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These are the most common mistakes companies make that land their workers fat settlements, according to employment lawyers

Money over a photo of an office
Employment lawyers say companies repeat some of these same mistakes again and again, and it could lead to big payouts for their workers.iStock; Rebecca Zisser/BI
  • Employers can fall into legal pitfalls leading to costly litigation brought by workers.

  • Employment attorneys say companies make common mistakes that could land them in legal trouble.

  • These mistakes could result in hefty settlement payments to employees, the lawyers say.

In businesses small and large, employers can fall into a series of legal pitfalls that could lead to both costly and damaging litigation brought by their workers.

The outcome could involve hefty settlements that employers are compelled to cough up to employees who brought workplace-related lawsuits against them.

Business Insider spoke with two high-profile employment rights attorneys about some of the most common mistakes companies make that can land them in legal hot water and compel them into making settlement payments to their workers.

1. Improper handling of employee complaints

The vast majority of internal complaints that employers get are not considered legally protected under federal or state laws, but if employers "mess up" on ones that are protected — such as cases involving discrimination or harassment — it could be a "big deal" and open the door to legal liabilities, Ron Zambrano, the employment litigation chair at the California-based law firm, West Coast Trial Lawyers, told Business Insider.

If an employee reports that their supervisor has repeatedly made inappropriate advances, like asking them out on dates and sending them messages, and the company fails to address the situation, it can become a clear-cut case for the employee to take legal action and come out on top, according to Zambrano.

"That is easy, easy money" for the employee, Zambrano, who is suing the musicians Lizzo and Ye (formerly known as Kanye West), on behalf of ex-employees, said.

Having an under-trained human resources department could pose major legal troubles for a company, added David Gottlieb, a partner at the New York City-based employment law firm, Wigdor LLP.

People working in HR departments at companies may find themselves in a "tricky position" because they could deal with cases that involve the law, yet have no background in that realm, Gottlieb told BI.

"I can tell by the way things transpire when employees call [the law firm] with complaints that HR is not well trained on what the law is, and they're often not well trained on what the company's own policies are," said Gottlieb, who is one of the lead attorneys handling a blockbuster class action racial discrimination lawsuit against the NFL.

In order to avoid legal liability, Gottlieb said it's important for employers to make sure that their HR reps undergo robust, yearly training on how to handle complaints and are intimately familiar with the company's employee handbook.

Gottlieb said many of his law firm's cases center on allegations of retaliation as opposed to underlying discrimination. For example, said Gottlieb, "It's like, there's some issue, an employee goes to HR and complains, and then the case ends up being about what happens after that."

"Exposure on cases could be really minimized if HR is really able to adequately handle the complaints," Gottlieb added.

Zambrano echoed those remarks, emphasizing the importance of companies maintaining a set grievance process that is "obvious" to employees. Employers should "act quickly and put it in writing" when employee complaints arise, Zambrano said.

When there's a "50-50 chance of liability" for an employer, the company "will absolutely throw money" and try to settle the case, said Zambrano.

"All companies want to settle," Zambrano said. "It's a matter of whether the employee is accepting the money as quote-unquote 'enough.'"

If a case has some merit, employers will "absolutely" offer money to an employee pursuing legal action, continued Zambrano.

"The real question is whether the employee's going to take it," he said.

Money with a gavel
Companies will generally look to settle with employees, lawyers say. Getty Images

2. Being a jerk to your employees

It may seem like common sense, but treating employees with "dignity and respect" can go a long way in helping to keep a company out of legal jeopardy, according to Gottlieb.

Gottlieb said his law firm frequently gets phone calls from employees with gripes that their performance was not judged correctly or about their boss being rude, demeaning, or even condescending.

"None of those things are in and of themselves unlawful," said Gottlieb.

However, he said, those calls could end up opening the door to more legally inappropriate misconduct.

"One thing that I find over and over and over again is people call a lawyer when they're angry and have gripes with the way they're being treated, and then during the course of a conversation with a lawyer other stuff might come up that otherwise might not have," Gottlieb said.

This could lead to what a potential lawsuit could be pinned on, according to the attorney. Issues employees initially call the firm with may be totally irrelevant to the law, but then it may be uncovered that the person is being paid unlawfully, said Gottlieb.

"There may be a pregnancy discrimination issue that the person wasn't even thinking of, or there may be any number of issues that they weren't even thinking of," Gottlieb said. "And if the employer just treated their employee with dignity and respect and sensitivity such that they didn't feel the need to call a lawyer in the first place, that would be a way to avoid a lot of issues."

"The point is," said Gottlieb, "if employers treat people nicely with dignity and respect and compassion other issues that lawyers might be able to identify could be avoided."

3. Misclassifying employees as exempt from overtime

Zambrano said that another common issue he encounters is employers misclassifying employees, sometimes in order to save money for the company.

Oftentimes employees will be misclassified as salaried employees exempt from overtime pay when they should be paid an hourly rate with overtime compensation, according to Zambrano.

"That's another mistake I see a lot," said Zambrano, who explained employers regularly face lawsuits for overtime pay violations and misclassifying employees.

"A lot of personal assistants will go through this," Zambrano said.

Employees will routinely call Zambrano's firm with grievances about being "overworked and underpaid," he said. "But what I am learning is that they're overworked and incorrectly paid — they should be paid by the hour," said Zambrano.

When it comes to the classification of an employee, it's not about the amount of hours an employee works, but the type of work that an employee does, Zambrano said.

"The more independent judgment and discretion you have in the execution of your duties, the more likely you are correctly paid on a salary," he explained.

4. Poor handling of employee pregnancy

Cropped shot of a woman touching her pregnant belly while sitting in a meeting
Employers can open themselves up to legal risks depending on how they handle an employee's pregnancy.LaylaBird/Getty Images

Employers open themselves up to legal risks if they fail to properly handle an employee's pregnancy, parental leave, and reintegration back into the workplace, according to Gottlieb.

"When an employee announces that they're pregnant, that's an opportunity for an employer to demonstrate their commitment to that person by having a meaningful and open dialogue," Gottlieb said.

Yet, Gottlieb said that oftentimes he finds employers are so "worried" about talking with an employee about their pregnancy, fearing they may cause offense, that it prevents employers from having a "meaningful" conversation with the employee about it at all.

"That's harmful to the woman to not be able to make an informed decision about how her maternity leave and return will be handled," the lawyer said.

Additionally, Gottlieb said, there's many cases where individuals returning from pregnancy-related leave find themselves not being adequately integrated back into the workplace the way they were before their leave.

"If someone is not integrated back into the workplace into their previous role, that's discrimination and retaliation," said Gottlieb.

As an employment rights attorney, Gottlieb said that pregnancy discrimination in the workplace is one of the most prevalent types of discrimination he comes across.

5. Reliance on an 'automated' points-based attendance tracking system

A June 2020 report by the worker-advocacy group A Better Balance found that an estimated 18 million workers across 66 US employers, including many big companies, were affected by points-based or so-called "no-fault" attendance policies.

Major companies such as Walmart and Amazon use these kinds of controversial points-based attendance systems to track worker absences and, in turn, fire employees if they rack up a certain amount of points in a specific time period, Zambrano has told Business Insider.

"A lot of these large companies are just really stepping in with this point system," said Zambrano, explaining that these heavily automated systems "make a lot of mistakes" and seemingly have issues filtering "an absence that is 'unexcused' or an absence that is protected" by law.

A row of timecards gradually turning into a pink slip
Points-based attendance policies have recently led to several wrongful termination lawsuits filed by West Coast Trial Lawyers against Walmart and AmazonTyler Le/BI

These kinds of points-based attendance policies have recently led to several wrongful termination lawsuits filed by West Coast Trial Lawyers against both Walmart and Amazon, according to Zambrano.

A Walmart spokesperson previously told BI that the retail giant will continue to defend itself against the litigation. An Amazon spokesperson has told BI that the points system the megacorporation uses has human oversight and that the company works with its employees if they're dealing with an emergency or any unforeseen circumstances.

Zambrano said his firm has been getting multiple calls a week in recent months from people reporting they were wrongly fired from their jobs after racking up too many points for absences, even though their leave should have been protected or was already cleared with managers.

"This stuff is happening very routinely, and people are just being laid off just because they hit these points, and there's no one fixing it," Zambrano said. "It is absolutely crazy."

Read the original article on Business Insider