The Costs of Employment Litigation and the Benefits of Employment Policies, Procedures and Audits

Litigation for employment based claims can subject a company to both the risk of paying damages and expending substantial attorney fees for the company's counsel, and quite possibly the employee's counsel if the company loses the claim. The non-economic costs of employment litigation can also be taxing and may include: current employees spending time talking with the employer's attorneys, giving depositions or attending court proceedings instead of spending time conducting the business of the employer. In addition, the employer is required to gather and produce every document potentially relating to the plaintiff’s employment with the employer, including electronically stored documents. This can become both expensive and burdensome for a company.

Proactive measures from the start until the end of the employment relationship are the best way to avoid the risk of paying damages and minimizing the expenditure of legal fees. It is therefore important to create and implement appropriate policies and practices concerning all facets of the employment relationship--interviewing, hiring, personal conduct of employees, social media, privacy concerns, and disciplining and terminating employees.

Here are some basics that PDH routinely recommends to its clients:

  • Employers should have their employment applications reviewed to be sure they are legally compliant and avoid elicitation of inappropriate information from potential employees such as the potential employee's age, information that could lead the employer to learn about the potential employee's age, or any other information relating to a legally protected status.
  • Those company employees responsible for conducting prospective employee interviews should be trained regarding permissible and impermissible questions to ask or avoid during interviews. For example, interviewers should be trained in avoiding questions that could elicit information relating to a potential employee's age, national origin, religion, disabilities, or any other potentially protected status.
  • Job descriptions should exist for each category of employee that include the following information in an accurate manner (See Exempt v. Non-Exempt—Know the Difference):
    • The educational and practical requirements of the position.
    • The essential functions of the position.
    • Supervisory authority, if any, of the position.
    • The category of employee to which the position reports.
    • Whether the position is exempt or non-exempt.
    • The employee's signature acknowledging receipt of the job description.
  • Employers should have employee handbooks that contain separate written policies putting employees on notice of the various company employment policies and rules, including progressive discipline, drug testing, leave and other benefits or terms and conditions of employment.
  • In addition, employee handbooks should provide for proper avenues of complaint for employees concerned with discrimination, retaliation, harassment, and any other employment-related issues. This will enable the employer to create a proper defense to discrimination and harassment lawsuits should the employee fail to use the available avenues of complaint.
  • Likewise, employment handbooks should have proper procedures to enable employees with disabilities to request and engage the employer about obtaining reasonable accommodations.
  • All employers with payrolls approaching 50 employees or more must be cognizant of the Family Medical Leave Act ("FMLA").
  • Employers should be sure to keep separate personnel files and medical files relating to employees. Comingling all documents relating to an employee's employment can result in an inference that an employer considered improper medical information when making an employment decision. All documents relating to an employee's medical history--doctor notes, FMLA forms, and requests for accommodations due to disabilities should be kept separate and apart from personnel files and only select employees should have access to those documents to avoid their consideration when making an employment decision.

The bottom line is there are a myriad of employment laws and regulations, both federal and state, that require the employer's attention. Compliance with those laws and regulations and the adoption of proper procedures for hiring, disciplining, reviewing, and terminating employees can avoid litigation following whatever employment decision is made. While litigation is never totally avoidable, compliance with laws, regulations and best practices relating to employment decisions is the best and most cost-efficient defense to potential litigation or actual litigation.