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Top Ten Things an Employer Does to Get Sued

To lessen your risk of being sued, employers need to be aware of, and comply with, all federal, state, and local laws regarding the employment context.  Here are ten reasons employers may be themselves sued.

1. Ignore claims of harassment – let the employees work out their “personal” problems by themselves.  Even though harassment may be deemed a “personal” issue, the minute it affects your employee’s work environment, the employer needs to do something about it.  The most significant obligations that an employer has are trying to prevent the harassment from occurring in the first place and conducting a prompt and effective investigation of any and all claims of harassment, regardless of how absurd the claim.

2. Save on payroll processing – only pay employees when the company gets paid by its customers.  Employers must pay employees on a regular payroll cycle, generally weekly or biweekly, and must pay the employee what the parties agreed the employer would pay the employee.  The employer cannot avoid liability by paying the employee $1.00 for the work-week.  Failure to pay the employee what is owed and when it is owed can subject the employer to double damages and attorneys’ fees.

3. Avoid employee friction – only employ individuals of the same gender, race, color, national origin, and religion.  Title VII of the Civil Rights Act states that gender, race, color, national origin, and religion cannot be the basis for any type of employment decision, including hiring, firing, promotions, and benefits.

4. Pay for new company equipment – use money deducted from employees’ paychecks.  Per Indiana Code §22-2-6-2, an employer may deduct money from an employee’s paycheck only if the employee agrees to the deduction in writing and the deduction is made for the purpose of paying one of the eleven deductions listed in the statute, such as a deduction for a premium for insurance, union dues, or payment to a credit union.  If the deduction is not listed in the statute, the deduction is impermissible and the employer must return the money deducted, regardless of whether or not the employee originally agreed to the deduction in writing.

5. Keep the energy high at work – terminate an employee once he or she turns 40.  The Age Discrimination in Employment Act forbids an employer from terminating an employee based on age.  To be protected under the Act, however, the employee must be 40 years or older.

6. Reduce your workers’ compensation premium – fire someone who files a claim for workers’ compensation.  An employer cannot retaliate against an employee for filing a workers’ compensation claim.  An employer who retaliates against an employee can be held liable for damages, such as back pay and front pay, and may be required to rehire the employee.

7. Eliminate overtime expenses – make all employees “exempt” or “salaried” employees.  Per the Fair Labor Standards Act, only certain articulated classifications of employees can be exempt from overtime, such as professional employees or outside salespeople.  Furthermore, an employee must make a certain minimum weekly salary to be an exempt employee.  If an employer misclassifies an employee, the employer could be liable for unpaid overtime, statutory double damages and attorneys’ fees.

8. Reduce job turnover – prevent former employees from obtaining new jobs.  Indiana Code §22-5-3-1 prohibits an employer from doing anything that prevents a former employee from obtaining employment elsewhere.  However, an employer is allowed to truthfully state the reasons why the employer terminated the employee.

9. Avoid employment laws all together – make all your employees independent contractors.  If you direct the work of your “independent contractors” and provide them with office space, a computer, or any other type of instrumentality to do their jobs, they will likely be considered employees and not independent contractors.  Employers should be careful when classifying an individual as an independent contractor because misclassification could result in significant tax and other liabilities.

10. Increase job satisfaction by allowing employees to “bank” overtime hours and use compensatory time whenever they want.  Employees must be paid for overtime hours.  Per the Fair Labor Standards Act, overtime occurs when the employee works over forty hours in one week.  If you are a private employer, in general, allowing employees to “bank” overtime hours and use them later as compensatory time is not allowed.

Mallor Clendening Grodner & Bohrer LLP has experience in all aspects of Labor and Employment law and can help your company ensure that it is in compliance with all federal, state, and local employment laws.