Employment lawsuits have proven devastating for many businesses in Rochester and throughout Minnesota. Watching out for these five common employment mistakes can protect your business from lawsuits and other unnecessary liabilities.
- Misclassifying employees: A common problem employers face is misclassification of employees as independent contractors. Employers acting in good faith can misclassify the people they hire as independent contractors, freelancers or consultants, when, in fact, these workers meet the legal definition of an employee. Failure to accurately classify workers can result in fines and unexpected payroll taxes as well as wage and hour claims. Employers can also face significant liability for unemployment compensation and workers compensation for failing to have proper insurances in place to cover those who should have been designated as employees. To avoid such problems, employers need to recognize that if they are controlling the means and manner of the work, the workers should be designated as employees, not contractors. Another common mistake is misclassifying non-exempt workers as exempt salaried employees. Failure to properly classify workers as non-exempt can result in liability for unpaid overtime going back years, penalties, fines and other costly liabilities. To avoid such problems, employers should become familiar with the overtime exemptions, should establish accurate job descriptions and adjust those descriptions in the event the position evolves.
- Failure to document: Anything that could ultimately turn into an employment lawsuit should be properly documented. This includes employee performance issues and complaints. For instance, a paper trail detailing an employee's poor job performance could refute that employee's claim that he or she was terminated based on a protected characteristic or for other unlawful reasons.
- Inadequate training: Many employment issues can be avoided through proper training. Training your workforce on harassment, discrimination and other employment law topics provides many rewards. For one, you will have a well-trained workforce who are aware of their rights and responsibilities. Also, in the event your company is sued over an employment issue, you can demonstrate to the court that you have a sound training program in place and took pains to protect your employees.
- Inaccurate employee evaluations: We call it Minnesota nice. Supervisors and managers are unwilling to address employee performance problems for fear of upsetting those they supervise. This leads to two problems. One, the employee is unaware of performance deficiencies and does not know what they need to improve on. This could lead employers to lose otherwise potentially valuable employees. Two, if a supervisor or manager gives a more favorable employee review than is warranted, it could prove costly in the event of a wrongful termination lawsuit as the employer will potentially fail to have adequate documentation to support the decision. When a termination falls under scrutiny, there should be ample and accurate evidence of the reasons for the termination.
- Failing to have sound employment policies in place: One of the most effective defenses to employment lawsuits is that the employer had sound employment policies in place, and the employee was aware of and trained on the policies, yet the employee failed to avail him- or herself of those policies. When a business facing employment litigation lacks such policies, it must defend itself from a weakened position. As noted above, juries demand documentation. The same is true of sound employment policies.
In the realm of employment law, an ounce of prevention is truly worth a pound of cure. With skilled legal guidance, you can protect your business from lawsuits alleging harassment, discrimination, wrongful termination, retaliation and other illegal employment practices.