7 Mistakes That Lead to Employee Lawsuits (and How to Avoid Them)

In 2018 alone, the U.S. Equal Employment Opportunity Commission (EEOC) heard over 76,000 new employee complaints. After any complaint, the agency investigates it, and if the complaint reflects a violation, try to settle or mediate it. If settlements or mediation doesn't work, the complaint turns into a lawsuit.

For the more than 90,000 new and outstanding complaints the agency resolved over the course of that year, the EEOC distributed over $505 million to victims of such illegal workplace acts as the appearance of retaliation, unsafe working conditions, or discrimination based upon such factors as gender, age, disability, and other violations of employee rights. To ensure that your business isn't on the receiving end of an employee lawsuit, take some time to understand these seven HR standards that commonly fuel employee legal action.

1. Fair Labor Standards Act

Plenty of organizations have a hard time adhering to the Fair Labor Standards Act. Particularly common sticky points include understanding the difference between exempt and hourly employees as well as the difference between employees and independent contractors. Other important areas of enforcement include violations of child labor and overtime rules.

For instance, exempt employees must have a minimum base salary and typically qualify because of supervisory, managerial, or professional roles. A company can't just declare that all employees are exempt and thus not entitled to overtime.

Some examples of penalties for violating the Fair Labor Standards Act can include:

• Paying back pay and even double back pay as liquidated damages
• Lawyer fees and court costs
• Penalties from $1,000 to $10,000 per incident and in the case of criminal charges, the possibility of imprisonment for multiple, willful acts.

In order to avoid these errors and potential fines, businesses need to keep up with and follow the laws. States also have their own labor statutes which must be followed.

2. Worker's Compensation

Businesses buy worker's compensation to comply with labor laws and to help pay an employee's lost wages and medical costs if they suffer a job-related illness or injury. This kind of insurance also protects both employees and employers against financial losses.

Perhaps it's a surprise to learn that the most common type of worker's compensation violations come simply from poor record keeping. Payment delays and discrepancies come in second, but at least some of these may also stem from inaccurate records.

Settlements and judgments against companies that fail to properly protect themselves or follow the rules can cost hundreds of thousands of dollars. Businesses need to rely on processes and technologies that will help them maintain proper records and avoid deduction or payment problems.

3. State Tort Laws Against Negligent Hiring or Defamation

HR people are particularly vulnerable to individual liability under state negligent hiring and defamation laws. Negligent hiring describes a complaint made by a customer or another employer because the company should have known better than to hire the employee who injured them.

Companies may make these sorts of mistakes because they lack adequate employee screening, hiring policies, or HR training. A recent Illinois court awarded the plaintiffs over $54 million, including $35 million in punitive damages, for a lawsuit that involved an accident by a company truck driver that they hired who had a bad driving record. To avoid violations of these laws, HR departments need to set adequate hiring policies that include appropriate screening.

4. Americans With Disabilities Act

Working Americans with disabilities are entitled to protection under the Americans with Disabilities Act (ADA). For example, employers can't deny jobs to qualified applicants because of their disability or take any steps to discourage disabled applicants from applying. Employers are also expected to make reasonable accommodations for disabled employees, such as having accessible facilities or audio alternatives to written materials.

Despite these laws, the EEOC received over 20,000 complaints on this basis in 2018. Like with other violations, the EEOC will investigate and move valid complaints forward to mediation, settlements, or lawsuits. To avoid violations of the ADA, businesses must demonstrate that they have worked within the regulations to accommodate and hire disabled employees.

5. OSHA Violations

The Occupational Safety and Health Administration helps ensure safe, healthy working conditions for employees. According to this division of the Department of Labor, the three most common violations include lack of fall protection, hazard communication, and unsafe scaffolding. Even white collar employees and managers may make claims in cases of safety hazards in their office or because of the appearance of retaliation for whistleblowing.

During the course of work, accidents may happen. However, employers need to demonstrate that they could receive and act upon employee feedback about unsafe working conditions, required adequate safety training, and took every reasonable step to prevent work-related injuries or illnesses. Companies must work within the Occupational Safety and Health Act’s (Osh Act) rules to develop guidelines that will create a safer work environment and keep themselves in compliance.

6. National Labor Relations Act

The National Labor Relations Act (NLRA) mostly focuses upon protecting an employee's right to join a union. Some examples of NLRA violations include threatening or offering incentives to keep employees from joining a union. Another example of a violation would be offering extra benefits to employees who aren’t in a union. To avoid NLRA violations, businesses must understand which actions are legal to take and which might be considered violations.

7. Genetic Information Discrimination

Genetic testing has grown increasingly popular as a way to uncover health information. The EEOC has kept up with this trend by also banning any use of this information to discriminate against an employee in any way. In most cases, companies aren't even allowed to obtain this data. Some narrow exceptions might include the employee volunteering it for a wellness program or needing it for certain certifications.

Because there are both legal and illegal ways to use genetic information, the issue can become complex for employers. To avoid claims and lawsuits, businesses need to understand what constitutes the legal use of information from genetic testing.

How to Avoid Serious HR Mistakes and Employee Litigation

The state, federal, and local rules governing employees are complex and subject to rapid change. At the same time, violations can generate large penalties, lawsuits, morale problems, and sometimes, even criminal penalties. How can companies eliminate the chance of having complaints filed, enduring an investigation, or even getting sued?

Businesses may need to implement compliance systems, create safety programs, develop hiring and screening policies, and much more.

Here at PRemployer, we make it our mission to learn about your unique business and keep up with laws to work with you to ensure compliance. We can offer all of the above services, from occasional compliance consulting to a full-service HR department. 

To learn more about what your company needs to do in order to stay compliant, use this form to contact us.