THE LAW: 4 employer mistakes to avoid in 2023

Employers get sued nearly every day by former employees.

Here are four of the biggest personnel mistakes made by employers, and some tips on defusing these potential time bombs before they result in poor workplace morale, or explode into a costly employment lawsuit.

1. Failing to properly document performance problems.

Because supervisors hate to write up employees or state something unflattering on a performance review, this is often the biggest hurdle for an employer defending an employment lawsuit.

A well-documented personnel file with dated, written, corrective action is priceless either before a civil rights agency or in the courtroom.

Attorneys representing employees know this, too: The plaintiff’s first exhibit at trial is recent performance evaluations showing good or excellent performance. If those reviews are inflated to reflect “positive performance,” the employee will argue that their termination must have been illegal or discriminatory.

Also, do not pad or paper employees’ files. As one court wrote, “We find it surprising that suddenly, after the plaintiff filed her EEOC (Equal Employment Opportunity) complaint, problems with her work surfaced.”

Your documentation does not have to be formal or perfectly written, but it does have to be accurate, understandable and contemporaneous. Many employment cases — especially those involving retaliation claims — hinge on timing issues alone.

Do not be mean spirited either. Focus on the problematic behavior, not the person. (Picture your corrective memo blown up in front of a jury!)

2. Creating a perception of favoritism.

Are you playing favorites? Employees become disillusioned when they believe that favoritism is driving a manager’s decision-making. When that happens, they will call a lawyer or a labor union for protection, which may lead to costly outcomes.

To avoid this, it is critical to train front-line supervisors to be clear and consistent in personnel actions. Monitor supervisors’ performance to make sure they’re not creating the perception of favoritism — or worse, discriminating against people on the basis of their protected class status.

3. Failing to investigate and confirm the factual basis for termination.

Employment in Iowa is at will. An Iowa employer is under no specific legal duty to investigate before firing an employer. (Investigations of any kind of discrimination, harassment or retaliation claims are, of course, another story).

However, many jurors expect that an employee will not be fired unless the company first performed an investigation in good faith, especially involving a long-term, sympathetic employee. And, courts will also find it suspicious if an investigation would have cleared the employee.

In one case, for example, an employee was fired for allegedly altering time cards without further employer investigation of the time cards. The court found it suspicious that the employer never investigated, as it turns out the cards had merely been altered to delete incorrect and inflated time entries. The court said it appeared that the company was just “looking for a reason” to fire the employee.

Any valid investigation gives the employee notice of the charges against her and an opportunity to explain her version. Failure to provide this minimal due process may serve to upset the judge or jury.

4. Misclassifying your work force

Is that individual working for you an “employee” or an “independent contractor?”

In order to save on employment taxes and possible liability for overtime, worker’s compensation or discrimination, many employers call the individuals working for them “independent contractors.”

Remember, just because an employer calls someone a contractor or says a position is “exempt” from overtime, that is insufficient. The Internal Revenue Service and the courts will examine the job based on the amount of control exerted over the work, the position’s actual duties and the amount of pay.

Employers should perform an audit on their contractors and exempt positions to ensure compliance with the law before the IRS or the Department of Labor does it for you.

The moral: Employers should avoid these mistakes and their potential to lead to costly employment-related litigation or costs. While nothing can insulate you from someone determined to sue you, being proactive with these tips is a good start to defending these claims.

Wilford H. Stone is a lawyer with Lynch Dallas in Cedar Rapids.