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Saving yourself from a lawsuit

James V. Nelson

In a recent survey of human hesource professionals, more than half said that their organizations have been named as defendants in at least one employmentrelated lawsuit.

The majority (91 percent) had been sued by former employees, followed by current employees (37 percent), unsuccessful candidates for employment (8 percent), and prospective employees (5 percent).

Causes of action include discrimination, wrongful termination, abusive discharge, intentional infliction of emotional distress, negligent hiring, and negligent retention.While each case is different, fees in an average lawsuit can easily amount to between $100,000 and $150,000 when you consider back pay, compensatory damages, punitive or liquidated damages, front pay, attorneys fees, pre-hire and post judgment interest, and appeal costs.

So how do employers avoid these costly lawsuits? You can’t prevent someone from suing you; but you can take the necessary precautions that will place your company in a position to prevail if you are sued.

Start with a comprehensive hiring process:

* Review/determine job requirements; update job descriptions as necessary

* Recruit from several sources, not just the newspaper

* Make sure your employment application is comprehensive and lawful (should be reviewed by an attorney)

* Screen candidates carefully by matching experience to job requirements

* Conduct extensive background checks to verify information

* Conduct a comprehensive and lawful interview by determining questions ahead of time (ask about actual past experiences rather than hypotheticals about the future)

* Conduct a thorough new-hire orientation

* Review performance regularly Even though you may have hired the right person for the job, sometimes corrective action becomes necessary.

Disciplining an employee should be approached positively and constructively.

Determine whether the punishment fits the crime.

Would you be able to explain your actions in a court of law in good conscience?

Keep the following steps in mind, although you should preserve the right to accelerate the process depending on the circumstances:

* Instruction: Make sure the employee knows what to do; make certain the knowledge, materials, equipment and whatever else is needed are at hand; verify understanding without threats or warnings

* Reminder: If performance falters, address immediately; go back; patiently check the first step; make it crystal clear and simple where failure occurred; get agreement on facts and commitment to improve

* Warning: Conduct a thorough investigation if necessary; double check your facts; review the previous two steps with the employee; be specific; give a chance to explain, but don’t accept excuses; make it clear this is the third discussion; describe this discussion as a “warning” and continued lack of improvement is required or further disciplinary action will occur up to and including termination of employment

* Discipline: Carefully recheck your facts; remind the employee of each of the three previous discussions; discipline depends on the seriousness of the matter and company policy; further written counseling, transfer (if appropriate), last chance agreement, suspension or termination Should none of these steps prove successful, and the employee cannot be salvaged, termination may be the only alternative.

Discharging an employee should not be taken lightly.

Aside from the obvious turnover costs, handling a discharge inappropriately can be an invitation to a lawsuit.

The following items should be considered prior to the termination of an employee:

* Has the employee’s personnel file been reviewed for proper documentation supporting the decision to discharge?

* Does the termination procedure follow the company policies and procedures?

* Have other employees been treated similarly under the same or similar circumstances?

* Was the employee given forewarning of the possible or probable consequences of their conduct?

* Was the company’s investigation conducted fairly and objectively?

* If the employee is within a protected class (over 40, female, minority, disabled, etc.), have discriminatory motives been ruled out?

* Have all alternatives to discharge been ruled out (demotion, transfer, new supervisor, leave without pay, referral to an employee assistance program, voluntary resignation, etc.)?

* Are there any implied, written or oral contracts with the employee governing the termination process?

* Has the termination been independently reviewed by a third party?

* Is there a plan for informing the employee of their discharge in a brief, yet dignified manner?

* Is the payment of final wages ready to be given to the employee immediately? Making a sound hiring decision in the first place can avoid most of the legal pitfalls associated with disciplining and terminating an employee.

If termination is inevitable, consider having a process for the discharged employee to appeal the decision.

An appeal or grievance process, properly administered, can usually further your chances of prevailing in a lawsuit.

James V.Nelson is the executive director of the Nevada Association of Employers.

Since 1938,NAE, a not-for-profit organization, has been assisting member companies in the area of human resources including compliance with state & federal workforce regulations.

NAE also provides handbook/ policy review, and customized training.