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Expanded employment liabilities require proactive mitigation

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Fueled by more labor-friendly laws, nearly 90,000 employment lawsuits were brought in 2015 with monetary awards topping $65 million, data from the Equal Employment Opportunity Commission shows. Maxine H. Neuhauser of employment law firm Epstein Becker & Green P.C. looks at the growth and potential outcomes of such litigation and talks about what employers must do to limit their exposures and mitigate any judgments.

The universe of employee-friendly laws, regulations and initiatives has been expanding since well before the Obama administration.

Employment lawsuits offer the prospect of significant reward, and not just to the employee who has sued. Nearly all employment laws — including Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Fair Labor Standards Act and their innumerable state and local counterparts — provide for payment of attorneys' fees to a prevailing plaintiff. The philosophy underlying attorney fees shifting is that it encourages plaintiffs attorneys to take on cases for plaintiffs with limited means who otherwise could not seek redress, because if they win, the employer (or its insurer) will pay their attorneys' fees — a factor that no doubt drives the growth of such litigation.

Listen to Ms. Neuhauser weigh in here:

A review of the “results” tabs on the websites of well-known plaintiffs' employment firms demonstrates that potential exposure from employment related claims can reach into the hundreds of thousands of dollars and beyond, even for a single plaintiff case. Every day, the list of cases filed in New Jersey, for example, includes multiple employment-related lawsuits.

Adding to the trend are new issues unimaginable just a few years ago. New York City's Human Rights Commission, for example, recently announced legal enforcement guidance broadly interpreting the New York City Human Rights Law's prohibition against gender identity and gender discrimination claims in new ways.

Under the new guidelines, employers must use gender-neutral pronouns (such as ze/hir) if requested by an employee to do so, may not require dress codes or uniforms or apply grooming or appearance standards that impose different requirements according to gender, and must permit employees to use bathrooms “consistent with their gender, regardless of their sex assigned at birth, anatomy, medical history, appearance or the sex indicated on their identification.”

Similarly, ban-the-box laws, prohibiting criminal history inquiries on employment applications and delaying background checks until deeper in the hiring process, are recent developments. Today, 20 states and more than 100 cities and counties have enacted such laws. Paid sick and family leave initiatives are also on the agendas of many legislators.

Added to this, the U.S. Department of Labor's proposed revision to the Fair Labor Standards Act is expected to affect millions of employees currently considered exempt from overtime. Imagine what this will mean in terms of potential worker misclassification or failure to pay overtime lawsuits as employers wrestle with managing newly nonexempt employees conditioned to check their email 24/7, who may now expect (and be entitled) to be paid. Already, in-house counsel reports that employment suits are among the most common class actions their companies face. Expect the trend to continue.

This substantially increases potential exposure for employers in the event of loss and can push even highly defensible cases to settlement. Since there seems to be no end in sight for this trend, employers must be increasingly vigilant at managing their risks and exposures to these types of suits.

The task of avoiding an employment lawsuit is already daunting and poised to become harder — not to mention more expensive.

Staying up-to-date on employment laws in the locations where the company does business is a first step. Employees in a small branch office in Morristown, New Jersey, for example, may not be eligible for leave under the federal Family and Medical Leave Act, but New Jersey's Family Leave Act or Law Against Discrimination may provide such entitlement. Well-documented compliance has never been more important, nor the investment more worthwhile.

As a second step, consider a human resources audit. Does your company's employment application comply with state law? Is your handbook reviewed annually? Are policies revised and updated as needed? Are employment law notices posted and distributed as required? Have supervisors and staff been trained? Have systems and procedures been put in place to monitor employees' hours and leave entitlements? Have job descriptions been reviewed recently? What about your benefits summary plan descriptions? Admittedly, the checklist is long.

Complying with the law and managing litigation risk and exposure will be an ever-growing challenge. In this changing environment, companies cannot afford to be asleep at the wheel.

Maxine H. Neuhauser is a member of the employment law firm Epstein Becker & Green P.C. in New York. Contact her at mneuhauser@ebglaw.com or 973-639-8269.