- 781-659-2262
Employment Practices Liability refers to 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 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 working out OK. The key is that it’s a two-way street, both for the employer and for 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... say if business needs change or 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 high standard, even with the “at-will” doctrine, so don’t be 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, as well as changes to FMLA and ADA.
These laws and regulations apply to all three stages of employment, so 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
Termination
There are appropriate steps to be taken at each part of this process. For example, the employment application and the employee handbook should state clearly that the 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 makes the employer complicit in discriminatory practices. In addition, 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 which are always more defendable. For others, if termination can happen deliberately over a period of time where documentation can be gathered, that’s safer. The more documentation the better. Imagine you end up in front of a judge or jury in a year; give your defense team some paperwork to work with.
In Massachusetts, employment regulations require that the employee must be notified whenever a negative review is placed in his or her file. Unfortunately, the effect of this can be conflict avoidance whereby a friendly manager may avoid writing a negative review since asking the employee to sign the review for placement into their file can be 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, perhaps because of the notification regulation. So ironically, 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 cite 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. 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 outsource the cost and many of the headaches associated with these lawsuits.
But nobody wants a claim. It’s better to provide employees with training and opportunities to develop in a position.
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 unnecessary 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 fair to the employee. Every employee should know their value to the organization, as well as ways to enhance that value and avoid self-sabotage.
To discuss your personal situation with a professional call Gordon Atlantic Insurance toll free at 800-649-3252. Prefer to type instead of talk? Pose your question below!
