By Keith J. Rosenblatt, Esq.

Unfortunately, it has simply become far too easy for employees to sue their employers in today’s overly litigious society. It is even more unfortunate that many employers do not realize until after they are sued that a lawsuit could have been prevented, or at least their defenses to a lawsuit strengthened, by simple “preventative maintenance” regarding their employment policies and practices.

A recent case illustrates this point. The case involved five employees who worked alone with their branch supervisor in a remote office. In their lawsuit, the employees alleged that the supervisor sexually and racially harassed them on a daily basis, and that they did not know how or to whom to complain regarding his conduct. When they finally did complain to the corporate headquarters, the company investigated their complaints and terminated the supervisor, who claimed (falsely) that he had never received any harassment training and therefore did not know that his conduct violated company policy. A few months after the employees’ complaint, the office was closed and all five employees were terminated, rather than transferred, for performance-related reasons. The employees claimed that they were terminated in retaliation for complaining about the supervisor.

Although the case was settled shortly before trial, it was largely the employer’s own mistakes, long before the suit was filed, that gave the employees a basis for their claims and prevented an early dismissal of the case. For example, although the company had, in fact, trained both the employees and the supervisor on its policy against unlawful harassment and its internal complaint procedures, it did not have sufficient documentation to prove it. Similarly, the company had failed to adequately document the employees’ performance problems, which seriously hampered its ability to prove that their terminations were performance-related, rather than retaliatory.

Regrettably, these self-inflicted wounds are rather common for employers, regardless of the size of their workforce. Fortunately, there are five simple steps that employers can take to prevent these and other problems quite easily. These steps will help to both avoid employee lawsuits and make it easier for a company to prevail if a lawsuit is filed.

1. Implement And Maintain An Effective Unlawful Discrimination And Harassment Policy.

Although many employers already have a sexual harassment policy in place, companies will often omit other forms of unlawful harassment, such as harassment based on race, religion, age or disability, from their policy. Such policies will also often fail to address protections against retaliation (as in the case described above) or discrimination. Given the paternalistic view of the employer-employee relationship held by most courts, arbitrators and civil rights agencies (many of which too frequently relieve an employee of his common sense obligations), an effective unlawful discrimination and harassment policy should address all forms of prohibited discriminatory and harassing conduct, by both description and example. The policy should also set forth a complaint procedure that affirmatively requires all employees to immediately complain about any unlawful conduct that they witness or to which they are subjected. Additionally, the policy should reassure employees that their complaints will be kept confidential to the maximum extent possible and that the company will not retaliate (or allow retaliation) against them for complaining. Lastly, the policy should clearly set forth the severe consequences of engaging in unlawful conduct in the workplace, including termination.

In addition to providing a mechanism whereby claims of harassment and discrimination can be promptly and effectively addressed before a lawsuit is filed, an effective unlawful discrimination and harassment policy will in many cases also provide an employer with a strong affirmative defense to the claims of an employee who failed to take advantage of the policy and its complaint procedure before filing suit. This is because an employee may be precluded from litigating (or at least recovering damages on) a claim if her employer could have internally addressed and resolved it had the employee complained. In short, an effective policy can both prevent employee lawsuits and provide a compelling basis for their dismissal before trial.

2. Ensure That All Employees And Management Are Aware Of The Policy.

Obviously, the full benefit of having an effective unlawful discrimination and harassment policy cannot be realized unless the policy is communicated to the employees. In the case described above, although the company distributed the policy to the employees when they were first hired, there was no proof that the employees had ever seen the policy again. This was particularly problematic because a few of the employees had started their employment years before the alleged harassment occurred.

To overcome this problem, employers should have their policies prominently posted in the workplace and should distribute them to all employees (including management) at least once per year. If an employer has an employee handbook, the policy should be included in it as well.

In addition to distributing the policy, employers should also train the employees, at least annually, on the conduct prohibited by the policy and on how to report violations. Simply giving them a copy of the policy to review may not be enough. An effective training program ensures that all employees and supervisors are aware of the policy, and demonstrates how seriously the company takes its assurances of a non-discriminatory working environment.

3. Document, Document, Document.

The importance of documentation and record keeping cannot be stressed enough, because once a lawsuit is filed, if the employer cannot prove something, it never happened. Indeed, one of the first things that a judge, juror, arbitrator, EEOC investigator or opposing counsel wants to know is, “do you have that in writing?” In the above case, the company knew that the supervisor had, in fact, been trained on its sexual harassment policy, but had no document to prove it. As a result, it was easy for the supervisor to deny knowing that his conduct violated the policy. This seriously weakened the strength of the policy. It also exposed the company to claims of negligence for allegedly failing to train the supervisor regarding prohibited conduct.

With regard to the distribution of an unlawful discrimination and harassment policy, every employer should have documentation that each employee received, reviewed and was trained on the policy. This is accomplished easily enough by requiring employees to sign and date a copy of the policy beneath an acknowledgment that they have received it, reviewed it and were trained on it. The supervisor or Human Resources representative who reviews the policy with them also should indicate, below the employees’ signatures, that he or she has done so. Employers should also maintain documentation of each training session held with the employees, by virtue of an attendance list or an acknowledgement form signed and dated by each employee.

Performance issues need to be documented as well, regardless of whether the only discipline given is a verbal warning or counseling. This is because it is harder to prove that an incident occurred or that an employee was warned or otherwise disciplined if it was never documented. Such documentation should include a brief description of the incident, a summary of the communication with the employee regarding the discipline (including the nature of the discipline), and the dates of the incident and discipline. Documentation of the discipline or performance issue also should be given to and signed by the employee. If the employee refuses to sign it, the fact that he has done so should be noted on the document.

Each of these records should be maintained in the employee’s official personnel file, regardless of whether a separate file is maintained by the employee’s supervisor. This helps to insure that important documentation is not lost or misplaced.

4. Be Honest When Evaluating Employee Performance.

In addition to documenting specific rule or policy violations, employers should also document and notify their employees of less tangible performance problems, such as by accurately recording such issues on written performance evaluations. All too often, direct supervisors will “sugar-coat” their criticisms of subordinates’ performance (or sometimes not address them at all) in order to avoid conflicts in the working relationship. While this may ease daily interactions with the employee, such conduct does far more harm than good.

The most obvious effect of not honestly addressing performance issues is that they become more difficult to resolve and take longer to resolve when they are not confronted directly. Depending on the extent of the problem, the failure to quickly and effectively address an issue may also negatively impact other areas of the business. Thus, soft-pedaling employee criticisms may detrimentally affect more than just that employee’s future performance with the company.

From a litigation standpoint, letting a performance issue fester until formal discipline is needed gives an employee grounds to claim that the employer fabricated the reason for the discipline or termination to conceal an allegedly unlawful motivation, such as discrimination or retaliation. Although performance issues should not be presented to employees in a rude, unprofessional or overly negative manner, honestly assessing performance issues with them will prevent claims of surprise and fabrication after a lawsuit is filed, and may even make employees think twice before threatening suit.

5. Preserve At-Will Employment Rights.

Although the overwhelming majority of employee lawsuits involve claims of unlawful discrimination, harassment or retaliation, employers should also ensure that they do not give away the protections provided to them under the employment-at-will doctrine. Under this doctrine, employers retain the right to terminate employees at any time and for any reason not prohibited by law, with or without prior cause or notice. Employers may forfeit this right, however, by statements or conduct that give employees assurances of job security or lead them to believe that they may be terminated only for cause. Such actions may expose an employer to wrongful termination or breach of contract claims.

To ensure that this does not occur, employment applications, offer letters and employee handbooks should clearly and unmistakably state, at a minimum, that employment with the company is “at-will, meaning that either you or the Company may terminate your employment at any time and for any or no reason, with or without cause or prior notice.” Employees also should be required to acknowledge their at-will employment status by a signed writing to be maintained in their personnel files.

While even the best management practices cannot prevent every lawsuit, these simple steps will go a long way toward reducing and resolving potential claims. At the very least, incorporating these safeguards before a lawsuit arises will provide an employer with the proper tools it needs to mount a successful defense and, hopefully, an early dismissal of the case.
To ensure that your company has done everything it can to prevent employee lawsuits, have your policies, training and employment practices reviewed by employment counsel. Too many employers learn too late how easily a lawsuit could have been prevented. Being pro-active and working with experienced employment counsel will also severely reduce potential liabilities and defense expenses if a lawsuit is filed.

Keith J. Rosenblatt is a senior associate with Grotta, Glassman & Hoffman, P.C., in Roseland, New Jersey. Mr. Rosenblatt specializes in all types of employment litigation and counseling on behalf of management. He may be reached at 973-992-4800 or at rosenblattk@gghlaw.com.

Grotta, Glassman & Hoffman, P.C. devotes its practice to the exclusive representation of management in labor, employment, business immigration and employee benefits law and related litigation, with offices in New Jersey, New York and California.

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