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Avoiding Employment Lawsuits

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"To sue or not to sue is no longer the question."

It wasn't long ago that employment-related lawsuits were relatively rare. The courts tended to side with employers when such cases were litigated; even when the ruling was in favor of the plaintiff (employee), damages were small, usually covering only the amount of wages actually lost. As a result, attorneys were reluctant to take on such cases, especially on a contingency basis.

That scenario changed, however. Personal injury lawyers, accustomed to enjoying large jury awards for clients who had suffered pain and suffering because of someone else's negligence, became aggressive in skirting legal formalities and bringing employment suits to sympathetic juries as quickly as possible. Dismissed employees or those claiming they were not offered a job because of discrimination were increasingly compensated for the pain and suffering inflicted on them by unfair employer conduct.

The impact of this type of litigation has been dramatic. In the '90s, there are more employment-related lawsuits being filed than personal injury suits. Jury awards in employment cases are routinely into six figures and employees are winning many more cases. As a result of this groundswell of civil litigation in matters of employment, a rich file of legal precedents upon which to support attorneys' arguments has mushroomed.

That the United States has become the most litigious society in the world is beyond debate. Former Chrysler chairman Lee lacocca is fond of telling the story of a tree that grew in the middle of the Sahara Desert: There was no other vegetation within hundreds of miles. During World War II, a British tank driver ran into the tree. lacocca finishes the story by adding, "If it happened today in this country, he'd sue. I don't know who he'd sue, but he'd sue."

This penchant to sue touches every aspect of our lives; its ramifications for American business are especially damaging and confusing. Problematic employees whose employment could once be terminated at management's discretion through "good cause" now turn to the courts for redress, and often win.

Employers' Liability Is Increasing

Today's employer has more to worry about than being accused of an unfair dismissal of a troublesome employee, or failing to hire someone because of perceived prejudice in the decision. As expected, the liability of employers for their employees' conduct now extends beyond the workplace. Consider these examples:
  • A Texas cab company was sued for $5 million after one of its drivers raped a passenger. The plaintiff won.

  • A security guard at a Miami bank killed a fellow guard, and was judged mentally incompetent to stand trial. The slain guard's widow sued the bank for failure to have adequately researched the murderer's history of mental stability. The bank settled.

  • A guard for a major national security company stole a large sum of money from one of the firm's Rhode Island clients. The security firm had thoroughly checked the guard's references, including a search for prior criminal convictions. No criminal history was found, and every reference had positive things to say about the guard. Still, the client sued, the jury found in its favor, and the Rhode Island Supreme Court ruled that where "sensitive" jobs are involved, an employer must adequately research a potential employee's past, even when initial queries fail to turn up negative information.
There are thousands of such lawsuits each year, and they touch on every facet of the relationship between employer and employee, employer and prospective employee, and even employer and past employees. Employer liability is not necessarily limited to employee misconduct while on the job, a situation covered under the legal concept of respondent superior. Employers have been held liable for injuries caused by the employee outside the employment arena. Never before has there been such a critical need to evaluate a prospective employee thoroughly before offering the job. Checking references is a key factor.

Wrongful discharge is another area of litigation that today's employers must face. Jury Verdict Research Inc., based in Solon, Ohio, is a private organization that monitors jury decisions throughout the country. It reports that a former employee who sues a private company for wrongful discharge has an 86 percent chance of winning the case, as opposed to a 33 percent chance for a similar suit against a government-run business.

Every aspect of the employer-employee relationship has been impacted. The legal ramifications of hiring, retaining, promoting, compensating, interviewing, reference-checking, and firing are consider-able. In general, however, companies wishing to minimize the risk of becoming embroiled in employer-employee litigation must begin by acknowledging the possibility of its happening, no matter how well intentioned management might be. Just as the hiring process cannot be left to chance and intuition, the reality of today's legal climate cannot be ignored.

Review Your Employment Practices to Avoid Legal Problems

Enlightened companies are building an annual legal checkup into their budgets. It's money well spent. Should you decide to do so, have an attorney knowledgeable in the field of employment law review such areas as
  • Employee handbooks

  • Employment applications

  • Hiring practices

  • Firing policies

  • Rules of employee conduct

  • Workplace safety and security

  • Performance reviews

  • Salary increases and promotions
A legal review can head off future legal problems.

Recently, some employers have been building into conditions of employment a contract that contains a provision precluding disgruntled ex-employees from taking civil action, and limiting them to arbitration. The U.S. Supreme Court has ruled in one case that a 62-year-old worker could not sue a former employer for age discrimination because he had signed such a contract when taking the job. The court rejected the notion that his right to bring action in civil court had been guaranteed by the Age Discrimination in Employment Act.

Keep In Mind Legal Issues When Interviewing Job Candidates

It's not only lawyers who should be involved in evaluating and implementing a company's employment policies. If the company's commitment to ethical, legal employment practices is part-and-parcel of its business philosophy, the company must ensure that every employee in a responsible position be aware of the pitfalls into which they might step, even inadvertently. A careless comment to a job candidate by a company employee, who has not benefitted from at least a cursory education in the company's employment practices, could become the basis for future legal action. Promising job candidates that they will be secure in their job at the company, will never be fired unless they deserve to be, or that the position they're interviewing for is a permanent one, could cause employment-related legal actions. Ten years ago, such comments were considered innocuous. Today, they can land companies in court.

Discrimination based on age, gender, religion, and national origin is a common area of offense. While presumably everyone knows that it is blatantly illegal to discriminate in hiring based on these factors, there is an increasing number of subtle mistakes an employer can make that may lead to legal action. Requesting that a candidate's photograph accompany an employment application, asking for his or her place of birth, and inquiring into a woman's plans for starting a family have all been considered to be in violation of today's employment law. Privacy in the workplace has also become a popular legal issue as more companies test employees for drug and alcohol abuse and utilize electronic technology to monitor performance.

These issues contribute to a legal minefield for even the most well-intentioned company and management to traverse. No book can or should attempt to offer legal advice. However, if there is one thing a book on hiring, retaining, and firing should attempt to do, it is to raise the awareness of American companies concerning the integral relationship between staffing a company effectively and the legal ramifications of failing to do so lawfully and ethically. It has been said that "nice" doctors are rarely sued for malpractice. The same thesis applies to nice companies. Many employee law suits may be sparked by vindictiveness, but when there is a healthy company spirit, employees are less likely to sue, and are even discouraged from doing so by contented colleagues.
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