Recommended Employment Practices to Minimize Risk and Liability

GavelTo Our Clients and Business Associates:

Over the years, as we have represented employers and management in labor and employment related legal matters, we have discovered a few practices that help keep employers from costly disputes and litigation. With this in mind, we share a few practices that may assist you in maintaining compliance with current labor and employment laws.

Although at certain times modifications may be more frequent, we generally recommend employers update employment handbooks and written policies at least every two years, conduct regular labor audits, and consider obtaining appropriate Employment Practices Liability Insurance (“EPLI”) to guard against unanticipated liability. In addition to reviewing employment policies and labor audits, our firm offers, at no charge, regular training seminars and monthly articles on current labor and employment laws and trends. If you haven’t already, we recommend you sign up to receive these articles and notice of our seminars.  More information is available at our website:  www.pkwhlaw.com. Also, please find us on Facebook and LinkedIn where regular updates and access are available.

Employee Handbooks

Last year, the National Labor Relations Board issued a Report Concerning Employer Rules. The report attempted to provide guidance on whether employee handbook policies were considered lawful or unlawful.  The report prompted many employers to revise their employment policies and practices. Employers should consider reviewing applicable policies and rules to ensure compliance with these guidelines and other current legal amendments and trends, such as the recently adopted regulations from the California Department of Fair Employment and Housing, which have necessitated changes to prohibited harassment policies and the statutory sick leave requirements that took effect in 2015, which significantly changed how many employers structure their sick leave and other paid time-off policies.

In many instances, clearly defined employment policies and handbooks have been instrumental in protecting employers. For example, the California Supreme Court in Guz v. Bechtel National, Inc. advised that employers who want to ensure their at-will employment relationship with their employees should include correct at-will language in all written communications, including employee handbooks. The court stated, “[W]ritten employer communications to employees are the best evidence of the company’s intentions about at-will or for-cause terminations.” Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317.

In another case, a federal court found that the language in the employer’s handbook, coupled with the employee’s signed acknowledgement that she read and understood the provision in the handbook, was “strong evidence” that the parties did not intend to enter into any agreement to the contrary.  Bianco v. H.F. Ahmanson & Co. (C.D. Cal. 1995) 897 F.Supp. 433, 440. See also Eisenberg v. Alameda Newspapers, Inc. (1999) 74 Cal.App.4th 1359, 1388, (holding that the employer’s written personnel policies and employee’s acknowledgement provided overwhelming evidence in support of the presumption that employment was at-will). In a recent landmark case, the Supreme Court of California denied class action certification for off-the-clock work, in part, based on the employer’s formal written handbook policy disavowing such work consistent with the law. Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1017.

So, handbooks should be updated regularly to reflect major changes in the law or in the workforce.  Also, from time to time, employers determine that some policies are not effective and wish to consider options that may be more suitable for a productive workforce.  We regularly review and revise employment policies and practices and are able to provide meaningful insights as you consider and develop strong employment procedures.

Labor Audits

We recommend employers be proactive about ensuring compliance in their employment practices. It is a good practice to periodically audit employment practices.  Because employment law continues to evolve, regular labor audits can keep you up to date and help you modify aspects of your employment practices to comply with applicable laws. Additionally, employers should be aware that many state and federal governmental agencies have the right to conduct audits at any time (with little notice), so it is prudent to regularly conduct self-audits with an eye toward compliance and maintenance of sound practice.

To be proactive, we recommend employers consider performing labor audits which may include review of the following:

  • Recruitment and Hiring Policies and Practices
  • Performance Evaluations; Promotions and Transfers Policies and Practices
  • Discipline and Termination Policies and Practices
  • Recordkeeping/Personnel Files/Job Descriptions
  • Existence and Components of Safety and Training Programs
  • Employee Handbook /Written Policy Review
    • Communication of Policies and Practices
    • Wage and Hour Compliance
    • Leaves of Absence Policies and Practices
  • Individual Contracts
    • Employment
    • Independent Contractor

Employment Practice Liability Insurance (EPLI)

We have seen a growing trend in the use of EPLI.  EPLI protects an insured against major litigation costs and the liabilities associated with claims of wrongful termination, harassment, discrimination, and retaliation. Additionally, some EPLI policies include limited coverage for other claims such as leaves of absence and wage and hour issues.  Although EPLI continues to develop, some of our clients have secured favorable results when properly insured.  So, as a firm, we encourage clients to consider obtaining appropriate EPLI coverage.

In making this recommendation, we also note that EPLI has some restrictions.  For example, some clients were unaware, and quite surprised to find, that their EPLI coverage restricted their right to select their own legal counsel.  For these particular clients, provisions in their EPLI policies gave the insurance company full authority to select the client’s legal representative, even when that legal counsel (hand-picked by the insurance company) may not have had the client’s best interests or preferences at heart.  We believe selection of your legal representation should be your choice, not the insurance company’s.

So, if you decide to obtain EPLI coverage, or if you are renewing your existing EPLI policy, consider asking your broker about choosing your own lawyer.  At your request, many EPLI insurance companies will include a “choice of counsel” provision that expressly permits you to choose your own legal counsel – so long as the lawyer is experienced and qualified in employment law.  We have seen that retaining this right to choose your own legal counsel can be critical to resolving a matter consistent with your objectives and values.

These are just a few practical solutions we believe can help you avoid employment law disputes and legal actions.  If you have any questions, you are welcome to contact us directly.  Contact information is available at our website:  www.pkwhlaw.com.  We would be happy to discuss any or all of these topics with you in greater detail.  We look forward to our continued relationship.  We truly appreciate and value your confidence in our firm.

Very truly yours,

Palmer Kazanjian Wohl Hodson