How to Ensure that Your Company Does Not Become Another Casualty to Rising Employment Litigation

As the economy continues to struggle, the number of companies implementing layoffs and reductions in force likewise continues to grow. Along with that growth comes a corresponding increase in employment-related litigation. Recently, it was reported that 45% of the respondents to a survey of corporate counsel on litigation issues and trends cited labor and employment as the most prevalent form of litigation they faced in 2009. Over half of the respondents reported that discrimination lawsuits comprise the greatest portion of the increase. In fact, they reported increases of 11% in sex discrimination cases and 10% in race discrimination cases during the past 12 months alone. Clearly, this is an area in which caution is required.

What can you do to prevent your company from becoming another statistic?

Make Smart Hiring Choices

The easiest way to protect against problem employees is not to hire them in the first place. While it is impossible to predict with absolute certainty which applicants will become productive employees and which will become disruptive, there are screening measures your company can take to ensure that the best person is found to fill each position. Some of the actions you can take include prescreening, interviewing, administering assessments, and verifying references before making an offer. Engage in dialogue; ask tough, but relevant questions; and look for the red flags, rather than avoid them. (For example, if an applicant has been to five different companies in the last two years, you should fully explore the reason for each move).

Identify and Address Problems Early

Once an employee is hired, the company should monitor his or her performance on an ongoing basis. Turning a blind eye toward underperformance or behavioral issues only creates additional risk for your company. Rather than waiting until the employee’s evaluation to address problems, promptly communicate your concerns and expectations, and document the discussion in his or her personnel file. If the behavior continues despite intervening counseling, stronger disciplinary action may be needed. Such action should be taken sooner rather than later. If it corrects the problem, that is better for both the employee and the company. If it does not, it is much easier to terminate an employee following counseling and discipline than to terminate without notice.

Conduct Accurate Annual Performance Evaluations

Properly conducted performance evaluations can be beneficial to both the employee and the employer, by identifying and correcting problems. Poorly conducted performance evaluations, on the other hand, are a gold mine for plaintiffs’ employment lawyers. To ensure that your evaluations are helpful rather than harmful, counsel your supervisors to use reviews as an opportunity to improve employee performance, or, alternatively to document performance problems, and thereby provide a means of defending the company against potential employment claims. Supervisors should not shy away from an employee’s bad behavior. An evaluation should truthfully and accurately note areas where improvement is required, and identify objective means of achieving success along with a timeframe for doing so. If there are positive attributes about the employee’s performance, they should be noted as well.

Document, Document, Document

All too often, companies facing employment-related charges assert that they have had a long list of problems with the charging employee. Yet, when the employee’s personnel file is reviewed, there is little, if any, documentary evidence to support the company’s position. In fact, the prior evaluations may even be quite positive. When problems arise, and most certainly when discipline is administered, it is essential that the employee’s file be documented. Every employee’s personnel file should contain accurate and up-to-date information, to avoid the appearance that you later “papered the file” to justify an adverse employment decision.

Seek Legal Guidance Before Rather than After Taking Action

As the area of human resources becomes increasingly complex, the pressure and the demands placed upon supervisors and managers likewise continue to grow. Supervisors can help lighten this burden by seeking legal guidance sooner rather than later. Many times the call to the lawyer is not made until after the adverse employment action (such as termination) is taken, or even after the employee has filed a charge with the Equal Employment Opportunity Commission or filed a lawsuit. When supervisors are faced with difficult employment decisions, a phone call to a lawyer before the decision is made can help avoid significant problems (and expenses) down the road.

Value Your Employees

Treating employees with respect and civility can go a long way in avoiding future employment problems. Employees who feel that they are valued and treated fairly, and in a manner consistent with that of their peers, are far less likely to cause problems or file claims. Work to ensure that the respectful and consistent treatment of your employees is an expectation that is firmly embedded within your company’s culture. Typically, it is easier to keep a good employee than it is to hire and train a new one. Make sure employees have open lines of communication to identify and resolve small problems before they become large ones.