Here are some common mistakes that many businesses make with respect to employee relations (in no particular order):

1.  Not Following Your Employee Handbook

A good employee handbook sets the tone for a workplace.  It should provide information that employees need to know including company policies, benefits, and consequences for violations of the handbook provisions.

Employee handbooks are usually not legally mandated.  In fact, many states do not legally require employers to follow their own policies.  However, a company’s rules and policies are often pointed to in legal disputes, and they can frequently make or break a legal case. The best way to avoid such a conclusion is to set out clear policies and adhere to them consistently.  

  • Example:  A company can be accused of having unlawful discriminatory or retaliatory intent when it deviates from its own policies with respect to a particular employee.

2.  Failing to Document 

Employers that do not document conduct and/or performance issues with employees will regret it down the road.  Whether the company faces an unemployment claim, EEOC Charge, lawsuit, or any other legal challenge, it is difficult to defend against a claim when there is no evidence of the employee’s bad behavior or poor work. 

In addition, employment claims can take years to resolve. That means key witnesses can disappear. In the event that happens, documentation will be the main evidence upon which a company has to rely to avoid liability.

3.  Misclassifying Employees

Federal law places specific requirements on the way employees are classified for purposes of pay.  You cannot avoid paying overtime and make an employee work unlimited hours a week for a set amount of money simply by labeling them as “salaried.” 

Only certain types of jobs are considered “exempt” from overtime (based on criteria set out under federal law).  Likewise, an employer cannot label someone as an “independent contractor” who receives an IRS Form 1099 (versus a W-2 employee).  There are specific legal criteria that must be met when making those designations.

4.  Denying Overtime Pay

Non-exempt employees (hourly or salaried) must be paid overtime for any hours exceeding 40 that were worked in a particular workweek. 

TIP – Do NOT confuse this requirement by thinking that overtime is only paid if an employee works more than 80 hours in a 2 week pay period!  You must look at hours per week.

An employer cannot avoid paying overtime by asking employees to work “off the clock” or shifting already worked hours into a different workweek. 

It is especially important that employers keep track of the work hours for all non-exempt employees (including salaried). If a pay claim arises and there are no records, it will be extremely difficult to defeat the allegations, and the company could face liability for the unpaid overtime, liquidated damages as well as the employee’s attorneys’ fees (i.e., in addition to paying attorneys to defend the company!)

5.  Ignoring Employee Complaints

It is important to look into employee complaints to determine whether they are legitimate.  While many issues may not implicate legal exposure, you never know. 

  • Example:  An employee is terminated for making a false complaint about her supervisor.  The nature of the complaints may later be raised in an unemployment claim and/or could also become the subject of a claim of an allegation unlawful discrimination, harassment or retaliation.  Even if the allegations have no legal merit, it can be extremely expensive to defend against it.   But, if a company can demonstrate that the employee’s complaint was looked into and show that there was no evidence to support it, that evidence could help diffuse any alleged legal claims.

6.  Different Treatment of Similarly Situated Employees

Employment discrimination claims involve accusations that an employer unlawfully subjected an employee to adverse treatment based on one or more of their legally protected characteristics (race, age, gender, disability, pregnancy, national origin, religion, sexual orientation, etc.). Typically, these types of claims are based on the fact that the employer treated another employee more favorably under similar circumstances.

  • Example:  A 50-year-old and a 20-year-old employee report to the same supervisor who is 25 years old. The 50-year-old employee was late one day and was fired by the supervisor. A few weeks prior, the 20-year-old employee was late, but the supervisor only issued a warning. The company now has exposure for an age discrimination claim by the 50-year-old ex-employee. If such a claim is made the company will have to provide a legitimate non-discrimination basis for the difference in treatment to avoid liability.

7.   Failing to Address Safety Issues

It is important to be proactive about safety issues. A company must maintain vehicles and equipment. Likewise, if there are any chemicals or other potential hazards in the workplace or used at job locations, make sure items are properly secured and stored. It is also critical to have any necessary personal protective equipment (“PPE”) and safety equipment for all employees who need it.  Additionally, make sure that employees hold valid licenses, if required.  Not addressing safety matters exposes your company to workers compensation claims, OSHA investigations, and third-party liability.

8.  Ignoring Employee Health Issues

Multiple laws can be implicated when an employee identifies a health issue: 

  • The Americans with Disabilities Act (“ADA”) – affects companies with 15 or more employees and prohibits:
    • Discrimination against people with “disabilities” (as defined by law), as well as people who are deemed “regarded as” disabled.
    • Discrimination against someone who is associated with a disabled person (such as a spouse or parent).

Additionally, the ADA requires employers to make “reasonable accommodations” for individuals with disabilities, which may include medical leave.

This law It also provides rules dictating when an employer can request medical information or require an employee to undergo a medical exam or inquiry.

  • The Rehabilitation Act – smaller businesses may that do not fall within the ADA’s reach may still be subject to this law if they receive federal funding.
  • Family and Medical Leave Act (“FMLA”). Companies with 50 or more employees have additional responsibilities under the FMLA to provide up to 12 weeks of medical leave for qualifying health conditions and/or to care for someone else. 
  • Workers compensation – most states require employers to have workers compensation insurance to cover for on-the-job injuries or illnesses.
  • Short and/or long-term disability  – if a company offers these benefits, it will be important to understand what events will trigger coverage.

9.  Allowing Human Resources to Handle Legal Matters

Certainly, a HR department should be able to adequately handle certain “routine” matters (separation paperwork, investigating complaints, responding to unemployment claims where an employee quit, etc.). However, it is not advisable to have HR address any contested legal issues with a current or former employee.

  • Example 1:  Someone handling HR issues sends a response to a demand letter or EEOC Charge.  Any erroneous statements in that response can carry through to subsequent legal proceedings, leaving the company stuck in an unwanted legal position if the claim proceeds further.
  • Example 2: If a former employee is arguing unlawful termination in a Department of Labor unemployment case, any information provided in that matter could be used against the company in a subsequent proceeding (such as an EEOC Charge or lawsuit). For these reasons, it is wise to retain an experienced employment attorney early in the process, as it can save time and money in the long run!

10. Not Seeking Legal Advice

Not many people “want” to call a lawyer.  But spending a little up front to get some advice could save you from a legal claim that could lead your business into financial jeopardy.  It is essential to have someone to call when you are not sure how to handle a situation – whether it’s a contract issue, drafting company policies, what documents are needed when hiring employee, how to pay certain employees, or uncertainty about handling employee complaints, discipline and termination.

Moreover, if you receive a demand letter, lawsuit, EEOC charge or other notice of a claim, you should immediately have a lawyer evaluate the situation to assess the potential exposure and to avoid missing any deadlines. EEOC Charges and lawsuits can be expensive and take years to resolve, even if the company did nothing wrong! Likewise, unemployment claims should not be ignored, as successful claims will increase your business expenses and can be used against the company in other legal proceedings.