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Should You Be Concerned About Employer Class Action Lawsuits?

HCM
Article
01/30/2017

Smart employers are aware of risk management and risk mitigation. But one risk that may deserve increased attention is class action lawsuits. The 12th Annual Workplace Class Action Litigation Report was recently released (an executive summary is available to the public online and the full report can be ordered). The study's authors found that class action lawsuit settlements reached a record high in 2015. In addition, federal courts granted more class action certifications than they denied: 123 approved versus 43 denied. The report called wage-and-hour class actions and collective actions a "growing juggernaut." As the study’s authors noted, when considered with the fact that FLSA filings in federal court have risen each year for the last six years to nearly 9,000 cases, employers are right to consider this area a critical part of their risk management strategy.

In order to help protect your organization, partners, shareholders, and employee rights, managing risk should be a priority for employers. Evaluating your compensation, benefits, bargaining agreements, and other areas for ongoing compliance can help reduce the risk of these issues. Too many business owners find out they're liable when it's too late. With class-action litigation on the rise, liability could expose you to a lengthy lawsuit, expensive damages, and more.

Consult an Employment Attorney 
Seek out specialized counsel to review current and proposed employee compensation, benefits, and other areas to ensure that they're in line with applicable laws and regulations. Often, senior managers are unqualified to understand the legal ramifications of certain business decisions without expert guidance. Ongoing legal consultation can help you identify and minimize risk over time.

Seek out specialized counsel to review current and proposed employee compensation, benefits, and other areas to ensure that they're in line with applicable laws and regulations.

Evaluate your HR Department's Expertise
It's also important to keep your HR department's expertise on par with current trends. Are they up-to-date on changes to applicable federal, state, and local laws and regulations? Are they trained to effectively investigate employee disputes to represent your company's needs as well maintain impartiality with respect to the employees involved? Ensure that your HR team is receiving regular market intelligence, training, and oversight in areas that may eventually be connected to potential liability and legal claims.

Update your Company Handbook
Your company's handbook can become a centralized document that's called into question during litigation. What policies are outlined in the employee handbook, and how are issues addressed when conflicts arise? Ideally, handbooks should be reviewed and updated at regular intervals to ensure they are remaining current with laws and regulations.

Inspect What You Expect
Too many HR managers remain outside the loop when department heads are forced to increase manpower to meet project demand, for example. Develop a chain of command process whereby all HR staff are updated on increased manpower needs which can lead to overtime pay or other business decisions that may have legal or regulatory implications.

It's also important to keep your HR department's expertise on par with current trends. Are they up-to-date on changes to applicable federal, state, and local laws and regulations?

Review your Documentation Procedures
How are employee reviews and complaints documented? Employees may have more leverage in court when companies appear without a thorough paper trail chronicling job performance warnings and reviews. Ensure you're keeping copies of documents such as resignation letters, exit interviews, and performance evaluations.

With class action lawsuits on the rise against employers, developing expert consultation support, training your team, and ensuring your compliance paperwork and process is up to date is an essential part of creating a secure business.

 

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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