Lawsuit Prevention for Employers

Any experienced employer can tell you that just the cost of defending a garden-variety employment-related lawsuit, alone, can be devastating. This means that the only meaningful solution to this problem is the prevention of lawsuits.

To illustrate this dilemma, consider the following:

• Employers without a written, legally enforceable arbitration policy will be forced to defend a lawsuit to the satisfaction of a jury which is predominantly or exclusively comprised of employees. This is because business owners or supervisors rarely survive jury selection. Such juries are predictably sympathetic to the plaintiff suing the employer, which explains why employers lose the overwhelming majority of the wrongful termination cases in California.

• Unlike employers, employees who sue them typically don’t have to pay their lawyers, because plaintiffs’ lawyers are compensated by a percentage of any settlement or jury verdict, plus any attorneys’ fees awarded; so employees can sue their employer at no cost to themselves, and force the employer to incur huge attorneys’ fees even if they are ultimately unable to prove any wrongdoing by the employer. The uneven nature of the employment law playing field is perhaps best described by the fact that attorneys’ fees are typically not available to employers who prevail at trial.

• At-will employment policies, while recommended, offer no protection against the most dangerous (i.e., most expensive) common claims, such as those alleging discrimination, retaliation and harassment.

One example of how ignorance of the law can backfire on employers involves the subject of overtime compensation. Contrary to a common misconception among employers, hardly any employees are legally “exempt” from overtime compensation requirements, which means that most “salaried” employees are entitled to overtime. Consistent with many recently enacted employment laws, an employee who prevails on an overtime claim is entitled to an award of attorneys’ fees. This feature of the law can, and often does, transform a $5,000 claim into a $50,000 liability.

These examples represent just a sample of the hazardous terrain California employers are treading from the moment they hire the first employee. However, the following three precautions could eliminate many of the lawsuits that would otherwise be initiated:

• A state-of-the-art employee handbook, drafted by a labor law expert and updated annually, to address the many new laws enacted each year and to keep the handbook’s legal protections undiluted;

• A written, legally enforceable arbitration policy, also revised annually;

• Close collaboration with an expert labor lawyer whenever complaints are made about working conditions, whenever the employer is made aware of any complaint of harassment, retaliation or favoritism, regardless of the source of the information and before any employee is terminated.

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Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over three decades. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives.

While no one can guarantee a future free of lawsuits, Putnam has compiled a remarkable record of success: Not one employer-client has been sued in 36 years with his system of precautions in place.

For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well. 

You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them. www.jaygputnam.com/articles-by-jay-g-putnam/