Employee lawsuits for unlawful employment practices – such as sexual harassment, racial and other forms of discrimination – increasingly threaten the financial stability of businesses large and small. Today, a significant liability issue for many businesses is employment practices liability. This is due to the record-high settlement costs and intense media coverage of monumental lawsuits against big name corporations.

The Sentry Solution will discuss some of the employment-related offenses upon which these lawsuits are allegedly based and recommended practices to avoid them.

Discrimination
Employer discrimination in employment practices based on race, national origin, age, disability, religion or gender is unlawful. Discrimination can occur in the form of different treatment, harassment and retaliation.

Sexual Harassment
Unwelcome sexual advances, requests for favors, and other verbal or physical conduct of a sexual nature, made:

As a term or condition of employment
As a basis for employment and/or advancement decisions, or
Which create a hostile, intimidating, or otherwise offensive working environment?

Harassment can occur in the form of touching or violating space, lewd or off-color jokes, foul language, etc.

Background and General Information
Discrimination is broadly defined within Title VII of The Discrimination of the Civil Rights Act of 1964. Other federal legislation has focused on narrower discrimination issues, including:

Equal Pay Act of 1963, which prohibits wage discrimination on the basis of sex.
Age Discrimination in Employment Act of 1967, which prohibits discrimination based on age for employees 40 or older.
Americans With Disabilities Act, which bars discrimination in employment based on disability In addition to the aforementioned statues, nonconformance or violation of the following federal employment laws may also present risks to your business:
Fair Labor Standards Act, which establishes both a national minimum wage and overtime rules.
Consolidated Omnibus Budget Reconciliation Act (COBRA), which requires offering continued health and dental insurance coverage to terminated employees
Family and Medical Leave Act of 1993, which requires leave and job-return for personal or family medical reasons and for the care of newborn or newly-adopted children
National Labor Relations Act, which prohibits retaliation against employees seeking to unionize

To reduce your exposure to employment practices liability, consider the risks and recommendations relative to each of these areas as discussed below: employment advertising, employment applications, applicant testing, candidate interviewing, harassment and termination.

Employment Advertising

Risks: Statements made in advertising material that allude to unlawful hiring practices can put your company at risk due to allegations of discrimination. Examples include:

“Recent college graduate” or “energetic” can be interpreted as “young.”
Using the term “salesgirl” or placing an ad in a gender-specific column or section could be perceived as “female preferred.”
Implying a contractual guarantee such as “permanent employment” or “employed for life” is misleading in the event of termination or layoff.
Requiring an “ability to lift 30 pounds” when there is no actual lifting in the job being posted or advertised.

Recommendations

Review your company’s entire recruiting and hiring process with legal counsel. If counsel makes recommendations, no recruiting or hiring should be conducted until all issues are resolved.
Keep advertisement of necessary qualifications limited to baseline skills for that position. Before posting a job opening, have a job description on file to support the requirement of any necessary skills or qualifications.
Eliminate any wording that could be interpreted as discriminatory, including references to gender/sex, age, religion or natural origin. The only exception to this generic approach would be a “Bona Fide Occupational Qualification” (BFOQ), which allows employers to require specific traits for candidates. This criterion is very narrow and requires the limitation to be a reasonably necessary for the position – advertising for a female attendant to work in a women’s locker room would be a BFOQ.
Do not make statements that could imply a guarantee, such as “$50,000 your first year as a salesperson.”
Include a statement that your company is an Equal Opportunity Employer.
In the ad, include a statement that drug and alcohol testing is part of your company’s recruiting service.

Employment Applications

Risks: Discriminatory questions in your employment application form can increase your risk of employment practices liability. An example would be seeking information on physical conditions or disabilities that are not job related. Questions on height or weight might also be interpreted as not relevant to the position, unless they could be supported as BFOQ’s.
Recommendations

Review your company’s application document to ensure all questions are job related to the position being staffed. Legal counsel should review the application. If questions arise, do not conduct any recruiting or hiring until all items are resolved. If the application was developed internally, consider replacing it with one from a professional supplier of employment-related documents.
Conduct pre-employment screening to determine the background and identity of your applicant and inquire about prior criminal convictions that could lead to allegations of negligent hiring.
Include the following in your application:
A statement that misrepresentation or omission on the application will lead to termination
Authorization from the applicant to check references
A statement of employment-at-will
Signature by the applicant attesting to having read understood and accurately completed the application.

Applicant Testing

Risks:Any type of skill, knowledge or physical testing used in your hiring and applicant screening process must be both valid (test results must correlate with success in the job or increased safety risk) ad work related. Examples of improper testing include:

Testing an applicant’s ability to lift 30 pounds when the position doesn’t require that task, or testing a person with a disability when the need to lift could be engineered out of the task.
Conducting physical ability testing to eliminate qualified candidates and subsequently extend an offer.
Administering a skills or knowledge test for which your company cannot prove or support a correlation between the test results and success on the job.

Recommendations

Review testing products currently in place and determine if such testing is necessary and worth the potential liability. If applicant testing is done, ensure that tests are relevant to the position’s duties. Consider adverse impact – resulting in a hiring rate for any protected group (e.g., African male) less than 80 percent of the hiring rate for the highest accepted group (e.g. Caucasian male). If historical results don’t pass this guideline, redesign the testing.
If testing is developed and administered by an outside agency or service, require the vendor to hold your company harmless and indemnify you for any discrimination claims based on the testing and any damages that may result.
Administer a drug and alcohol test on a pre-offer basis, which will help narrow the pool of candidates before an offer is extended. Ensure any guidelines of acceptability are documented and administered consistently and fairly across all applicants. Confirm your policy complies with applicable state laws.
Administer skills tests on a pre-offer basis. As with drug and alcohol testing, this helps narrow the pool of candidates to those most qualified before interviewing and extending an offer.
Administer any medical testing of physical capacities on a post-offer basis.
Retain a record of historical testing results to periodically evaluate and confirm a continued correlation between your companies’s testing and on-the-job success.

Candidate Interviewing

Risks: Risks for your company during the interview process include asking questions that suffest a discriminatory intent, such as:

“How many children do you have?” or “Are you married?”
Seeking information on general physical conditions or disabilities which are not job-related and could not otherwise be supported as a BFOQ .

Recommendations

Periodically review your company’s interview questions to ensure they stay relevant to the job’s existing requirements.
Train all management on interviewing techniques with emphasis on minimizing liability while obtaining relevant information toward a competent hiring decision.

Harassment

Risks: Deficiencies in anti-harassment programs (or failure to have programs) increase your exposure to employment practices lawsuits and/or your ability to defend these claims should they occur. Examples of deficiencies in anti-harassment programs include:

Failure to have a formal, written anti-harassment program.
Ignoring or not treating harassment complaints seriously, or threatening or terminating complainants.
Harassment policies with unclear or insufficient investigation procedures or policies that fail to designate anyone as responsible for accepting claims of harassment.
Anti-harassment policies and programs that do not address harassment may occur on any basis covered by EEO statues.)

Recommendations

Develop an employee handbook and distribute it to all new and existing employees. Obtain employees’ sign-off on having received, read and understood the handbook.
Provide an anti-harassment policy statement (see form 80-560) that they have received, read and understood your procedures.

Make sure your program and procedures include:

A written complaint procedure with two or more reporting channels
Reporting and investigation procedures
Disciplinary procedures emphasizing your company’s zero-tolerance policy.
Training on company policy and procedures upon hire and periodically thereafter

Termination Actions
Many people are employed “at will,” meaning that state law permits their employment to be ended at any time. However, even “At will” employees are entitled to certain legal protections against wrongful termination and cannot be fired for reasons that violate the law or public policy.

Risks:

Establish written employment rules and termination polices. Get an attorney that specializes in employment practices to advise you.
Make sure managers who handle terminations work with your Human Resources area and are properly training on how to apply company termination policies. In addition, explain policies to every employee and make sure each employee acknowledges receipt of them.
Investigate thoroughly before considering termination. If the employee has violated a rule, policy or procedure, be sure to investigate. Termination is not always the appropriate disciplinary action. Make sure you are consistent in your disciplinary actions with other employees for the same offenses.
Document the reasons for termination. Before terminating an employee, be sure you have a fully documented personnel file supporting the discharge. Documentation may include poor performance reviews, disciplinary notices, incident reports, records of investigations and similar types of documents. Terminating an employee for poor performance review indicated the employee was doing a ‘great job’ can made defending a legal claim very difficult.
Consult legal counsel before, not after, the termination.