Law360, New York (August 31, 2016, 7:06 PM ET) — Don’t hit on your colleagues, don’t mock an employee’s weight, don’t tell racist jokes — in employment law, the rules are fairly clear. Yet for every seemingly obvious faux pas, attorneys say, there are dozens of oblivious managers seemingly eager to commit it.
Pointing out such workplace “don’ts” is easy, but the employment attorneys worth their fees are the ones savvy enough to alert employers to less obvious, but equally dangerous mistakes their clients may be overlooking.
Here, top employment lawyers run down four things otherwise smart employers do that they shouldn’t.
They’re Lazy With Personnel Records
One common mistake that can leave the smartest clients vulnerable to lawsuits is their failure to be honest in employment reviews, according to Ford & Harrison LLP Atlanta office managing partner John Monroe.
When you work with people every day, it can be easy to gloss over flaws in favor of avoiding confrontation, he says. And reviews can sometimes be seen as less important than other duties, leading already-overworked managers to rush through them.
It’s for these and other reasons that entire departments can get marked down as “above average” in the personnel files, for example. But when an employee whose record shows nothing but positive reviews gets fired, they can have ample ammunition for a suit.
“You fire somebody for performance-related deficiencies, then you pull out the last three years of evaluations and they all say ‘meeting expectations,’ and yet in the last three months you’ve got a bunch of write-ups saying how terribly they’re doing, that creates a real problem if it turns out the employee has just informed you they have a disability or they’re pregnant,” Monroe said.
It’s important to vet a person before firing them, says Buchalter Nemer PLC labor and employment co-chair Bob Cooper.
“I’ve had employers that just call me for every termination, because undoubtedly, we run down a checklist of things and that points out all the potential red flags, all of the items they don’t realize they’re walking into,” he said. “That’s especially true with disability claims. It can be true with harassment claims.”
But handling personnel matters the right way starts with hiring, and smart employers can get things wrong by failing to do their due diligence, and instead relying on gut instincts.
Cooper says too much faith in intuition led to one of his clients finding out that one of its pilots had lost his pilot’s license, nine months after hiring him.
They Don’t Properly Follow Through On Internal Investigations
Workplace issues stemming from problems between employees are sensitive by their nature. Sometimes, this can lead a concerned employee to bring an issue to their boss, but ask that it not leave the room.
But granting such a request can be a costly mistake, Monroe says.
“The manager says, ‘I hear you, that is a concern, what do you want me to do?’” Monroe said. “‘Don’t tell anyone, don’t do any follow up.’ Then, lo and behold, it becomes a big problem down the road. The manager has known about it but has failed to act because the employee asked them not to.”
While it may upset the employee, the right thing to do in such a case is to promptly investigate, experts say. If the issue turns out to be legitimate, then it must be dealt with. If there is no issue, then the investigation must be documented while the status quo remains.
But things shouldn’t end there: Regardless of how the investigation turns out, an employer must make sure the reporting employee is not treated unfairly, or even treated with the appearance of unfairness.
“The person has engaged in protected activity by having complained,” Monroe said. “If [the employer hasn’t] made sure that the manager about whom they complained understands his or her obligation to refrain from conduct that could be considered harassment, or the employee gets demoted or transferred or some other adverse employment action is taken as a consequence, then you’ve taken somebody who really didn’t have a complaint and given them a valid issue.”
They Don’t Emphasize Labor Matters
According to Kirkland & Ellis LLP’s Tim Stephenson, head of the firm’s transaction-focused labor group, the firm might be reviewing upward of 200 deals at any given time.
Among the most common labor-related red flags he sees when reviewing his clients’ potential acquisitions is a failure to devote the proper resources to labor matters.
Many companies he reviews put HR under the purview of their CFO, sometimes with help from a lower-level specialist or generalist. But because keeping up with new rules and regulations is a full-time job in itself, this is a mistake, he says, no matter how competent this executive or generalist may be.
“Even small companies need to be looking for people who are following developments at the labor board, the department of labor and state labor agencies on a regular basis, so they can stay on top of things,” Stephenson said. “Things are happening, and they don’t realize it, sometimes, until it’s too late.”
Merely having the right person in charge isn’t everything — that person must keep up-to-date with the rapidly changing employment law landscape. So too must they ensure that any other employees whose jobs involve personnel matters know the state of the art, so seemingly innocuous situations like interviews don’t spark lawsuits.
“The best prescription for that is training, training, training,” said Seyfarth Shaw LLP partner Gerald Maatman.
He says anyone interviewing applicants should be well-acquainted with Americans with Disabilities Act and Equal Employment Opportunity Commission regulations.
“I would analogize it to having a driver’s license and learning the rules of the road when it comes to interviewing questions and realizing that there are ‘thou shalt not’ issues when it comes to asking questions of employees,” Maatman said.
They Put Off Compliance
Sixty years ago, there wasn’t much to employment law aside from the Fair Labor Standards Act. But in the decades since, the body of law has grown immensely. There are now more rules to comply with than ever, and with so many employers failing to emphasize HR as they should, they don’t always adapt to new rules promptly.
“Companies grow into a sort of noncompliance phase in their history, where they’ve grown too fast to develop the resources needed to avoid mistakes that become costly,” Stephenson said.
Among the biggest new hurdles facing employees is the new line for exemption from the FLSA’s overtime requirements, which rises from about $23,000 to more than $47,000 in December. Put simply, employers have to decide whether they want to reclassify their employees as nonexempt and pay them hourly — at time-and-a-half or half-time for hours worked over 40 — or they’re going to have to raise salaries. But this is not an easy task.
“If you’ve got an employee at $43,000, scheduled to make a $1,000 raise to $44,000, maybe they’re a manager who works 50, 60 hours a week, it’s going to cost a lot of money if it doesn’t raise that employee up to $47,000,” Stephenson said.
“But the employer is also going to say, ‘this person being raised up from $43,000 to $47,000 in one fell swoop, that’s not fair, now I have to go raise my other people up,” he added.
While employees have known since May that the rule change is coming, Stephenson says as many as 40 percent of the companies he’s looked at have yet to come up with a plan. And should compliance procrastination become compliance failure, things could get costly.