Protect Your Company

What Should You Do If an Employee Sues You?

By Bradley Hunt, Attorney

As an employer, you should take steps to protect your company and yourself in the event that an employee sues or files a complaint against your company. There are several ways your company may be sued by a current or past employee. The most common types of complaints are over wages and hours paid to the employee and complaints of harassment or discrimination.

Most complaints over wages and hours arise over whether or not your company paid the employee enough for the hours they worked or were allowed to work. Under the Federal Fair Labor Standards Act, any employee who is categorized as “non-exempt” or hourly should be paid time and half for any overtime worked. “Exempt” employees are just that – exempt under the FLSA and are what are normally considered to be salaried employees who work overtime without being paid extra. You should know that it is illegal to ask your employee to sign a waiver of overtime pay as an employee cannot waive the employee’s right to protection under FLSA. Properly categorizing your employees as non-exempt or exempt is your first step towards complying with FLSA. Additionally, the use of unpaid internships can run afoul of FLSA as well.

Complaints about discrimination or harassment usually stem from employees who file a complaint with The Equal Employment Opportunity Commission in regards to the company’s actions against a member of a protected class during hiring, everyday work, or discharge/termination. An employee may also file a complaint with EEOC for your company’s failure to act on a previous complaint of harassment in the workplace. The EEOC protects people that are among the many protected classes including race, color, religion, sex, gender, pregnancy, childbirth, marital status, age, national origin, medical condition, or physical or mental disability. Additionally, an employer is strictly prohibited from retaliating against any employee who may file an EEOC complaint or who participates with the EEOC during the course of their investigation.

How can you protect your company? The best way to do this is 1) keep adequate and thorough records. You should do this by documenting employee hours and pay as well as keeping a file for each employee that includes discipline records, reprimands, warnings, performance improvement plans, and job evaluations. You may also consider keeping records of job safety trainings and other trainings your company has had on discrimination and harassment. 2) Keep an up to date employee handbook that outlines company policies about discrimination and harassment as well as disciplinary processes, including an employee grievance policy. Your handbook should also include that there is an open door policy so that employees feel free to report discrimination or harassment that happened to them or to someone else. Once your handbook is in place, train your employees on your company policies so they can’t say they didn’t know about them. 3) Promptly and thoroughly investigate any report of discrimination or harassment and follow your company’s grievance policy.

Overall, the best practices your company should have are:

  1. Have an employee handbook that has been properly drafted and reviewed by an attorney. Give each employee a copy of the handbook and train your employees on the handbook policies and procedures.
  2. Hire an attorney to help you when creating company policies. It is not a good idea to download an employee handbook from the internet as each company is different. An attorney is best suited to help you determine what you should have in your handbook and can draft company policies for you.
  3. Know the law when it comes to employees and the Fair Standards Labor Act and discrimination/harassment. An attorney can help you by showing you how the laws apply to your company specifically and can give you advice when special circumstances arise.
  4. Create and enforce a zero-tolerance policy on discrimination and harassment in the workplace. You should immediately investigate all claims of harassment and administer training and discipline as necessary and always follow your company’s grievance policy.
  5. Document, document, document! Your company should keep organized employee and payroll records within reach for up to a decade.

If you are sued, or suspect you may be sued by a current or former employee, I recommend you seek legal counsel to protect the company and defend the claim.