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Ready to hire (or fire) and don’t know where to start?

Hiring is key to scaling a business. But having employees on the payroll also presents a slew of rules and regulations that many business owners find overwhelming. On top of that, employee misconduct, data security, and potential lawsuits are very real threats to nearly every business. Don’t hire without determining your risks – and how best to minimize them.

Employment issues are one of the biggest minefields faced by companies today. In addition to potential claims from employees in the event of harassment, retaliation, or a hostile work environment, there are myriad federal, state and local labor laws that are ever-changing and can carry harsh penalties for non-compliance.

Here we’ll discuss – at a very high level – employment compliance, handbooks, and litigation. But be sure to consult with an attorney who can advise you on the specifics of your business and your state and municipality, as employment issues vary greatly depending on each of these factors.

Employment Compliance

Compliance with employment law is a multifaceted issue that changes based on jurisdiction, the size of the company, the industry, and other factors. However, there are several common employment compliance issues that many companies face across the board. Here’s a high-level summary of key compliance areas:

  • Wage and hour laws
  • Compliance with the Fair Labor Standards Act (FLSA), including payment of minimum wage and overtime.
  • Classification of employees and independent contractors.
  • Compliance with state-specific wage and hour laws, which may provide greater protections than federal law.
  • Anti-discrimination laws
  • Adhering to the Equal Employment Opportunity Commission (EEOC) guidelines to prevent discrimination based on race, color, religion, sex, national origin, age, disability, or genetic information.
  • Ensuring compliance with the Americans with Disabilities Act (ADA) and providing reasonable accommodations.
  • Following the Pregnancy Discrimination Act and state-level equivalents.
  • Leave laws
  • Family and Medical Leave Act (FMLA) administration for qualifying medical and family events.
  • Understanding and adhering to state and local leave laws, which may include paid sick leave and parental leave.
  • Health and safety regulations
  • Occupational Safety and Health Administration (OSHA) standards and state-specific safety requirements.
  • Establishing a process for reporting and addressing workplace injuries or illnesses.
  • Employee benefits compliance
  • Making sure health care plans comply with the Affordable Care Act (ACA) and other benefits legislation.
  • Compliance with the Employee Retirement Income Security Act (ERISA) for pension and welfare plans.
  • Immigration law compliance
  • Ensuring that employees are legally authorized to work in the United States by properly completing Form I-9.
  • Following visa requirements for non-citizen workers.
  • Privacy laws
  • Protecting employee personal information in accordance with relevant state, federal, and international privacy laws.
  • Ensuring cybersecurity measures are in place to protect sensitive employee data.
  • Labor relations
  • For companies with unionized workers, compliance with the National Labor Relations Act (NLRA) and maintaining good relations with labor unions, if relevant.
  • Recordkeeping and reporting
  • Properly maintaining employee records and meeting reporting requirements.
  • Ensuring compliance with recordkeeping requirements as specified by various laws including FLSA, EEOC, and OSHA.
  • Industry-specific regulations
  • Certain industries, such as finance, healthcare, and transportation, have additional regulatory burdens.
  • Worker Adjustment and Retraining Notification Act (WARN)
  • Compliance with the WARN Act’s notice requirements in the case of certain mass layoffs or plant closures.

Employee Handbooks

Although many early-stage businesses don’t think they need it yet, companies of all sizes should consider creating an employee handbook. A handbook serves as a valuable resource for both employers and employees, setting expectations and providing as a source of information for employees.

Benefits of a Handbook

Adopting an employee handbook comes with a number of benefits, including:

  • Centralized information source: A handbook compiles all company policies, procedures, and expectations in one central location for easy access.
  • Legal protection: A handbook provides a first line of defense against potential legal disputes by clearly stating company policies and showing the company’s commitment to compliance with employment laws.
  • Clarity on expectations: Clearly outlining company policies and employee expectations helps prevent misunderstandings and inconsistencies in policy enforcement.
  • Introduction to company culture: A handbook can help new hires understand the organization’s values, mission, and culture.
  • Guidelines for conduct: Your handbook provides employees with guidance on the expected standards of behavior and what is considered misconduct.
  • Explanation of benefits: A handbook details the full range of benefits offered to employees and how to access them.
  • Orientation and onboarding tool: A handbook assists in the onboarding process by giving new employees a guide to understanding their workplace and their role in it.
  • Updates and changes in policy: Your handbook offers a framework for communicating changes in policy as the company evolves and grows.

What a Handbook Includes

Key provisions to be included in an employee handbook are varied, and while not exhaustive, here are some fundamental components:

  • Welcome statement: A brief welcome message from leadership expressing the company’s goals and values.
  • Anti-discrimination policies: EEOC compliance, anti-harassment, and a clear statement of the company’s commitment to a diverse and inclusive workplace.
  • Employment classifications: Definitions for full-time, part-time, exempt, non-exempt, etc., so employees understand their employment status and associated rights.
  • Work hours, overtime, and pay: Workday expectations, timekeeping procedures, payroll schedules, and overtime policy.
  • Benefits and leave: Details on health insurance, retirement savings plans, paid time off, FMLA leave, and other leave policies such as parental leave and sick leave.
  • Code of conduct: Expectations regarding attendance, dress code, general behavior, anti-harassment, and confidentiality.
  • Disciplinary action: Details on the company’s policies and procedures for disciplinary action for misconduct or performance issues.
  • Safety and security: OSHA compliance, workplace safety guidelines, and emergency procedures.
  • Use of company property: Guidelines for appropriate use of company equipment and resources, including digital security protocols.
  • Technology policies: Rules around using the company’s electronic communication systems, including social media use.
  • Termination and resignation: Procedures for the resignation process, as well as company policies for termination.
  • Acknowledgment page: A statement for the employee to sign, acknowledging they have received, read, and understand the handbook.

Remember that the employee handbook should align with the latest laws and best practices; thus, it’s often wise to have it reviewed by a legal professional. Additionally, since every business is unique, provisions should be tailored to the organization’s size, industry, culture, and specific legal requirements of the state(s) in which it operates. 

Employment Litigation

Even with safeguards in place and employees trained on the company’s workplace policies, a business can face employment-related litigation at any time. An employment lawsuit can take many forms – harassment, wage-and-hour, misclassification – but there are a number of steps a company can take to protect itself and put itself in a better position to resolve the dispute as quickly and efficiently as possible. Here are some important considerations for a company facing an employment lawsuit:

  • Assessment of claims: The company must thoroughly review the claims being made against it, including any alleged wrongful actions and the legal bases for such claims.
  • Legal counsel: Engage experienced employment counsel to navigate the complexities of employment litigation.
  • Document preservation: It is crucial to preserve all relevant documents, including electronic communication, employee files, policies, and any records that may pertain to the case.
  • Internal investigation: Conduct an immediate, thorough, and impartial internal investigation to gather facts and understand the potential strengths and weaknesses of the case.
  • Costs and benefits: Evaluate the potential costs, including legal fees and potential judgments or settlements, against the potential benefits, such as vindication of the company’s policies and practices.
  • Insurance coverage: Review any employment practices liability insurance (EPLI) to determine the scope of coverage for litigation costs and possible settlement or judgment.
  • Settlement considerations: Assess the viability of settlement, including the potential advantages of resolving the dispute early and confidentiality of the settlement.
  • Public relations: Consider the impact of litigation on the company’s public image and brand reputation, and prepare a communication strategy accordingly.
  • Government agencies: Determine if the litigation will involve or attract the interest of government agencies such as the EEOC or the Department of Labor.
  • Impact on workforce: Account for the litigation’s potential impact on employee morale and its potential to set precedent for future complaints or lawsuits.
  • Discovery strategy: Develop a discovery strategy that will uncover all relevant information while also protecting the company’s confidential and proprietary information.
  • Potential policy changes: Depending on the nature of the lawsuit, the company may need to review and potentially update company policies and training programs to prevent future litigation.
  • Litigation holds: Implement litigation holds to suspend normal document retention/destruction policies and ensure potential evidence is preserved.
  • Alternative Dispute Resolution (ADR): Explore avenues such as mediation or arbitration as potential alternative methods for resolving the dispute.
  • Continuous review: Regularly review the case strategy with legal counsel and ensure that the company’s interests are being effectively represented throughout the litigation process.
  • Confidentiality and non-disparagement: Carefully manage the flow of information and consider requiring confidentiality and non-disparagement as part of any settlement agreement.
  • Legal compliance: Ensure that all actions throughout the litigation process comply with applicable laws, rules, and court procedures.

Next Steps

When confronting employment litigation, it is critical to seek advice from legal counsel as soon as possible. They can provide strategic direction, representation in court, and guidance on managing risks associated with employment disputes. Book an exploratory call with us to learn more.

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