Employment Lawsuits: 10 Ways to Safeguard Your Business

Learn the 10 things you have to know about mitigating exposure to employment-related lawsuits.

Learn the 10 things you have to know about mitigating exposure to employment-related lawsuits.

Employment-related lawsuits are difficult to deal with: Emotions run high with personal issues often brought into play. Even when claims are meritless, defense costs can be substantial. The impact on morale and reputation can also be significant. The following 10 steps help reduce these issues in your business and strengthen your defense if an action is brought.

1. Invest in an employee handbook

This includes employment-at-will, harassment and discrimination provisions. Every employer should invest in an employee handbook. While this might seem like an unnecessary expense, having policies in place that address termination of employment, discrimination and harassment can reduce potential exposure in employment-related matters. At a minimum, a handbook should include an employment-at-will statement and a zero-tolerance policy toward discrimination and harassment. While sample policies are available, employers should ensure all policies are compliant with applicable state and federal laws. Ideally, an employment attorney should draft and/or review the handbook.

Example: The COO maintained only one copy of an old, out-of-date handbook that was no longer compliant with state or federal laws in her office. The employees knew it was in the COO’s office and were not comfortable accessing it. When an employee filed a lawsuit, the handbook’s provisions were not enforced because they were (1) in conflict with the law and (2) because it had not been disseminated to employees.

2. Ensure consistency

Maintain consistency with a uniform review of all adverse employment decisions. A neutral party within your organization should review all such decisions to ensure the emotional component is minimized, and consequences of poor performance or misbehavior are being consistently evaluated.

Example: Two supervisors had the ability to hire and fire employees on their respective teams. One strictly enforced attendance rules and terminated two employees who were late to work on three occasions. The other supervisor was more lax, allowing her team to arrive to work late or leave early. The terminated employees, who were both older than 40, filed suit alleging age discrimination, pointing out many employees younger than 40 had also been tardy on several occasions, but weren’t terminated.

3. Train employees on employment-related issues

All employees should receive basic training on employment-related issues. Training options are available online and in-person, or you can opt for an attorney to perform training at your organization.

Train supervisors to:

  • Take every complaint seriously.
  • Immediately refer every complaint to HR or the designated employee and investigate in a timely, thorough manner.
  • Be fair and consistent.
  • Document performance issues and be honest on performance evaluations.
  • Be vigilant to stop conduct that could draw allegations of discrimination or harassment.

Train non-supervisory employees to understand:

  • There is a process in place to file a harassment or discrimination complaint.
  • These are the types of behavior that are unacceptable in the workplace.
  • There is an employer’s handbook and/or policies and procedures in place.

Example: Every day, after business close, employees would stay to complete standard end-of-business day duties. This hour was typically filled with sexual banter among the employees. The manager was present, but never took steps to stop these conversations. A new employee was hired and terminated after only a few months when it became clear that she was not meeting required service standards. She filed a discrimination charge, claiming sexual harassment because of what took place at the end of the workday.

4. Document everything

Employment claims often come down to one’s word against another’s. When an employer maintains detailed documentation created close in time to incidents in question, it’s a much stronger defense in any subsequent claims. Documentation should be clear, concise, free from emotion or unnecessary commentary, and include performance issues and the resulting consequences. Ideally, the employee should sign the documentation to acknowledge issues were brought to his or her attention. Performance evaluations of all employees should be done honestly. While it might be easier to simply give average or above average evaluations, it’s then difficult to defend any action by an employee where performance is relevant.

Example: A woman complained to the president that she was being sexually harassed by her supervisor. The president met with the supervisor who promised to stop. The president did not document the conversation. The behavior continued. Months later, the woman was terminated for performance issues. She alleged she was fired in retaliation for complaining about sexual harassment. She kept detailed notes and established she complained to the president.

She alleged he did nothing as a result and conspired with her supervisor to get rid of her. Because the president had no documentation of his meetings with the woman or her supervisor, her version of events was more believable.

5. Watch workplace jokes and banter

Most adults spend a huge chunk of their waking hours on the job and want to be able to enjoy relationships with their co-workers. While a collegial atmosphere is to be encouraged, it can quickly cross the line into actionable behavior. Consider the following comments: “Pregnant again? How many kids do you have?!” “You’re 50? Over the hill!” “As an African-American, what do you think of Obama?” “How was your vacation? Wish I could have seen you in a bikini!” “We need to figure out how to attract Gen-X employees.”

All were intended as harmless banter; however, they were used as evidence against an employer in a lawsuit brought by a former employee. Be vigilant in ensuring that employee interactions are professional and appropriate.

Example: A supervisor planned a 50th birthday party for an employee, including an “over the hill” banner, a black cake decorated with a tombstone and numerous age-related gag gifts. Shortly after the party, the employee was fired. He sued, alleging age discrimination, using the events at his birthday party as evidence of his supervisor’s discriminatory intent.

6. Recognize pitfalls in pre- and post-employment time frames

The interview process can be challenging as an employer attempts to gain information about prospective employees to determine whether they are suitable for a job. However, it is prohibited to ask about certain topics, such as disability, age, children, marital status, etc., and illegal to make hiring decisions based on such information. Interviewers should focus on asking only work-appropriate questions. Once an employment relationship has ended, care must still be taken. Final paychecks and payment for accrued vacation time must be made in a timely manner based on state law. Calls for references should be handled by one person and dealt with in a consistent manner. No specifics regarding a termination should be discussed with other employees or customers.

Example: After an employee was terminated for dishonest conduct, the employer received a reference call on the employee. The employee provided a detailed and extremely negative reference that resulted in a defamation lawsuit.

7. Regulate Internet and email use

In most workplaces, employees have email and Internet access. Be vigilant that these tools are used in an appropriate manner. Have a policy prohibiting the access of pornographic or inappropriate websites and consider software that blocks inappropriate websites. Employees should be warned emails are never truly deleted and all email communication should be conducted in a professional manner.

Example: The CFO was engaged in a consensual affair with an employee, communicating multiple times a day via corporate email. When the employee broke off the affair, the CFO continued to email her constantly, begging her to come back. Months later, the employee applied for a promotion and did not get it. She quit and filed a lawsuit alleging sexual harassment and retaliation. Their thousands of emails figured prominently in the case.

8. Be aware of workplace violence issues

An employer must be vigilant and safety conscious, understanding they have an obligation to provide a safe workplace and to take reasonable steps to ensure employee safety while on the job, especially in the event of a termination or other event that might cause anger on the part of an employee or even a customer. It might involve hiring security for the day or simply handling a termination privately with respect for the employee’s emotions.

Example: An employee who was a “cutter” would bring razor blades to work and, when stressed, would go into the bathroom to cut her skin. She told several co-workers, who informed management. Concerned with her bringing sharp objects to work that could be used as weapons, management warned her not to bring them to work and encouraged her to seek counseling. Days later, she was seen with a knife in the bathroom and terminated. She later filed suit for disability discrimination.

9. Review FLSA status of employees

The Fair Labor Standards Act requires that employees be properly categorized as exempt (paid a salary and not eligible for overtime pay) or nonexempt (paid by the hour and entitled to overtime pay if work is in excess of a certain number of hours per day or week). Failure to properly categorize jobs can lead to an employer being required to reimburse an employee or class of employees for unpaid overtime allegedly earned over a period.

Example: A group of employees filed a lawsuit alleging they regularly worked over 40 hours per week and were owed overtime pay.

10. Open door policy

A simple way to avoid employment-related problems is open and honest communication. Employees should feel comfortable approaching their employer to discuss employment-related issues. If managers truly have “open doors” to employees, many potential issues can be identified early and rectified before a true problem develops.

Example: A manager with a volatile personality rarely interacted with his staff. He instructed them to only interact with him by email and not to interrupt him in person with problems. An employee, diagnosed with cancer, needed accommodations to go to chemotherapy and doctor appointments. Uncomfortable with speaking with her manager, she didn’t inform him of her situation and missed many days of work. He terminated her and she sued for disability discrimination.

Questions? Comments? Contact Josh Holden at ABA Insurance Services via email at jholden@abais.com or call him at 216-903-4597.

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  • Next up: Enroll in BWC’s Destination: Excellence programs by May 29 to Earn Rebates
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  • Enroll in BWC’s Destination: Excellence programs by May 29 to Earn Rebates

    As part of the prospective billing implementation, enrollment is currently underway for private employers to sign up for several of the Destination: Excellence programs. Destination: Excellence is a bundle of programs BWC offers that help businesses improve workplace safety, enhance injured worker care and save money on workers’ compensation costs.

    As part of the prospective billing implementation, enrollment is currently underway for private employers to sign up for several of the Destination: Excellence programs. Destination: Excellence is a bundle of programs BWC offers that help businesses improve workplace safety, enhance injured worker care and save money on workers’ compensation costs.

    Private employers may sign up with BWC between now and May 29 for these programs:

    • Industry-Specific Safety Program, a 3 percent premium rebate for completing loss-prevention activities
    • Drug-Free Safety Program, a 4 or 7 percent premium rebate for incorporating an alcohol and drug testing and education program
    • Transitional Work Bonus Program, up to a 10 percent premium rebate for successfully returning an injured worker released with restrictions back to work

    If you would like additional information, the BWC website has details about the changes and programs. Visit www.bwc.ohio.gov. Click on the Employers tab on the menu. Then select Prospective Billing under the Featured Links tab. You can also contact COSE’s Workers’ Comp team at 216-592-2351.

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  • Next up: Ensure a Drug-Free Workplace by Watching for These 4 Warning Signs
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  • Ensure a Drug-Free Workplace by Watching for These 4 Warning Signs

    Part of keeping your employees and business safe is ensuring people aren’t coming to work under the influence of drugs or alcohol. Here are warning signs to look out for, behaviors to monitor and steps to take to create a drug-free workplace.

    Every business, no matter how big or small, can experience employees who struggle with or even use drugs or alcohol at work. Small businesses may face unique challenges to this issue, both from a manpower and from a financial perspective. You know and like your employees, but perhaps you have limited resources to help them or lack the knowledge or skills to detect an issue. Maybe you only have a few employees and don’t know how to prevent or deal with a drug problem in your company. How do you know you aren’t just being paranoid?

    Short of actually catching your employee in the act of actually taking drugs or drinking, there really is no way you can tell for sure they are taking drugs. Most people who take drugs are very secretive and are very adept at hiding their addictions. That doesn’t mean that you can’t detect drug use in your company, you just have to be observant and diligent.

    We are bringing you a list of warning signs and tips to help you determine if an employee is using drugs, followed by ways to effectively and safely handle the situation.

    Beware of these behaviors that may be telltale signs of drug use:

    Warning sign No. 1: Erratic or unusual behavior. An employee may be very energetic one day and very quiet and tired the next. They may behave irrationally or lash out. They may not be able to concentrate or have a short attention span. They may also be forgetful. While these behaviors may be symptoms of many things, if they are new or if they continue for a while, you should look into the possibility of drug use.

    Warning sign No. 2: Risky behavior. Drug users often do not consider the consequences of their behavior, making decisions that can lead to harming themselves or others. Small, but other telltale signs, can also be that they never have any money or that they are dealing with many legal issues. Again, these signs can mean many things, but they can also be signs of drug abuse.

    Warning sign No. 3: Irresponsible behavior. If you find they are breaking things, losing things or borrowing things you may want to keep an eye out for drug or alcohol usage symptoms.

    Warning sign No. 4: Nervous or confused behavior. Again, these can be a sign of many things but can also be a sign of a drug abuser.

    If you suspect an employee of drug abuse, never accuse them. Begin by monitoring them and keeping a written record of their behaviors, including the following:

    • how often they miss work;
    • if they yell at or act aggressively toward you or co-workers;
    • if they are glassy eyed;
    • if their hygiene has slipped or changed; and
    • if they are slurring their words.

    If you suspect an employee is using drugs or alcohol at work, send them home immediately! However, make sure that they can get home safely. Have someone drive them so they don’t get behind the wheel themselves. And, if possible, have another employee or supervisor witness when you do this. Do not spend time alone with them, especially if they are under the influence.

    You can discuss the situation at another time. Choose another day when they are clean to ask them about their behavior or actions. Perhaps you can offer some help or resources. Be prepared with a list of facilities or support groups you can give to them. Refer them to your company policy on drug abuse and if necessary, report them to the authorities. Let them know you care and want to help them.

    While nothing can completely stop drugs at work, you can help to make your workplace a drug free zone and protect yourself, your employees and your business by doing the following:

    • Create and enforce rules about drugs use at work. This includes rules about drinking and smoking on the premises. Include any consequences that will be enforced if they break these rules, up to and including termination.
    • If you can afford it, institute a random drug testing program. Be sure to tell employees and all new hires that you are going to do random drug testing.
    • Educate your employees about the signs of drug abuse.
    • Teach stress management to help employees deal with issues so they don’t turn to drugs.

    If you need assistance with any of these issues, you can bring in an outside firm to help you design a program, create or update your policies, or even to help with disciplining or even firing an employee.

    President, SACS Consulting & Investigative Services, Speaker, Trainer, Corporate Security ExpertTimothy A. Dimoff, CPP, president of SACS Consulting & Investigative Services, Inc., is a speaker, trainer and author and a leading authority in high-risk workplace and human resource security and crime issues. He is a Certified Protection Professional; a certified legal expert in corporate security procedures and training; a member of the Ohio and International Narcotic Associations; the Ohio and National Societies for Human Resource Managers; and the American Society for Industrial Security. He holds a B.S. in Sociology, with an emphasis in criminology, from Dennison University. Contact him at info@sacsconsulting.com

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  • Next up: Entrepreneurial StrengthsFinder
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  • Entrepreneurial StrengthsFinder

    Passion and ideas are not enough to grow a successful business. Entrepreneurs or start-up teams need to possess key characteristics that give them a stronger ability to launch and succeed. Understanding who you are and where you stand as an entrepreneur can help you tap your talents to become successful. Gallup Strengths Center explored this concept, resulting in a book, Entrepreneurial StrengthsFinder by Jim Clifton and Sangeet Bharadwaj Badal.

    Passion and ideas are not enough to grow a successful business. Entrepreneurs or start-up teams need to possess key characteristics that give them a stronger ability to launch and succeed. Understanding who you are and where you stand as an entrepreneur can help you tap your talents to become successful. Gallup Strengths Center explored this concept, resulting in a book, Entrepreneurial StrengthsFinder by Jim Clifton and Sangeet Bharadwaj Badal.

    “We studied successful entrepreneurs and figured out how to scientifically measure qualities that individuals inherently have that drive them to be successful in this role,” says Badal. The last four years, Gallup has been intensely studying successful entrepreneurs, identifying entrepreneurship as a strategy for economic growth. “We realize that even though there are so many different reasons why someone would start a business and why some businesses are more successful than others, one of the differentiators was the role of the entrepreneur who is at the center of the activity,” Badal says. Now, there is science that explains why entrepreneurs are different, and this can help us hone natural talents and provide tools to drive successful entrepreneurial ventures.

    “The demands of the entrepreneurial role are so complex that any one predictor of success is not possible,” Badal says, prefacing the 10 talents of successful entrepreneurs she lays out in Entrepreneurial StrengthsFinder. “You can’t have one or two characteristics that make you magically successful. In a role this complex, you need a complete set of talents.”  Badal identifies those talents as: business focus, confidence, creative thinker, delegator, determination, independent, knowledge seeker, promoter, relationship-builder and risk-taker.

    Have your StrengthFinder results analyzed by Gallup at COSE’s workshop event on August 13.

    This article originally appeared in the June 29, 2015, edition of Small Business Matters.

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  • Next up: Everything You Need to Know About Paid Leave
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  • Everything You Need to Know About Paid Leave

    Now that summer is behind us and the holidays are approaching, now is a good time to review your company's paid leave policy. Here's what you need to know.

    It’s hard to believe Labor Day has already come and gone! I know some of you hate to hear me say this, but Thanksgiving will be here before you know it. Followed soon after by the winter holidays.

    There’s a good chance your office is closed for at least one holiday, probably more. But is this your business’s official policy, or something that is not set in stone but just, “one of those things that everybody just knows?” With holiday time quickly approaching, now is a perfect time to give your company’s policies on holidays and other types of leave a thorough checkup.


    What counts as a holiday? It depends! Many businesses who choose to close for holidays tend to adhere pretty closely to the calendar of Federally recognized holidays, though some—such as Presidents Day or Columbus Day—are rarely viewed as an occasion to close up shop.

    Eliminate the guesswork by specifically listing the holidays your business will observe, and whether employees will be paid for them. For example:

    XYZ Company observes the following paid holidays:

    • New Year's Day (Jan. 1)
    • Memorial Day (Last Monday in May)
    • Independence Day (July 4)
    • Labor Day (First Monday in September)
    • Thanksgiving Day (Fourth Thursday in November)
    • Christmas Day (Dec. 25)

    XYZ will grant paid holiday time off to all eligible employees. Holiday pay for regular full-time employees will be calculated based on the employee's base pay rate (as of the date of the holiday) times the number of hours the employee would otherwise have worked on that day. Regular part-time employees will not be paid for holidays.

    If an eligible full-time non-exempt employee works on a recognized holiday with company approval, he or she will receive holiday pay plus wages at his or her straight-time rate for the hours worked on the holiday. 

    PTO vs. vacation/sick days

    A growing trend among employers is a movement away from the traditional, “You get X number of vacation days per year and X number of sick days” approach, choosing instead to employ a more universal and flexible PTO (Paid Time Off) policy.

    Often, Paid Time Off is accrued as the employee accumulates actual hours worked. For example, an employee might earn one PTO hour for each 25 hours of workplace service. Generally, the employee may choose to use this earned time off however he or she sees fit and PTO hours are applied identically whether used for sick days, vacation time, or other personal reasons. In contrast, traditional Vacation Time or Sick Leave days are intended to be used specifically (and only) for their stated reason and generally do not need to already be “in the bank” for the employee before they can be used.

    Whether you choose a PTO approach or a more traditional vacation/sick days combination, there are important details to consider. Who is eligible—full time employees only, or can part-timers enjoy this benefit as well? Will your employees be eligible for time off right away, or will you require a certain term of service to be completed before time off becomes accessible? Also consider how you’d like to address unused time off to which an employee is entitled. Will unused hours/days expire if unused within a year? Can employees roll over leftover Vacation or PTO days into the following year? Whatever you choose, make sure that your policies are outlined clearly in your employee manual.

    Family and medical leave

    While it’s true only employers with 50 or more employees are required to comply with the provisions of the Family and Medical Leave Act (FMLA), smaller employers still face many of the same concerns that can befall themselves or their employees. At some point or another, nearly everyone might need to take unpaid leave to care for a new child, to care for a seriously ill family member, to handle their own medical issues, or to handle issues relating to a family member's military service. Do you have a plan in place to address these challenging circumstances? Have you applied identical understanding and accommodation to all employees who have needed this type of time away from work? If you’re a larger employer, it’s time to brush up on FMLA! If your group is smaller, though, you still need a plan. Craft and document your official policies now, before you need them.

    Other Kinds of Leave

    Not every workplace absence falls neatly into the sick, vacation, or holiday categories. Some of the most notable exceptions include:

    • Bereavement time following the loss of an immediate family member;
    • Jury duty; and
    • voting time.

    Will you provide paid time away for these events? Will your PTO or Vacation policy these occasions apply to the same way that you’d address absences under different circumstances? Whatever your plan is, it should be consistent and well communicated to each employee beginning their very first day, when they receive their employee manual.

    Caroline Schwerko is a long-time leader in the administration department at BIG-HR, which focuses on HR consulting and outsourcing. You can learn more about the company by clicking here.

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  • Next up: Exempt Vs. Non-Exempt Employees: How to Avoid the Sinkhole of FLSA Lawsuits
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  • Exempt Vs. Non-Exempt Employees: How to Avoid the Sinkhole of FLSA Lawsuits

    Get educated on how exempt employees differ from non-exempt employees. Knowing the difference could save your business from a costly FLSA lawsuit.

    In a previous article, you learned the differences between employees and independent contractors. Once a worker is determined to be an employee, the next step is determining whether they are exempt or non-exempt from FLSA minimum wage and overtime pay requirements. The Fair Labor Standards Act requires employers to pay non-exempt employees for overtime hours at a rate of one and a half times their regular pay, with “overtime” defined as more than 40 hours worked in a work week.

    Properly classifying employees as exempt or non-exempt is the cornerstone of complying with the FLSA. Misclassification is a common ground for lawsuits against employers. Fines, penalties and back pay for FLSA violations can add up to an enormous, even crippling, sum that may far surpass the cost of paying overtime. Further, back pay owed to employees who were misclassified can be doubled as a means of bolstering compliance with the law.

    Know the difference

    With few exceptions, an exempt employee must

    • be paid at least $23,600 per year ($455 per week);
    • be paid on a salary basis; and
    • perform exempt job duties.

    Most employees must meet all three “tests” to be exempt. Exempt job duties include: executive, administrative, learned professional, creative professional, computer science and outside sales.

    In addition, highly compensated employees performing office or non-manual tasks, paid in excess of $100,000, are exempt if they customarily perform one of the mentioned duties.

    Implement your knowledge

    Once you have developed a thorough understanding of the differences between exempt and non-exempt employees, follow these steps to protect your company from FLSA exposure:

    1. Conduct an extensive self-audit to ensure that all employees are properly classified by using the tests mentioned above.
    2. Train managers on wage and hour regulations, and explain how errors negatively affect the company. Remind them that wage and hour compliance is part of their duties.
    3. Educate your staff about company rules regarding overtime, proper time clock usage, meal and rest periods, and all other wage and hour related items.
    4. Determine repercussions for employees who break company rules in this area, and educate the staff on them.
    5. Take all wage and hour complaints seriously, immediately correcting any errors.
    6. Be careful when new positions are added, especially if they are added because of mergers or acquisitions. If the previous company misclassified its employees, you might be responsible even though the merged or acquired entity may no longer legally exist.

    Ohio law

    Under Ohio law, employers grossing more than $150,000 per year are required to pay overtime to non-exempt employees at a rate of one and a half times the employee’s wage rate for any hours worked over 40 within one work week.

    Employers grossing less than $150,000 are not required to pay overtime for hours worked beyond 40.

    In most circumstances, the employer should follow the rule that is most advantageous to the employees when federal and state laws differ. For instance, the current federal minimum wage is $7.25 per hour, but the current minimum wage in Ohio is $8.10 per hour. This means Ohio employers must use the state minimum wage of $8.10, as this is most advantageous to employees. Thus, the minimum overtime rate in Ohio is $12.15 per hour. However, if the employer grosses less than $297,000, it may use the federal minimum wage as a basis for paying overtime.


    Determining an employee’s exemption status isn’t always simple. It pays to know the rules ahead of time because the wrong classification can trigger a painful inquiry from the IRS and the Ohio Department of Labor, as well as other fines and penalties. Following these tips will help you to stay ahead of the game and ensure that your employees are properly classified—saving your business a huge chunk of change!


    This article is made available for educational purposes only, as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this information, you understand that there is no attorney-client relationship between you and the author. In no event should any information contained here be used as a substitute for competent legal advice on your own individual situation from a licensed attorney in your state. For more information on this topic, contact Alex Gertsburg at 440-571-7775 or ag@gertsburglaw.com. Get more legal tips for your business on The Gertsburg Law Firm blog, with new articles every week.

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