There is no silver bullet for California employers to avoid workplace disputes and litigation. However, by focusing on a few key best practices, employers can reduce the likelihood of litigation, and if sued, the practices will make defending litigation much easier and can result in a better outcome. Here are my top five employer practices to reduce employment liability:
1. Develop a company culture of documentation.
It does not matter the type of employment litigation at issue – wage and hour claims, leave issues, or harassment claims – the better documented the situation is, it dramatically increases the odds of prevailing in litigation. I believe there is a relationship in place that correlates the likelihood of avoiding a devastating judgment to the amount of documentation the employer has regarding the particular employee or group of employees involved in the litigation.
So that leads to the question of, what should employers document? Conversations with employees, reviews, days absent and the reason for the absence, performance issues (both good and bad). With email and the ability to scan documents or take pictures of documents on a phone, there is almost no excuse not to have nearly every critical discussion, disciplinary action or time off request documented. The only issue preventing employers from documenting issues is not stressing the need to do document these items with management.
2. Focus on maintaining good time records.
Employers have the burden to record and maintain accurate time records under California law. If the employer knows employees are not properly recording their time, the employer needs to enforce a policy to have employees accurately record their time, even if it requires disciplinary action.
Some bad time keeping practices to avoid include the following:
- Records that do not record the employee’s actual time working. For example, the employee records their start and stop time at the same time every day even though the employer knows it changes.
- Not keeping time records long enough. The statute of limitations can reach back four years in wage and hour class actions, and these records will be the primary issues in most cases.
- Not recording all required information. For example, employers are required to record employee’s meal periods under the IWC Wage Orders.
- Not keeping the time records in a manner that is usable. Maintaining records in a form that makes reviewing the records almost impossible is almost equivalent to not maintaining them in the first place. Some thought should be put into how an employer is keeping old time record information and how that data could efficiently be reviewed in the future if needed.
3. Having multiple people with institutional knowledge and knowledge of company policies over time.
Is there one person with full knowledge of the employment policies implemented by the company? Institutional knowledge about the various policies put into place by the company, when they were implemented, and why they were implemented is critical knowledge and information in defending litigation. This information should not reside with just one person but should be shared with a few executives so that this institutional knowledge can be preserved.
4. Communicate goals and performance expectations to employees routinely.
The basic HR functions are key here – conduct employee reviews routinely and accurately. The reviews will likely be the primary focus in a wrongful termination, discrimination or retaliation claim. Reviews need to be accurate. While the reviews must be professional, they need to note the employee’s deficiencies. It is hard to counsel employees on performance issues, but it is critical that these issues are addressed with employees in writing. I wrote recently about common misunderstandings about disciplining employees in a prior post here.
5. Consider offering severance agreements if this is a potential dispute with a departing employee.
If an employer believes that there is a potential dispute with a departing employee, the employer may choose to pay some severance in exchange of a release of claims by the employee. If done properly, an employee’s acceptance of a severance agreement would effectively waive any and all claims that he or she may have against the company (see my prior post here on common questions about severance agreements). If there is any potential for a dispute about any issues that arose during employment, entering into a severance agreement could be an effective way to avoid costly and time-consuming litigation. However, employers need to approach severance agreements with caution, as California has recently passed legislation prohibiting certain confidentiality clauses in agreements with employees (see prior post about 2019 California legislation here), and employers need to ensure their severance agreements comply with California law.