Suits At Work: Protect Your Company from Employee Litigation

New York, New Jersey and Connecticut are all employment-at-will states. That means that you can, generally, fire employees for any reason, no reason and even unfair reasons, as long as they are not illegal reasons. Awareness of discrimination laws is essential to preventing costly lawsuits. Recent reports estimate that the average cost of defending an employee discrimination case from beginning to end is approximately $250,000. In 2007, the U.S. Equal Employment Opportunity Commission (EEOC) collected $101,931,222 from small businesses (under 200 employees).

Small Business Exposure

Small businesses face unique challenges when it comes to creating a discrimination-free environment. While most discrimination claims are filed for discharge (58%), small business are particularly susceptible to claims of inconsistency — disparate or inferior treatment of certain employees. “Particularly in small businesses where employees may also be friends or relatives, giving anyone greater flexibility, compensation or treatment can create an unequal situation between employees,” says Jim O’Neill, legislative liaison for the Connecticut Commission on Human Rights and Opportunities (CHIRO). “The main advice we give businesses is to be even and fair with each employee.”

Small businesses also must be careful to avoid retaliation, which is the basis of nearly 30% of claims against companies employing between 15 and 200 people. Ensure that employees who file complaints of discrimination or harassment truly do not suffer any reprisal. Federal, state and local laws protect an employee’s right to protest discrimination or harassment in the workplace — even if the complaint is ultimately unsubstantiated. Employees are protected after filing an internal complaint, filing administrative charges with government agencies, testifying or providing evidence in related legal proceedings and other similar conduct.

Between 1992 and 2005, the number of retaliation claims brought before the EEOC more than doubled. Then, in 2006, the Supreme Court ruled that employees no longer need to show a loss of compensation, like termination or suspension, but rather can base a retaliation claim on any personnel decision that might discourage an employee from filing a complaint or testifying, such as moving the employee’s work station to a less desirable location or assigning less desirable tasks to the employee. To protect yourself against charges of retaliation — or any basis for discrimination — document legitimate, non-discriminatory and business-related reasons for every personnel decision including hiring, assigning work, issuing discipline, adjusting pay, promoting, demoting, transferring and firing.

In a small company, the loss of just one person can affect your entire business. That is why businesses with limited resources may have a difficult time coping when an employee goes on maternity leave. However, if not handled properly, the cost of EEO litigation could far exceed the cost of hiring a temp or consultant. According to a recent msnbc.com report, pregnancy discrimination charges filed with the EEOC jumped nearly 19% to a record 4,901 in 2006, from 3,977 in 1997. And nearly 30% of those 4,901 claims were filed against small businesses. Many employers may not realize this, but if you ask a woman about her child-rearing plans and don’t ask the same of your male job applicants or employees, that also is illegal. Stricter legislation against pregnancy discrimination is currently being debated in Washington.

New Employment Laws

Other federal employment laws could be changing as well, highlighting another important practice: following new developments in the law as they unfold. Both the EEOC (eeoc.gov) and N.Y.S. Division of Human Rights (www.dhr.state.ny.us) maintain websites that provide information about pending legislation. Many human resources societies, like SHRM, have local affiliates, which should provide timely legislative updates. During 2007, the U.S. House of Representatives passed the Employment Non-Discrimination Act of 2007, which would outlaw employment discrimination on the basis of sexual orientation. Earlier in the year, by a vote of 420-3, Congress passed the Genetic Information Non-Discrimination Act of 2007, which would prohibit employers from discriminating against an employee because of the employee’s genetic information. Both these bills may or may not pass the Senate or the President’s veto pen in 2008. But 2009 will see new dynamics at work, and employers must stay up to date on changes in the law.

Management Awareness