Hot Topics in Employment Litigation – How Employers Can Protect Themselves

October 2016

By: Erin K. Tenner, Esq. and Michelle Macdonald, Esq.

I asked Michelle MacDonald, one of Gray Duffy’s employment attorneys, to answer some questions about some of the hot topics surrounding employment law. Her answers provide important guidelines for every employer.

Erin: There have been a lot of decisions coming down from the courts about arbitration agreements. What do auto dealers need to know about arbitration agreements?

Michelle: The law is in flux as to whether a class action waiver can be upheld in arbitration agreements. The US Supreme Court needs to work out the interplay between state and Federal law on the subject and these waivers may be struck down as overreaching.

Erin: How can employers protect themselves?

Michelle: A savvy employer should have an arbitration agreement that includes a class action waiver as part of their arbitration agreement. There are multiple benefits to handling a class action through an arbitration not the least of which is potential reduced cost for administration and litigation. Also arbitrators are far less likely to award huge verdicts on behalf of the individual and the class based on the entirely practical reason that arbitrators rely on repeat business from both sides and that tends to moderate results even unconsciously on the part of the arbitrator.

Erin: Can auto dealers amend their arbitration agreement language to offer more protection?

Michelle: Yes. I would recommend that arbitration agreements set forth class action waivers with language to the effect that if the waiver is overturned, any class action is handled and administrated by the arbitrator and not by the courts.

Erin: What other types of lawsuits can be costly to employers?

Michelle: Wage and hour and discrimination claims are some of the most costly. Employers start out behind the eight ball when hit with these claims, although they can counter bare assertions with good records. However, many businesses simply don’t keep the kinds of records that they should and that becomes a very expensive headache for them in the event of a claim and especially in a class action.

Erin: What kind of records do you recommend business owners keep?

Michelle: At a minimum, a business must have accurate payroll records that reflect total ordinary hours, overtime hours, gross amount of wages paid, deductions, net wages, pay period, hourly rates and the legal name of the employer and the employee. The employer must furnish this information on a semi-monthly basis to the employee and keep these records for at least two years by law (although four years is preferable to get beyond the statutes of limitations of all possible claims). With respect to discrimination claims, having a well thought out employment policy manual that is followed, training records, documentation of discipline and complaints and how they were resolved can be valuable in a lawsuit, as long as the employer is either well versed in the laws and how records can hurt or help them, or has worked with an attorney to make sure it is all done properly. If these records are not kept properly, they can be more harmful than helpful.

Erin: Aside from record keeping, what kind of wage and time practices should employers follow?

Michelle: Employers must provide the appropriate meal and rest breaks, comply with the rules concerning waiting time periods and unpaid wages if employees resign or are terminated. Employers also need to know that they are forbidden from making certain deductions from wages such as for reimbursement for breakage or accidents, except in very limited circumstances.

Erin: What is the one area in which you are seeing the most frequent claims against employers?

Michelle: Again wage and hour and particularly class actions because the costs can be extreme, and small amounts multiplied can add up quickly, which puts tremendous pressure on a business to resolve them quickly.

Erin: If an employer does receive a claim, what should they do?

Michelle: That depends on the claim. If the claim is from a terminated employee for money owed, the employer should pay an accurate amount due immediately to avoid running afoul of the Labor Code and being subject to waiting penalties.

However, more complicated claims, including discrimination matters and potentially class based wage and hour matters, should be referred to counsel. Even if the matter is never litigated, counsel can resolve it with appropriate agreements in place to avoid future claims from the same persons and reduce the chance that the claim becomes a class action.

Erin: Thanks, Michelle, for your insights on these important employment law issues facing business owners.

Michelle: My pleasure. I love helping business owners with these issues!

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.