Employers often believe there is no way to avoid employee claims and lawsuits, so they do nothing at all to prevent them. Or, employers, especially small employers, try to avoid any conflicts with employees and take a hands-off approach to managing employees for fear of causing a claim or lawsuit. Unfortunately, these passive approaches are not stemming claims, especially in California. As reported by the California Chamber of Commerce, employment claims and suits are on the rise, with wage and hour class action suits and retaliation claims leading the charge. Understanding the ever changing federal, state, and local laws affecting the employment relationship is critical to avoiding and reducing these costly suits. While nothing can prevent an employee from suing, the “do nothing approach” typically increases the probability, difficulty, and expense of employee lawsuits. But, employers can take some simple steps to reduce the risks of employment claims.
First, employers need to document the employment relationship. This means having clear and written discrimination, harassment, and retaliation policies that are not simply posted in a break room. Documenting that the employer is telling its employees about these policies and that employees are hearing them is essential. Documentation could be as simple as content-specific sign-in sheets at mandatory training meetings and keeping copies of the training materials. It also means writing up accurate employee evaluations, documenting warnings and disciplinary events, and memorializing review of the evaluations and disciplinary measures with the employee. And, obtain the employees signature on evaluation and warnings/discipline documents.
Be sure employee-specific documents (e.g., employee evaluations, discipline warnings, discipline actions, etc.) are maintained in the employee’s personnel file and that the file is current. Many states, including California, give employees and former employees the right to inspect at least portions of their personnel files. Incomplete personnel files that are inspected or copied by current or former employees (or their attorneys) will make it difficult for employers to later add pre-inspection materials without an accusation that the employer violated the applicable state law or that the materials are a pretext or made up to justify some adverse employment action such as a termination or demotion.
Ultimately, an employee who knows poor performance has been documented is less likely to file suit because a known paper trail exists in the personnel file. And, an interested plaintiff’s attorney seeing a well-documented personnel file might reconsider taking on a claim or suit arising from that employment relationship. A good general rule for employers is: If it isn’t in writing, it didn’t happen. So, document the file.
Second, investigate! Employers often fail to investigate an employee’s complaint of discrimination, harassment, or retaliation, sometimes not realizing that the employee is articulating one. If the employer’s response to an employee complaint of sexual harassment is, “We don’t need to do anything, it seems like griping,” then that employer’s inaction has dramatically increased the risk of being sued. Instead, the employer should investigate to understand the complaint and its factual basis, and should document that investigation and its outcome. Remember, an employee does not need to be “in the right” to have an employment claim. For instance, the employee might be 100% wrong about witnessing what they believe is discrimination, but if they complain about it, then the employer should investigate by following company procedures (hopefully, the employer has a written investigation policy). Also, be careful about disciplining or terminating an employee who recently complained about harassment, discrimination, or retaliation – that adverse employment action might be the basis of a retaliation claim by the employee. As a precaution, at the start of the investigation, the complaining employee should be assured that he or she will not be retaliated against for making the complaint, witnesses should be similarly assured, and the alleged bad actor should be warned that company policy prohibits such retaliation.
An employer should check with an HR professional or an employment lawyer to determine whether and what investigation materials must be kept in the investigated employee’s personnel file. For example, in California, investigation records should not be kept in a personnel file, although relevant disciplinary action, counseling or other direct communications should be placed in the file.
Obviously, employers should also have written policies that tell employees how to lodge complaints, and how their complaints are processed or investigated. Also, the policies should offer a complaint process that doesn’t involve the employee’s supervisor in the event that supervisor is the accused bad actor. Examples include open-door policies (designating any other supervisor, etc. as an acceptable recipient of a complaint) and “hot lines” (telephone or email) by which an employee may lodge a complaint via a third-party vendor.
Learning how to implement these suggestions can seem overwhelming in practice. But, investing time in the employment relationship on the front-end will save time and money in the long run, reducing the length of litigation and perhaps avoiding it altogether.