Employment-related claims continue to rise. High unemployment rates fuel the fire. There are steps you can take, however, to keep any potential legal costs under control.

“Ben Franklin’s famous saying, ‘An ounce of prevention is worth a pound of cure’ really applies here,” says Jeffrey C. Miller, a director with Kegler, Brown, Hill & Ritter. “In addition, you want to have good communication with your employees and show them respect.”

Miller also stresses how important it is to “know” your employees. “Employers lose 75 percent of negligent hiring cases, so be sure to perform pre-hiring background checks. In the case of mergers and acquisitions, identify key employees you want to keep. Make sure they have agreements in place, and have counsel review the documents to ensure they are valid and enforceable, especially any noncompete provisions.”

Even when you do have all your ducks in a row, problems can still arise.

Smart Business asked Miller how companies can rise to those challenges without breaking the bank.

What issues must employers be especially mindful of right now?

First, despite reductions in many other line items, the budget for the U.S. Department of Labor (DOL) — Wage and Hour Division has been increasing on an annual basis. The two areas of major focus are 1) the investigation and enforcement of overtime and 2) employee versus independent contractor status, so be sure you are in compliance in those areas. Next, have measures in place to protect against retaliation claims, which — according to the Equal Employment Opportunity Commission (EEOC) — have risen every year since 1997 and now account for nearly 40 percent of all charges. Finally, be aware of the expanded regulatory definitions of the Americans with Disabilities Amendments Act (ADAAA) that went into effect in March 2011.

How can a company establish a solid foundation to protect against claims?

An employee handbook may or may not be necessary, but at the least have an effective Unlawful Discrimination and Retaliation Policy. Regardless of your company’s size, make it a compulsory company policy to document everything that happens, along with the disciplinary measures taken, even if they were only verbal warnings. Plaintiffs’ attorneys love taking undocumented cases to juries, so have everything in writing.

What are the first steps to take if a dispute arises?

Handle the situation with business efficiency — if you receive notice of a claim, contact counsel and your insurance company immediately. Do not change or destroy any documents, e-mails, or other electronically stored information, and make sure that your computer system is not set to automatically delete at specific times.

Designate one person to serve as a point person to work with counsel. You want to make the time spent with counsel productive, so having one designated person to handle this task will help avoid overlap and unnecessary fees. The point person should go into the first meeting with counsel with the confidential personnel file. He or she should provide a written narrative for the attorney that includes a chronology of events/facts. It should include the employee’s date of hire; salary history; any promotions, demotions, or disciplinary actions; and the names and titles of any supervisors or other employees who are involved in the current dispute. In a dispute involving a demotion, discipline, or termination, provide narrative examples of other similar employees who were treated in the same manner. Identify whether the complaining employee filed or participated in any grievances or disputes.

What happens after counsel has the facts?

Once counsel has all the dates, facts and information, he or she will develop a critical analysis and a strategy. Even though you may have significant HR experience, do not try to do these things yourself. Your attorney has seen a variety of cases and will be able to make a good evaluation of where you should go from here.

During this stage, you should feel free to talk through your strategy, but don’t ‘fall in love with it.’ Don’t be too rigid, because counsel might uncover further information as the case moves forward.

How can a company make the most of their time with the attorney?

In addition to having all the facts in writing for the attorney at the first meeting, maximize future time by scheduling formal follow-up meetings to cover multiple issues. Save up the e-mail and phone call questions and instead have a comprehensive discussion during the next meeting.

When should settlement be considered?

No matter how much you think there is no case, you almost always should consider settlement. You can arrange for Equal Employment Opportunity Commission (EEOC) mediation rather quickly and it is free and fairly effective. EEOC attorneys will tell you that 90 to 95 percent of cases that are filed have no merit and are due to hurt feelings — that is why it is so important to treat your employees with respect and keep the lines of communication open. Sometimes the settlement is as simple as an apology, an acknowledgment of some sort, an agreement to send management for training, or something similar. If you do reach a settlement, do not let your attorney leave without some type of signed agreement. A full and final document can be drafted later.

JEFFREY C. MILLER, a director with Kegler, Brown, Hill & Ritter, focuses his practice on management interests in labor and employment matters. Reach him at (216) 586-6650 or jmiller@keglerbrown.com.

Insights Legal Affairs is brought to you by Kegler, Brown, Hill & Ritter Co., LPA

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