In the film Evan Almighty everyone believes Evan has lost his mind when he begins building an ark next to his home to protect against an upcoming flood.  Right now, in Iowa, no one would proclaim him crazy.  Our recent flooding has once again wrecked havoc to homes and businesses throughout Iowa.  

So how do you build an ark to protect yourself from continually rising employment lawsuits?

1.  Treat Employees with Respect:  Seems like a basic philosophy but it is amazing how many employers forget to treat their employees with respect.  Employees that are humilated or treated in a disrespectful way are much more likely to sue your company. 

2.  Communicate with Your Employees:  First, make sure you have an effective employee handbook with up-to-date employment policies and publicize your policies to employees.  Make sure you follow your policies.  One of the easiest ways to land in an employee lawsuit is the failure to follow your employment policies.  Also make sure you have an open door policy where employees are allowed to voice their concerns or complaints.  Do not let complaints fester.  Deal with them right away.

3.  Implement an Effective Unlawful Discrimination and Harassment Policy:  Your harassment policy should include more than just sexual harassment.  There may be other forms of harassment based upon race, religion, age or disability.  It is also critical to consistently train employees and supervisors regarding unlawful harassment and discrimination.  You should consider training employees on harassment and discrimination issues at least once every year.

4.  Document, Document, Document:  The importance of good record keeping cannot be overstated.  If you don’t have something in writing, chances are a jury or judge may not believe it happened.  Be sure to document even verbal warnings and maintain an appropriate personnel file in order to make sure the documentation is not lost. 

5.  Conduct Honest Employee Evaluations on a Regular Basis:  Unless your company is headquartered in Lake Wobegon every employee is probably not above average.  Evaluations can be valuable proof in an employment lawsuit.  Make sure poor performance is properly documented.  Otherwise, the judge or jury will not believe you when you say the employee performed poorly but all their evaluations are excellent.  You should conduct the evaluations on a regular basis, usually at least once per year.  I recently represented a client sued for discrimination.  A key in defending the case were the honest performance appraisals performed b management.

6. Do Not Retaliate:  Employers are often blindsided by retaliation claims.  There are a number of proactive measures you can take in order to avoid liability for retaliation claims.  It is important to avoid retaliation because recent cases have lowered the burden for plaintiffs to prove their retaliation claims and the number of retaliation claims from plaintiffs is continually on the rise.

7.  Take Action and Investigate Promptly: If a complaint arises, make sure you take the complaint seriously and investigate promptly.  A quick and thorough investigation may help eliminate problems before you have a real mess.  You will need to consider who should conduct the internal investigation.

8.  Compy with Wage and Hour Laws:  Ensure your exempt employees (i.e., salaried employees) are properly classified as exempt under the law.  Wage and hour claims are also on the rise and could result in a class action against your company.  This is a common area of the law that is ignored by many employers and could result in significant liability.

9.  Review and update your employee handbook and/or policies:  At least you should review your policies to incorporate any changes in the law or your manner of doing business.

These simple steps will go a long ways to reducing employee lawsuits.  To ensure that your company has done everything it can to avoid employee lawsuits, you should have your employment policies, training and practices reviewed by your employment lawyer.

*This post originally appeared as the Seven Ways to Avoid Employee Lawsuits from January of 2007 but this updated version is worth repeating.  It also includes some ideas from Anthony Zaller of the California Workforce Resource Blog who had commented on my original post. 

Photo on flickr by Whisper Photograhy.

 

 

Glad to see my friend Mark Landa blogging over on the Iowa Law Blog.  Mark has an important reminder that the time for filing a civil rights complaint under Iowa law will be extended from 180 days to 300 days in order to conform to the federal timeline.

Iowa employment lawyer Victoria Herring points out on her blog that it is not a good idea to push deadlines but the extended time frame will allow complainants (and employers) and additional time to work out a resolution or gather evidence for claims.

The new Iowa law goes into effect July 1, 2008.

Indiana civil and business lawyer Sam Hasler recently expressed his view that the place to incorporate your business is generally in your home state.

I agree with Sam. 

Delaware or Nevada may offer viable options for some companies but in general most Iowa small businesses are probably wise to incorporate here in Iowa.  First, Iowa has very low fees when it comes to incorporating your business.  It is a $50.00 fee to file Articles of Incorporation for a domestic corporation in the state of Iowa.  Further, it only a $30.00 fee every two years for a biennial report if you file online.  These fees are extremely low compared to other states.

Second, you won’t avoid Iowa taxes by incorporating your Iowa small business in Nevada or Delaware if you are doing business here in Iowa.  The tax and corporation laws of Iowa will require you to register your company and pay fees as a foreign corporation in Iowa and you will be required to pay Iowa state income taxes for any income earned.  (You also do not avoid federal income taxes by incorporating in Nevada despite the lack of an information sharing agreement with the IRS).

And the perceived court advantages in Delaware?  That might be fine for a large business that is actually going to litigate a case in Delaware but it is probably not cost effective for most Iowa small businesses to litigate their cases in Delaware.  Besides unless you have well-written forum selection clause in contracts your Iowa small business will likely end up in Iowa courts anyway.

This post on employment lawsuits causing most e-discovery woes just confirms the reasons why a sound document retention policy is necessary in today’s business environment.

Organizations need to respond to an increasing number of document requests, from regulatory compliance issues to internal investigations to full-scale litigation. Much of this information is available electronically. Despite the prevalence of such document requests most organizations remain reactive rather than proactive when it comes to dealing with the issue of electronic discovery.

Are you prepared?

This past January I posted on an Iowa immigration bill that targeted employers.  The bill sparked significant debate but was not passed.

Now in the wake of the raid at the AgriProcessors slaughterhouse and packing plant in Postville, Iowa, Iowa’s legislative leaders are renewing promises to target employers.

This time legislative leaders will introduce legislation to prevent employers from hiring immigrant workers as independent contractors when they should be considered employees.  It is also anticipated the legislature will renew efforts to create sanctions on employers that knowingly hire undocumented workers.

I have written on the issues relating to employees and independent contractors on several occasions.  The issue of whether a worker is an employee or independent contractor is one of the most misunderstood (or should I say ignored) areas of the law.  The proposed legislation is likely to crack down on the use of illegal immigrants serving as independent contractors in the construction industry. 

In my experience a significant percentage of workers in the construction and other industries are misclassified as independent contractors rather than employees, not just illegal immigrants.  For most companies I would argue it’s more about saving on payroll taxes and workers’ compensation insurance than hiring undocumented illegal immigrants.    

As I have said in the past, the approach of misclassifying workers as independent contractors is not worth the risk.  The safest course is to treat workers as employees if the workers’ status as an independent contractor could reasonably be questioned. 

If you have questions about whether to treat workers as employees or independent contractors be sure to consult with an employment lawyer.

A new Iowa law blog has sprouted.  Jim Nervig of the Brick Gentry law firm has started the Iowa Real Estate Lawyer Blog.  Jim’s just getting his feet wet at this point but he is off to a fine start. 

Jim practices in the areas of real estate transactions, tax sale law, tax assessment appeals, zoning and other municipal law, corporation law and wills. He frequently speaks at seminars on real estate, tax sale and zoning topics.  Jim previously served as City Solicitor for the City of Des Moines, Iowa. Jim’s blog is intended to help readers stay current on issues relating primarily to real estate and tax sale law and procedures in Iowa.  Particularly when it comes to tax sale law, there are few in this state with the knowledge and experience possessed by Jim.

I encourage you to add Jim’s blog to your favorites if you are interested in real estate.  It will be worth it.

 

Tonight I will be appearing on the Iowa Business Hour with Jim Goodman from 7:00-8:00 p.m. on 98.3 WOW-FM. 

I follow a long line of distinguished guests on the program including the incomparable Brett Trout. 

If you don’t have anything else to do take a listen tonight.

Do you have bad credit?  If so, this article on how to qualify for a franchise loan even with bad credit may interest you.  But please don’t be offended when I say I hope you don’t get the loan.

The number one reason I see for business failures is the lack of sufficient capital.  I have seen several people invest their entire life savings only to have their business fail because they lacked the money to survive the first 6 to 24 months.  These overly optimistic business owners scraped the money for the initial loan but had no room for error.  When the business didn’t cash flow right away they were doomed.

My advice is simple for those that have bad credit and want to start a business.  Work on improving your credit and accumulate cash to invest in your business. You should plan on having at least double the capital you believe you need.  If you have the idea you just cannot pass up at this time you may need to go raise capital through a rich uncle, an angel investor or venture capital.  If you are investing in a franchise operation as discussed in the article you can probably forget about venture capital.  It’s not likely to happen.

I am not saying every person with bad credit shouldn’t consider starting a business.  But the odds of business success (a difficult task under the best of circumstances) go down measurably when the potential business owner cannot manage money well and does not start out with adequate capital.  A much better article would have been about how someone could improve their credit and increase savings to start out a business on solid footing.  Providing loans to those that cannot afford them is not the recipe for business success.  After all, it’s the same mentality that caused the mortgage crisis our nation currently faces.

 

 

My most recent post on Love Contracts received some link love from the Wall St. Journal and Law.com’s Legal Blog Watch.  It’s nice to get a little recognition now and then from the heavyweights.

Be sure to check out employment lawyer Mark Toth’s blog that was the source of my post.  He has one of the most informative and creative employment law blogs around.

Mark Toth of the Manpower Employment Law Blog has an interesting post on "hooking up at work" and whether love contracts are a good idea.  This is where co-workers sign a contract in order to protect the company and the employees involved against sexual harassment or other discrimination charges.  Mark says he doesn’t think the agreements are necessarily a good idea because it forces the company to become the love police and subordinates may claim that they were forced to sign such an agreements under duress when a superior is involved.

Other employment lawyers quoted in the Newsweek article featuring Mark believe the love contracts may be a good idea.  However, I tend to agree with Mark.  Sure certain office-romance relationships may start out consensual but it can quickly turn to harassment when one of the lovers calls it quits and the other won’t give up the pursuit.  I tend to believe that the changed circumstances and conduct that occurred after the relationship broke off still opens the company up to liability – love contract or no love contract.