Understanding and Reducing Employer Risk in a Down Economy Print

In a down economy, we always see an increase in employment-related legal claims, as terminated or laid off employees seek to grasp at some rationale as to why they have been let go, often overlooking the obvious fact that they or the Company (or both) are simply underperforming.  These claims are often times meritless, but without the proper documentation or systemic support, these claims can be very costly for employers to defend (even if successful).  The key thing to remember in these situations is that, if you put in place appropriate mechanisms to prepare for these claims, they can be dismissed quickly or, even better, never brought once the employee (or his or her counsel) sees that the employer has covered its bases.

Wage Claims

Many times, an employee will look upon termination to the methods of payment to see if there is a wage-based claim. Indeed, savvy plaintiff’s counsel understand that wage claims in Maine carry double damages, and attorney’s fees.  Therefore, a simply $1,000 oversight in payment can easily mushroom into a $10,000 litigation or more.  Employees or, more likely, employee’s prospective attorney will ask themselves:

        Did I receive overtime?
        Why was my overtime “comped” into the next pay period, and is that legal?
        Was I properly compensated for commissions?
        Why weren’t my commissions included in my overtime rate of pay?
        Am I appropriately characterized as an exempt employee?
        Why wasn’t I paid for vacation time?
        Was my FMLA leave paid or unpaid?

You, as the employer, need to be able to answer these questions clearly and definitively when they are asked.  If you as the employer are unable to articulate the compensation structure in your Company for wages and commissions and overtime, or cannot state with clarity why an employee is exempt from overtime, you can be certain that the employee and the employee’s counsel will articulate those items in an unfavorable light to you after further digging.

Sexual Harassment Claims

Harassment-based claims are on the rise, and an employer’s best defense is one that is actually required by law for many Maine employers.  In Maine, an employer of 15 or more individuals must provide sexual harassment training to employees within the first year of employment. In addition, all employers must provide their employees annually with a copy of the company’s sexual harassment policy.  This policy should detail what is harassment, provide examples, give the employees notice of who they should communicate with in the case of harassment, and give the contact information for the Maine Human Rights Commission, among other things.  Many harassment cases are won (or lost) based on the presence (or absence) of a sexual harassment training program and policy.  If you have a program in place, and individuals are aware of the reporting requirements, you are made aware of problems as they arise.  For the individual who seeks to fashion a harassment-based claim out of whole cloth post-employment, the fact that they never reported any harassment while employed- and the fact that the company has a valid program and policy- is a powerful defense for the employer in these situations.  By the same token, the absence of a training program (including training for supervisory personnel) and the absence of an updated policy often times sounds the death knell in these cases.

Reducing Risk at the Start

There are numerous ways the employer can reduce risk in the employment relationship, but one of the most effective ways is to hire the right person.  I am amazed at the range of questions that are asked on applications and in the interview process, and the questions that aren’t asked.  The key component in a hiring decision is to gather as much information as possible to make an informed decision.  I have seen applications that ask applicants to disclose only certain felonies.  Wouldn’t you, as the employer, want to have a disclosure of all felonies so that you can make an informed decision as to fitness for working? I have seen employers ask applicants for their work history on an application, but not ask if the applicant was fired from any prior position, or if the applicant was asked to leave. I have seen employers ask applicants about various professional licenses, but neglect to ask if that license has ever been suspended or revoked for any reason, or if the applicant has ever faced disciplinary proceedings related to the license.  Your applications should be bolstered to ensure that you are getting as much information as is appropriate, and legally permissible. The applications should make clear that truthful answers are required, and a lack of clarity on the application is grounds for termination if employed.

In short, there are a number of very simple, cost-effective ways that you as the employer can reduce risk in the employment context.  Please feel free to contact any of the attorneys at Taylor, McCormack and Frame if you have any questions regarding these risk-reduction strategies, or desire assistance in implementing them.

 
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