These five golden rules, if followed by employers, help prevent employment lawsuits, and in the event of litigation can lower the litigation exposure.  Employers cannot control who may file a case against them, but the following items are in their control, and can go a long way to reducing litigation exposure:

1. Must have excellent documentation.

No matter what type of employment litigation is at issue – wage and hour claims, leave issues, or harassment claims – the amount of documentation an employer has dramatically increases the odds of prevailing in litigation. I would even go as far as to say there is a relationship in place here (similar to Moore’s law in the computing industry) that the likelihood of avoiding a devastating judgment is proportionate to the amount of documentation the employer has regarding the particular employee or group of employees involved in the litigation.

What should employers document? Conversations with employees, reviews, days absent and the reason for the absence, performance issues (both good and bad – see below), etc…. With email and the ability to scan documents or take pictures of documents on a phone, there is almost no excuse not to have everything documented. The only issue preventing employers from documenting issues is not creating a culture of documentation and the press of business.

2. Must keep accessible and excellent 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. Be careful, the time records must also be adequate. Here are some examples of inadequate time records:

• The records that do not record the employee’s actual time working. For example, the employee records their start and stop time and 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 year 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 (see section 7 – Records).
• 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. There must be institutional knowledge of the company’s policies and how they have changed.

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. Also, this information should not reside with just one person in case that person leaves the company.

4. Must communicate goals and performance expectations to employees routinely.

This is basic, but it helps to be reminded about the need to conduct employee reviews routinely and accurately. The reviews will likely be the primary focus in a wrongful termination, discrimination, or relation claim, and therefore the reviews need to be accurate. It is hard to counsel employees on performance issues, but it is critical that these issues are addressed with employees in writing. I recommend using the “velvet hammer” approach when giving constructive criticism.

5. Must create and update company policies and employee handbook.

It is important to have the policies clearly spelled out in an employee handbook or in some other manner. It is critical to have the policies in writing to prevent an employee from claiming that he or she is being arbitrarily singled out for discipline. While employers are not required to have a written policy that addresses every potential company violation, basic company standards and protocols should be set forth in writing.