Employment practices liability is the chance of being sued if you fail to observe and practice certain employment practices regulations. Here’s a guide to keep from getting sued, and what to do if / when you are.
First, the good news: Many states, including Massachusetts, permit an arrangement known as “at-will” employment. This means employment continues as long as employer and employee decide things are OK. The key is that it’s a 2-way street, both for the employer and by the employee. The employee may quit to pursue better opportunities, or just to stop working for a while, without giving a reason. Similarly, the employer may terminate employment without a specific cause or reason: if business changes or other reasons such as when things just aren't working out. Every employer (where permitted) should actively state that employment is “at-will”: in the employment application, in the employee handbook, and at termination.
Employers are still held to a very high standard, in spite of the “at-will” doctrine, so don’t get complacent. The past year has seen a broad array of new state and Federal regulations, including the Massachusetts Paid Sick Leave law and new federal regulations on accommodating pregnant employees and changes to FMLA and ADA.
There are many new laws and regulations that apply to the three stages of employment; it's hard to keep up. A good HR department or outsourced partner is critical*. The timeline of employment risk runs across these three areas:
- Pre-employment, including the application process and interviewing:
- During employment:
There are other steps to be taken at each part of this process. For example, the employment application and the employee handbook should state clearly that employer does not permit discrimination by gender, race, religion, age, sexual orientation, and other characteristics. Not only is this good business practice, it's the law. Tolerating a rogue employee’s discrimination towards any co-worker member of these protected categories makes the employer complicit in discriminatory practices. And your company can face fines from regulators and get sued for the rogue employee's behavior. Non-discrimination should be part of any business’s culture.
That troublesome employee - what to do?
When the employer decides that an employee just isn't working out, there are steps that can be taken to mitigate the risk of being sued for wrongful termination. Performance or misbehavior needs to prompt quick action, but these are more often terminations for cause, always more defendable. For others, If termination can happen deliberately, over a period of time where documentation can be gathered, that’s safer. Lots of documentation is always better. Imagine you're in front of a judge or jury in a year: Give your defense team something to work with!
In Massachusetts, employment regulations require that the employee must be notified whenever a negative review is placed in an employee’s file. Unfortunately, the effect of this is often conflict avoidance: a friendly manager may avoid a negative review, since asking the employee to sign the review to place in the employees file can be so uncomfortable. Too often, no note is added to the file, as though everything is just fine. When the time comes to give the termination notice, the file is empty, sometimes because of the notification regulation, so on paper a perfectly reasonable termination appears to be a thoughtless decision by a capricious employer. The employee feels unfairly treated, and hires an attorney to pursue his or her rights.
When the letter from the lawyer comes in, it will allege all kinds of allegations that are certain to make the employer's blood boil, and escalate tensions. After all, the plaintiff’s attorney has heard only one side. Additionally the attorneys are skilled at exaggerating and fanning the flames. This is where employment practices liability insurance (EPLI) can be valuable. Employment practices liability insurance (EPLI) provides money for legal defense, and usually includes consultation with claims adjusters (many of whom are attorneys) to de-escalate the situation and take stock of the merits of the case. Insurance allows businesses to out-source the cost and many of the headaches, skill sets that are seldom part of a business's core competencies.
But nobody wants a claim. It’s better to provide employees with training and opportunities to develop in a position. But people are people, and you never know.
Our own experience offers these suggestions:
- Make sure your employment manual is up to date. Regulators love to cite employers for not providing up to date employment rights information to their employees. Don't let them play "Gotcha"
- If you are sure that you are going to let somebody go, it's a good idea to talk to a labor attorney* first. The attorney’s fee may seem an un-necessary expense, but the conversation itself will be valuable for future situations as well as protect you for the immediate need. (We network extensively and can refer you to a labor attorney)
- Document, document, document.
- Don't tolerate poor performance, but address it in written format. This can be difficult but is an easier solution than being sued, as well as being fairer to the employee. Every employee should know their value to the organization, as well as ways to enhance that value, and avopid self-sabotage.
* Geoff Gordon neworks broadly with other professionals and can refer qualified HR specialists, labor attorneys, and others throughout southeastern Masssachusetts.