Many polls show that hiring will pick-up in 2011 as business conditions and the economic landscape improve. One recent poll has hiring increasing as much as 32%. Whereas this is welcome news, it does come with some warnings. Employment based lawsuits are also on the rise. The 2010 Chubb Private Company Risk Survey indicated that one in five respondents believed they will have an employment practices liability (EPL) lawsuit during 2011. New legislation and U.S. Supreme Court decisions have opened the door for more and more EPL based lawsuits. According to the Chubb study, the Equal Employment Opportunity Commission (EEOC) filed a record number of work place discrimination charges in 2008 and 2009, and is on pace for a record setting 2010. Factors leading to the growth in EPL based litigation is increased knowledge of applicable laws by employees, aggressive attorneys looking for deep-pocketed employers to file suit against, and growth of the long-term unemployed that feel they were mistreated by their former employer. Growth in EPL based litigation has been seen in ADA (Americans with Disabilities Act), GINA (Genetic Information Nondiscrimination Act) and Ledbetter Fair Pay Act.
Americans with Disabilities Act
If an employee needs an ergonomic chair that costs $1,000 is that a reasonable accommodation that would not cause an undue hardship? For some small employers that answer might be yes. The ADA was originally passed in 1990 and was updated in 2009. In a nutshell, the ADA requires that employers with 15 or more employees make reasonable accommodations to employees with disabilities that would not impose an undue hardship. EPL matters develop over the term reasonable. The ADA also stretches into the hiring arena, promotion and benefits.
You hire an employee and offer him/her medical insurance, as you offer all of your employees. Your medical insurance provider rejects their coverage because their genetic data indicates they have a higher chance of having a genetic disease. Do you terminate the employee, charge the employee a higher employee contribution to offset any premium coverage, or not offer the employee any medical coverage? GINA was passed in 2008 and remains a relatively new law signed by President George W. Bush. The purpose of the law is to protect employees from discrimination based on their genetic information, specifically relating to hiring and health insurance coverage. Most of the law is aimed at the prohibition of collection and potential use of genetic data. What this means for employers is that health insurance premiums, eligibility, and enrollment should not be based on genetic factors.
Ledbetter Fair Pay Act
The Ledbetter Fair Pay Act was passed as a response to a Supreme Court ruling in Ledbetter v. Goodyear Tire & Rubber Co. in 1997. The Supreme Court attempted to limit the length of time an individual has to file a claim for discriminatory compensation to 180 days from the alleged discrimination. The Ledbetter Fair pay act reversed the Supreme Court's time limitation and restored the position that each paycheck that delivers discriminatory compensation is an actionable event that an EPL lawsuit can be filed. For example, if the employee believes they were compensated unfairly in 2000, they can bring a 10 year claim of discriminatory compensation practices. Pay discrimination lawsuits are a fast growing area in EPL litigation.
How can I prepare and protect my firm?
The first thing you should to do is update your employee handbook, policies and procedures. Ensure that employees, supervisors and managers are aware and understand the changes. TRAIN, TRAIN, TRAIN, and then train some more. Ensure that your managers and supervisors are updated with the latest information, and they are comfortable administering the policies. Communicate to the entire staff the open door policy, free from retaliation, for them to discuss their concerns.
Second, update your grievance policies, complaint resolution procedures, and compensation practices. Stress fairness as a stated goal. Give employee a voice and a means to vent their concerns. Research, react, and respond to employee complaints in a serious manner with open and honest communication.
The third action you should take is to keep accurate records. These records will be the base of any employer defense should you have an EPL based lawsuit filed against you.
In conclusion, the hiring landscape might be improving as 2011 approaches. The downside is employment based litigation is also on an upward trajectory. Training, updating policies, and accurate record retention are but the first steps one can take to ward off an employee lawsuit.
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