages: It
- promotes an atmosphere of fairness and interest in helping
- an employee improve performance. In fact, a well-designed
- system will accomplish that objective. Finally, such a
- system carefully documents each of the employees
- deficiencies or violations, the steps takes to warn the
- employee, and lack of improvement on the part of the
- employee.
-
- Documentation is all-important no matter which disciplinary
- procedure you adopt. Oral warnings and meetings are to
- easily refuted in court. Also be certain that the employee
- has the opportunity to refute any charges. Should the
- employee fail to take advantage of this opportunity, it can
- serve as evidence in your favor.
-
- DANGER ZONE #4: EMPLOYEE TERMINATION'S
-
- No business owner can forever escape the unhappy job firing
- an employee. No matter how carefully you hire you will make
- mistakes in judgment and end up hiring unsatisfactory
- employees who eventually have to be fired. While firings are
- inevitable, you can take steps to make them less traumatic
- to you and the employee- considerably less explosive from a
- liability viewpoint.
-
- A discharge is less difficult for both employer and employee
- when proper steps are taken. Many of these steps have
- already been suggested in this report, but they are
- summarized here together with other recommendations.
- Make certain you have an adequate written record to support
- the termination. Consider alternatives: Does the employee
- deserve and other warning? Can he be rehabilitated with a
- different type of supervision? Would the problem be
- alleviated by a transfer to another department or
- supervisor? Would a leave of absence improve performance?
- When at all feasible, the actual dismissal should not be
- done by the immediate supervisor should recommend the
- discharge, but its execution should be carried out by
- someone in a higher position, if possible. This creates a
- less emotional atmosphere. Be candid about the reason for
- dismissing the employee, but becareful not to be abusive. An
- abusive dissmal may prompt the employee to sue for emotional
- distress. Be prepared for unpleasant reactions.
-
-
-