Employees suing employers is probably one of the most unpleasant, and avoidable, experiences any business owner has to deal with.
Sometimes a simple apology is enough to diffuse a disgruntled employee long before things escalate to having anyone dial their lawyers. Many employers make the expensive error of assuming they won’t get sued, and that their employees are happy simply because they haven’t heard anything. This kind of complacency is exactly what bites business owners and managers in the you-know-what.
Encouraging open communication and training in the workplace and safeguarding against employee lawsuits is a sound first step. As is knowing the rules. Stop what you’re doing and take head. It’s cheaper in the long run to be informed, than it is to be sued.
Here is our list of the more common pitfalls and foibles for which many employers have been sued.
1. Make everyone an “independent contractor”
This is a common error many companies make because they want to save money by avoiding paying payroll benefits. CRA wants their pound of flesh and you can’t hide from them for long, they always come looking for it. Independent contractor status needs to be clearly defined at the beginning. It is imperative to have your independent contractor sign an agreement with you clearly outlining your non-employer/employee working relationship with them. Have your lawyer peek at it first before it’s signed.
2. Not Paying Overtime
Many employers are under the mistaken belief that salaried people don’t get overtime. Not so. Wages are wages and hours of work are hours of work. Putting your employees on salary does NOT exempt you from paying overtime if your salaried employees work beyond their regular 40-hour week. Exceptions to this must be clearly spelled out in your employment agreements, vetted by a lawyer of course. It’s better to be informed, than to be sued, or equally as bad, lose good employees.
3. Not Training Management Properly
Do train your managers and supervisors properly and be sure they are aware of the employment standards act, and if applicable the labour relations act too.
Other management basics include interviewing skills (behavioural and situational), communication (active listening) skills, being informed about policies and procedures, catching problems early on, conducting employee investigations and knowing when to ask for outside assistance, disciplining/discharging employees appropriately and according to the law, knowing when and how to document performance benchmarks – see #4.
4. Not Documenting
Employers have made the mistake of not documenting employee disciplinary action or performance problems simply because they felt their “legitimate non-discriminatory actions” were sufficient to build a case. Poor documentation is one of the more common items that arise out of lawsuits.
How to solve it? Again, training – your managers need to know how to document performance, and where potential employee dismissal is involved, when to document that employee’s poor performance and/or behaviour.
5. Not Handling Accommodation/Disability Issues
Encouraging your employees to come forward with their accommodation requirements is crucial, not only to avoid a lawsuit, but to ensure your employee is comfortable working for you. For example, an employee who is visually impaired may need a computer screen reader designed for that purpose.
If you ensure everyone is comfortable; for example, having a proper ergonomic set up for those who work at desks all day. You can’t avoid this forever, because if you do, you will have a number of employees with work-related stress injuries who can’t work and are now off on stress or medical leave and then you’re looking at potential Worksafe claims which is where no employer wants to go.
6. Not knowing When It’s Break Time
A very popular and often ignored piece of employment law is this — your employees are required to take a 30-minute unpaid meal break when they work more than five hours. But here’s where it gets even more interesting … Letting your employees take their 30-minute unpaid lunch break whenever they want can potentially put your company in front of a lawsuit. Did you know your employee is entitled to be paid if you asked your employee to work over a meal break? Your employee must take their break before their fifth hour of work and if they don’t take a break during this time, you must pay them.
7. Not Training Managers and Supervisors About Harassment, Bullying and Discrimination
Bullying isn’t just for kids. It occurs between adults in the workplace too. That’s why Bill 14 came into effect July 1, 2012 with Worksafe BC. Training your employees, managers and supervisors on this issue is integral to the success of your organization.
The bully isn’t always the boss and the bullied isn’t always the employee.
If everyone is aware of it and knows the laws around it, bullying, harassment and discrimination are far less likely to occur. Bill 14 aside, if you institute a zero tolerance policy like many other organizations, then all employees will know you take this seriously and you’ll go a long way to ensuring bullying, harassment and discrimination don’t happen.
Also, let them know about your employee assistance program if you have one. If you don’t have one, get one. Long before a lawsuit occurs keep an eye out for anyone whose looking depressed or despondent, or for any unexplained downturns in production or increased in work absences. Nipping this in the bud before it becomes a problem ensure you and your team will be happier for it.
8. Not responding to Harassment, Bullying or Discrimination Complaints
You can’t avoid an uncomfortable situation like harassment, bullying or discrimination. Think of how uncomfortable your employee must feel and how much courage it must have taken to approach you about this.
Sit down with your employee and encourage them to talk about it. Listen actively. Don’t look at your computer screen, out the window or at your phone to check emails. Look at them and treat this employee like the important person they are to your and your organization.
As the employer you’re required to take immediate action. Talk with the employee, don’t ask them to write down the incident and don’t encourage them to confront their bully before you respond to the complaint.
Once you investigate, sit down again with the employee and tell them your findings. Reassure them there will be no retaliation against them and don’t reveal any disciplinary action you plan to take against the other employee. Follow up in three to six months to ensure things have improved. Remember, you’re asking to be sued if you respond to an employee with, “oh he’s/she’s just like that; just ignore him/her.”
9. Terminating Workers while on Leave of Absences
Even if you’re desperate and you need someone to fill your employee’s shoes while they’re away, you cannot terminate their employment, but you can hire someone temporarily to fill the void.
Employees have legal protection from termination when taking leave through workers’ compensation, disability, pregnancy, medical, military, jury duty, etc. and workers are clearly protected when on leave under the Employment Standards Act. Besides, you’ll save yourself a lot of financial heartache if you don’t terminate someone on leave; you won’t get sued and you won’t need to hire someone to fill their position permanently.
10. Use Non-Compete Agreements to Prevent Employees From Going to the Competition.
Non-compete agreements are commonplace for many businesses in this competitive work world. However citing unreasonable grounds that prevent someone from earning a living or that unrealistically deter fair trade are generally unenforceable which means ‘fair game’ for expensive legal battles.
11. Not Paying Out Vacation Owed
Trying to implement a “use it or lose it” vacation policy is asking to be sued. As the employer, you may place a limit on the amount of vacation your employees can bank and carry over to the next year, but you can’t avoid paying them for what has been accrued.
12. Not Keeping On Top of the Labor Laws
Knowledge is power. Knowing you and your employees’ rights will give your organization the leg up and benefit everyone. These laws are always changing so staying abreast of them goes a long way to keeping everyone happy and productive and best of all, avoiding a nasty lawsuit.
If you’re too busy to read up on these issues, having an HR consultant on hand is a good bet. It’s also a good idea to build a relationship with a law firm that specializes in labor/employment law.
- Employment Standards Act
- Globe & Mail insights on when CRA decides what ‘contractors or small business owners to audit.
- BC Labour: Employee or Independent Contractor Fact Sheet
- Drafting Enforceable Non-Compete Covenants from Miller Thompson
- HR Reporter “10 Vacation Time and Pay Myths”
About the Author
Barbara Ashton is the owner and founder of Ashton & Associates Recruiting. She is an expert recruiter helping BC businesses to hire exceptional employees for over 25 years. She has offices in Kamloops and Kelowna to serve her growing list of clients throughout the Okanagan and Interior.
Business leaders rely on Ashton & Associates to recruit skilled employees who honor values and accountability, excel at winning new customers, and increase bottom line.
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