How to Limit Employment Law Exposure

This figure breaks down the types of charges filed with the Equal Employment Opportunity Commission (EEOC) in 2012. In that year, the latest in which data is available, more than 26,000 charges of disability discrimination were filed, or 26.5% of total charges. Source: NERA Economic Consulting
This figure breaks down the types of charges filed with the Equal Employment Opportunity Commission (EEOC) in 2012. In that year, the latest in which data is available, more than 26,000 charges of disability discrimination were filed, or 26.5% of total charges. Source: NERA Economic Consulting

Over the past several years, government agencies that regulate the workplace have been in a mode of aggressive enforcement.

Whether the agency in question is the Equal Employment Opportunity Commission (EEOC), the Occupational Safety and Health Administration (OSHA), the National Labor Relations Board (NLRB), the Office of Federal Contract Compliance Programs (OFCCP) or the Wage and Hour Division of the U.S. Department of Labor, agency actions have been up across the board.

For example, total EEOC filings have been steadily increasing, up more than 12% in the last 10 years.

In addition, disability claims are becoming increasingly prevalent. In 2012, the latest year that such data is available, more than 26,000 charges of disability discrimination were filed with the EEOC (about 26.5% of total charges). Race, sex discrimination and retaliation claims also remain extremely prevalent. The bar chart demonstrates the breakdown in types of charges filed with the agency.

At the same time, wage and hour lawsuits, both private as well as agency driven, have become increasingly commonplace. According to the consulting firm NERA Economic Consulting, wage and hour settlements for U.S. companies totaled $467 million in 2012, with overtime allegations — at 40% — the most prevalent. The pie chart on the next page illustrates a breakdown of types of wage and hour allegations settled in 2012.

Finally, with the continuing decline of unions, the NLRB has become increasingly focused on non-union workplaces. Under the National Labor Relations Act of 1935, private-sector employees, including non-union employees, have certain rights to air their grievances.

Increasing Regulation

The NLRB has been using this to extend its reach into non-union workplaces, including through regulation of social media policies, confidentiality in internal investigation procedures, appropriate use of workplace email and the content and form of employee handbooks.

All of these combine to confirm that employment law liability should be a serious consideration for all employers. It costs real dollars to respond and deal with agency enforcement actions, and plaintiffs’ attorneys have become increasingly active and adept at making claims under employment laws in recent years.

For example, in April of 2013, Enterprise agreed to pay $7.7 million to settle multidistrict litigation alleging the company failed to pay its assistant car rental managers overtime wages. The dispute centered on allegations that Enterprise had misclassified its regional assistant rental managers as exempt from overtime regulations under the Fair Labor Standards Act (FLSA).

Although Enterprise denied wrongdoing — and had strong evidence that its classification was appropriate — it cited the costs of ongoing massive litigation as the reason for settling.

Agency actions and lawsuits can dramatically affect any company. However, with some preventive care, employers can limit the potential for charges to be filed against them and also help put themselves in the best position to defend any claims that are filed.

Here are some tips and best practices for limiting employment law-related liability.

Minimize Suits through Arbitration Agreements

Employers can minimize employee lawsuits and their fallout through arbitration agreements, whereby a neutral arbitrator hears the facts of the dispute and makes a binding ruling, thus avoiding the courts and juries. A study by Alexander Colvin of Cornell University found that employers win more often in arbitration than in litigation, employee awards are fewer and the proceedings move much faster.

In addition, recent cases have made arbitration agreements even more enforceable. Having valid, well-drafted and enforceable arbitration agreements in place can help employers limit their liability exposure, especially agreements with class-action waivers. It is vitally important that employers utilize knowledgeable employment counsel when drafting the agreements.

While the NLRB has taken an aggressive stance against arbitration agreements that contain class-action waivers — asserting that they violate employees’ rights to engage in concerted action — every court that has ruled on the issue has found against the NLRB.

Currently, the NLRB is considering its options for review of a high-profile decision by the 5th U.S. Circuit Court of Appeals that found in favor of a broad arbitration agreement at the home builder D.R. Horton.

CONTINUED:  How to Limit Employment Law Exposure
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