For a small or medium business, one employee lawsuit could have life-altering consequences, endangering the health of the firm you've spent your life building. These lawsuits are up by 400 percent in 20 years. While the figures are scary, you can protect yourself from the crippling expense and devastating consequence of most HR lawsuits.
According to the Equal Employment Opportunity Commission, there were 88,778 allegations of workplace discrimination in 2014, and 133 lawsuits filed. Race was a factor in over one-third of the incidents and sex (gender, sexual harassment, and pregnancy-related employment discrimination) was a factor in 29.3 percent of incidents. Employees claimed discrimination over disability 28.6 percent of the time, and age-related discrimination 23.2 percent of the time. Troublingly, over 40 percent of the alleged incidents were retaliatory.
The EEOC returned $22.5 million in relief to wronged employees in 2014. As the numbers show, there are serious financial ramifications if you are sued by the EEOC, from the cost of defending your organization to the damages your business must pay if found guilty.
While the data shows that many employees feel they were discriminated against at work, it is often a surprise for employers when a lawsuit is formally filed. Rather than believe your company is immune from a lawsuit — and risk a nasty surprise when one is filed — doesn't it make sense to acknowledge that the risk is not only real but is growing, then take steps to protect your workplace and reduce the risk?
These 5 types of lawsuits are common and defensible:
By preparing to avoid these 5 common lawsuits, you can greatly reduce the odds of an HR lawsuit.
Even if the employee's lawsuit is frivolous, you must still defend against it. This can be costly for your business. The matter of reputation cost is a factor if it is reported in the press. It should go without saying, measures you take to lower your risk of the HR lawsuit are worth your time and money.
These steps will help your HR team follow best practices. In the event that you are sued, you'll have what you need to prove your side of the story. Better still, by following these steps you'll reduce the odds of an incident escalating to a lawsuit and avoid the headache of getting sued. Incorporate these practices at your workplace:
As a general best practice, strive to make sure documentation would tell the whole story of what happened, even if you were not there to add context. While it may seem like an undue burden on staff to keep significant records, these records will save you significant time (not to mention stress) if an employee files a lawsuit.
When it comes to something like progressive discipline, it's critical that your paper trail prove that your organization took steps along the way to fix things. This can disprove an employee's claim that they were unfairly targeted.
Develop guidelines for performance evaluations. Managers should strive to be truthful and thorough when rating employees, especially when someone is underperforming. A rating that does not accurately reflect an employee's performance not only makes it harder to prove a case later on, it prohibits the employee from having a growth experience.
Instruct managers to document verbal conversations as well as email exchanges. After a face to face meeting with an employee, managers should take notes on what was said and how the individual responded. Proper documentation of face to face conversations can help you avoid "he-said-she-said" allegations.
In some cases, managers may worry about terminating an employee and create excessive documentation leading up to the termination. This strategy can backfire, lending support to an employee's claim that a firing was retaliatory, for instance. Documentation should always be balanced, consistent, and fair across the board. If you start keeping more detailed records around one individual's late arrivals, for instance, it's best to give all late arrivals the same notice.
Documentation will also show you where your organization may be at risk of a lawsuit. By documenting performance reviews and promotions, for instance, you might find that a cultural value of gender parity or diversity in hiring is not being upheld when promoting employees. When something like this comes to light, your organization can take positive steps to reinforce your commitment to diversity and gender parity, perhaps by viewing gaps on a resume with more lenience, since women are more likely to take time off to care for ill relatives. Whenever you notice patterns in the data, you have the opportunity to be a more inclusive organization, so the record keeping can benefit your business in other ways.
While these steps will help you avoid the majority of lawsuits, you never know when someone will file a claim. An employee may feel they were wronged and decide to lash out, even if you did everything correctly. In this case, all you can do is comply with the proceedings, remain calm, and trust that the truth will come out.
As soon as you are aware there is a lawsuit filed against you, retain counsel. The sooner you act, the more time your attorney has to familiarize themselves with the individual's employment record and put together a plan. The worst thing you can do after a lawsuit has been filed is go into denial about it — yet this is precisely what many do!
Stay calm; panicking about baseless allegations not only wastes time and energy, it can distract other employees from doing their jobs. If you've incorporated these suggestions into your human resources department and if the accusation is baseless, then the evidence is on your side. Rather than engage with the plaintiff, refer all matters to your attorney. Your attorney will build a case that disproves the plaintiff's allegations, they will find witnesses who can corroborate your story, and they will use the paper trail of documentation to show that you acted in good faith.
Platinum Group is a full service human capital management resource that allows businesses to manage their payroll, benefits, compliance and other various human resources functions in a way that maximizes efficiency and eliminates redundancies.
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Platinum Group is headquartered in Asheville, NC with locations in Raleigh, NC; Greensboro, NC; and Charlotte, NC.