Five Steps Employers Can Take to Minimize Employment Liability

by Stuart R. Buttrick, Baker & Daniels

The number of discrimination lawsuits increases every year. They’re taking more time to resolve through the judicial process and becoming more costly to defend, and juries (especially in the post-Enron era) are awarding bigger awards to employees. Employers inevitably incur large expenditures of time, money, and other resources — regardless of whether they win, lose, or settle an employment discrimination lawsuit.

Thus, it isn’t surprising that many Indiana employers are aggressively seeking ways to minimize their employment-related liability and stay out of court. What follows are five practical steps that you should consider implementing to minimize the likelihood of being embroiled in employment-related litigation.

Conduct periodic employment audits

Employers should operate their businesses and handle employment matters in a way that avoids the likelihood of having to defend themselves before a jury. As an extension of that goal, there are a number of basic and fundamental steps that you can and should take:

  • Review and update your job applications.

  • Review and update your employee handbooks and personnel policies. If you don’t have an employee handbook, you should draft one immediately.

  • Review your prehire processes, including your interviewing procedures.

  • Review and update job descriptions.

  • Review your evaluation forms and procedures.

  • Review your leave of absence policies.

In short, besides keeping current on the latest developments in employment law, you should conduct an audit of your employment practices at least every two to three years. As the law in those areas continues to develop, you should make certain that you’re deleting or modifying aspects of your standard employment practices that may prove questionable and proactively including policies, procedures, and practices that can help you shield yourself from potential employment claims.

Improve methods of documentation

The three most important words in defending discrimination claims are documentation, documentation, and documentation. Every HR professional should have a standard and uniform method for documenting personnel actions and investigations. You must also train supervisors to do the same. Relying on memory is a dangerous proposition.

Disciplinary action and evaluation forms and investigation documentation that are well thought out are invaluable in the event litigation develops. Part of a good documentation system is having disciplinary action and performance evaluation forms that contain a section for employees to acknowledge the discipline or evaluation and offer their comments if they desire. That affirmatively provides them with an initial “outlet” to respond. Their comments could alert you to potential workplace problems that may need to be quickly addressed. If the employee acknowledges the offending behavior, you’ll have persuasive evidence that you weren’t acting discriminatorily.

Recognize and deal with ‘problem’ supervisors

A common shortcoming of employers is their failure to acknowledge supervisors with performance or interpersonal problems and take the proactive steps necessary to address those issues. Appropriate action can take a variety of forms, including counseling and training. One of the worst types of evidence in employment litigation is that a supervisor whose actions are under challenge has had similar problems in the past and the employer has done little — or nothing — to try to correct the issues. Remember, you’re only as good as your supervisors.

Regularly train your supervisors

Few dispute that supervisory training is a good practice, but far too many employers fail to follow through with consistent and regular training in the area of equal employment opportunity (EEO) laws. Most discrimination lawsuits are based on the actions, comments, or inaction of supervisors. In fact, a common question asked when an employee’s lawyer deposes a supervisor is: “What training has your employer provided you in the area of discrimination laws?”

If supervisors aren’t aware of the fundamentals of the EEO laws (or were trained but the training sessions aren’t periodically reinforced), they may not even realize that their comments or actions can lead to discrimination claims against their employer. Supervisors also need to understand that they could be named as a defendant in employment lawsuits and can have personal liability in some instances. Also, a number of courts have found employers liable for discrimination claims based largely on the fact that the employer didn’t conduct EEO training.

Have an effective internal complaint process

Having an internal complaint process is one of the easiest ways to know you have a potential problem before you hear about it from an outside agency. The process should be clearly communicated and uniformly followed. If an employee has a valid complaint, action should be taken. If the process always comes out in favor of the employer, it loses credibility and will cause employees to bypass it and instead go directly to outside agencies such as the EEOC, the Indiana Civil Rights Commission (ICRC), or an attorney. If an employee has filed an internal complaint under a complaint procedure, employers must be careful what they do if the employee proceeds to file a claim with an outside agency while the company is investigating the internal complaint. The EEOC, the ICRC, and some courts have ruled that it’s unlawful retaliation for an employer to stop processing an internal complaint because the complaining employee has sought the outside agency’s assistance.

Bottom line

Although it’s impossible for you to protect yourself entirely from employment-related lawsuits, the aforementioned five steps can help you minimize the risk of liability and — if litigation ultimately occurs — present an effective defense to the employees’ claims.


Stuart R. Buttrick
Associate, Baker & Daniels
Indianapolis Office
Phone: (317) 237−1038
Email: srbuttri@bakerd.com

With over 40 members currently practicing throughout its offices, Baker & Daniels' Labor and Employment Law Team is the largest in Indiana, and among the largest nationwide.

Representing employers in both the private and public sector, we handle the entire range of labor and employment law matters facing industry, business, construction, health care and educational institutions, as well as state and local governments. Team members work with clients of all sizes across the United States.


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