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Avoiding the Top Employer Mistakes of 2006 in 2007

By Elizabeth M. Rice, SPHR

We all make mistakes from time to time and employers are no exception. As we review 2006, we find that some employer errors were far more costly than others. To learn more about the common mistakes and best strategies on avoiding them, we turned to Lonny Zilberman, Partner in the Employment Law Group at Wilson, Petty, Kosmo, and Turner (WPKT).

According to Zilberman, the majority of mistakes in 2006 with verdicts over $1 million, fall into four main categories: wage and hour claims, harassment claims, disability discrimination and retaliation claims.

Companies using staffing firms and payrolling services should revisit their own staffing policies to ensure that the imposed limits are truly necessary and not based on a common legal misperception. Lenz' article examines basic principles of law that apply to employee benefit plans, and discusses ways that customers can effectively avoid retro-benefits exposure.

Common mistakes within these categories include:

• Retaliation against employees who make complaints
• Lack of enforcement of the anti-harassment policy
• Lack of enforcement of the meal/rest period rules
• Denying disability accommodations
• Firing employees who complain about workplace issues

Wage/Hour Claims
The principal law regulating employee benefits is the federal Employee Retirement Income Security Act (ERISA). This law sets rules governing the structure and administration of employer retirement and other benefit plans. However, it does not require employers to offer benefits, nor does it dictate the level of benefits that are offered.

Case Example: In a recent case against Wal-Mart, the jury fined the company over $55 million in missed meal periods and over $100 million in punitive damages. Employers can use their time records to create audit functions for meal and rest periods. It is also helpful to state and restate policies and have a formal complaint mechanism in place. The exempt status of employees can be reviewed on a periodic basis and employees that do not comply with policy are notified with proper documentation and disciplined.

Harassment
When we think of harassment claims, we automatically associate them with sexual allegations. It is critical to understand that harassment can take many forms outside of "sex" including ethnic slurs. As with other claims, even if the employer is not directly participating in the harassment, they can be held responsible for not taking action to stop the harassment.

"Employers need to fully understand the law of National Origin harassment," stated Zilberman. "Ethnic characteristics encompass more than skin color and physical traits. Names are often a proxy for race or ethnicity. Intent is not the issue - the jury evaluates if the conduct is offensive and unwelcome from the point of the victim."

Case Example: In a recent case against FedEx, two Lebanese employees were teased and called derogatory names by a couple of other employees, including a manager about their ethnicity. The plaintiffs complained to the company and no action was taken. Even though there was no evidence that the harassment was actually taking place, the plaintiffs were awarded $61 million and employers across the country got a wake up call.

Employees and managers need to recognize all types of potential harassment. Every complaint needs to be taken seriously - even those involving "name calling" or "teasing". Employers need to conduct a prompt, thorough, and documented investigation and take swift action to stop any harassment.

Disability
California has its own disability anti-discrimination statute, which says that a person can be considered disabled even if they have a way to mitigate the effects of their disability. For example, if you wear glasses or are on medication for high cholesterol, then you could be classified as having a disability even though corrective measures allow you to lead a normal life.

The top disability related mistakes include demoting employees who take leave, denying an employee has a disability, and/or discontinuing reasonable accommodation requests for no "good" reason.

Case Example: Due to panic attacks and a fear of interacting with people, a county employee was given permission to do his "in person meetings" over the phone. After 15 years of service, a new supervisor decided that the accommodations were "preferential treatment' and let the employee go. The jury awarded the worker $6.5 million.

Retaliation
Retaliation continues to be a growing area of claims in employment cases. In a recent survey by the Ethics Resource Center in Washington, D.C. of employees employed by the City of San Diego, the primary reason given by 63% who did not report misconduct was fear of retaliation. The most common form of misconduct was "abusive and intimidating behavior" by a supervisor.

Title VII of the Civil Acts Right of 1964 forbids employers from discriminating based on "race, color, religion, sex, or national origin." The Act includes an anti-retaliation provision prohibiting employers from discriminating against employees and job applicants who complain of practices that are illegal under Title VII.

Case Example: In a case against Eagle Jet Airlines, a flight attendant claimed she was subjected to verbal and physical harassment by a pilot. The airline decided not to discipline the pilot and to layoff the flight attendant. She was the only flight attendant that was part of this layoff. The jury awarded the flight attendant over $1.4 million.

An Informed Strategy for 2007
The best strategy in avoiding these common mistakes in 2007 is to have a clear plan of action for each category. As you create your plan, keep in mind the following list.

• State and restate company policies at every opportunity
• Create an atmosphere where complaints are seen as positive and welcomed.
• Take every complaint seriously and conduct a comprehensive investigation as soon as possible.
• Start the documentation process when the problem starts happening - not after the claim is made.
• Be consistent with how you take any adverse action and consider how adverse action is going to affect the issue.
• Don't use layoffs to get rid of complaining employees.

By keeping up with the common and not so common mistakes, employers can work toward creating a more healthy work environment as they avoid the very costly lawsuits and verdicts.