Clients come to my firm often frustrated by California employment laws and their complexity, the raising costs of doing business in California (such as the higher minimum wage), and the legal system in general. I have to agree that California poses one of the most difficult business environments businesses have to operate within, but I come back to thinking that many of the issues the clients voice frustration with can be managed if they are given the tools to do so. This Friday’s Five lists five things every employment attorney should tell their California clients:
1. Litigation is expensive (and no, I’m not just talking about legal fees).
Two lessons here: 1) Don’t approach litigation with the attitude that you are fighting for principle (unless you have unlimited resources), and 2) focusing on human resources/policy development/legal compliance before litigation (see #5 below) can help prevent litigation and save resources. For most businesses, litigation should be avoided, but to the extent it cannot be avoided, companies should usually view the transaction not as a personal vendetta, but as a business transaction. Executives should weigh the costs of litigation versus the benefits just as they do in any other business decisions to determine whether to litigate the case or make an attempt at settlement. But don’t approach this decision based on any attorney’s advice that litigation can be completed fast and inexpensively. As there are defense costs, but as just or possibly costlier is the time and effort that the company and its managers and employees will have to spend defending the litigation instead of running the business. This is often a hidden cost that must be taken into consideration.
2. Treating people with respect will likely result in less litigation.
I understand, it seems like California employment law is always adding new requirements on employers that are difficult to comply with. However, with a small amount of time and attention, most of the issues that present the largest amounts of potential liability for employers can easily be managed. But for the few occasions when it is legally unclear about what action the company should take, or if legal counsel cannot be reached in time for a decision where the law is not clear, employers that treat the employee with respect will usually avoid litigation. I believe that, for the most part, employees understand that employers/managers/supervisors must make difficult decisions. When the employee is treated with respect during a difficult employment decision, even though they might not like the decision, they will probably understand why it was made, and most likely will not hold a grudge against the company.
3. When in doubt, document.
As a litigator, the worse feeling I have is when the employer provides me with an employee personnel file for a problem employee, but the personnel file contains less than a few pages. Employers’ primary defenses to many employment lawsuits will be won or lost on the documentation created and maintained by the employer. The employee that believes they were wrongfully terminated will face a much tougher case if there were a dozen documented performance write-ups in their file setting for the date and examples of what the employee did or failed to do. For additional information, see my prior post, Five best document storage and retention practices for California employers.
4. Train front line managers and supervisors.
A company’s managers and supervisors are the eyes and ears of the company. They must be well trained about what issues can create legal liability for the company, as well as be trained in new developments in the law (for example, so they are not asking about criminal histories during the interview process since the beginning of 2018) and are trained about how to be managers (and treat people with respect). This training for managers/supervisors is the difference between a good and a great company.
5. A small investment in human resources will provide a return.
As I wrote about last week, human resource departments need to have a more critical role in organizations and should be viewed on the same level as marketing and finance departments. Giving HR managers budgets to proactively update policies, handbooks, and training sessions for managers will provide a positive return to the company. Now it may not be an immediate net gain on the financials, but if one lawsuit is avoided because of the proactive measures put into place, this will be money well spent (see item #1).