Top 6 ways managers will land your company in a lawsuit

Published: November 3, 2012
Updated: June 11, 2019

Although the managerial mistakes that have created HR headaches and triggered employee lawsuits are countless, here are the most common managerial moves at the heart of employers’ legal woes:

terminations
mishandled employee problems
policies and procedures
harassment/discrimination
retaliation
the Family and Medical Leave Act.

Take a look at our top 6 list, and the action advice and policy tips you can use to rein in managers and keep your company out of court.

Mistake #1:

Terminating without tact

Termination is an area ripe for potential legal liability. One reason why so many employees file complaints (and so many juries hand down large dollar awards): perceived unfair treatment. Although there is no way to prevent all post-termination litigation, you can certainly reduce the risk by training managers on how to terminate with tact and sensitivity.

While callous treatment during the termination process doesn’t necessarily translate into a valid legal claim, managers who treat their employees poorly are almost begging for an illegal charge to follow. And, unfortunately for employers, juries often side with the underdog employee against the “big, bad corporation,” whether the management decision was legal or not.

So imbue managers with the need to adhere to the spirit as well as the letter of employment laws during the termination process. In other words, review your termination procedures to make sure they are not only grounded in legal steps, but reflect courtesy and fairness to the employee, as well.

Mistake #2:

Mishandling employee problems

Dealing with common employee problems can be a sticky wicket for managers. Snap responses to everyday issues often get managers into trouble with their employers and employees, and with the law. For this reason, managers must learn how to deal with employee problems productively and confidently in order to prevent the mistakes that can lead to legal skirmishes. Here are some of the most common employee problems, along with advice you can pass on to your managers so they become first-rate problem solvers.

Absenteeism: Use the following six suggestions to reduce absenteeism legally and effectively:

Have a set call-in system that requires employees to talk directly to their supervisors. No messages should be accepted at the switchboard or relayed from other employees.
Warn employees about unnecessary absence. Explain how it hurts them with lower performance appraisals and hurts the company with lost production. Explain how poor attendance affects raises and promotions.
Confront employees early when absenteeism increases. Be ready to offer employees help if requested.
Make the employee aware of what will happen if his/her attendance doesn’t improve. Spell out the penalties completely.
Put the discussion in writing, whether or not you take disciplinary action.
Set improvement goals and dates for when you expect to see improvements.

Drugs: Here are some points to keep in mind before taking any action in a suspected drug use case:

If you suspect that an employee has a drug problem, start collecting evidence. If you can establish “reasonable suspicion,” you can require a drug test. Put everything in writing, including warnings, and follow your disciplinary procedure to the letter.
Be patient and don’t take any action until you have all the facts. If the employee refuses to resolve any performance problems, then you should take disciplinary action.
Make sure your discipline is consistent and fair. Don’t make idle threats. If you say you’re going to issue written warnings or suspensions if performance doesn’t improve, do it. Many of these problems could be headed off early by decisive action on the part of the immediate supervisor.

Insubordination: Four points to keep in mind whenever an employee says “no” to a legitimate work order:

Attempt to find the reason for the refusal. If you simply answer his/her “no” with a direct order, you can’t avoid a confrontation. A little understanding at this step of the process can save a lot of grief later.
Some employees want to get every possible hour of overtime while others don’t want any. Problems develop when the employee who always wants overtime suddenly has something else to do. You’d be better off setting up a rotating overtime roster. Even if you are able to work primarily with employees who volunteer, you should let all employees know that they are expected to work overtime when necessary.
You can overcome employees’ resistance to change by anticipating their fears and bringing their objections out in the open. Always give the reason for the change and try to emphasize positive aspects. But be honest. There isn’t anything positive in a change that’s going to cost an employee his/her job.
Always follow up on a change, even when it seems to have achieved initial success. Maybe a further refinement will bring even better results. Or you may uncover problems that hadn’t even been thought about when the change was introduced.

Mistake #3:

Straying from policies and procedures

Spelling out company policies and procedures in the company handbook is just the first level of legal protection. The second step involves putting those policies and procedures into practice. Managers who fail to follow the policies and procedures, or who enforce them inconsistently, can land your company in court.

Typically, the emphasis is put on managers to review policies and procedures with employees. Don’t forget the importance of going over the handbook with managers first. Give them the chance to ask you questions and seek clarification if there are any misunderstandings. Now is also a good time to iron out any discrepancies between the written policies and their actual practices. Train managers on how to enforce policies correctly that they haven’t been faithful in following. In certain instances, though, you may find that a policy modification is in order. It’s better to make that change before the policy is passed out to employees.

Just as you do with employees, get signed acknowledgements from managers that they have received, read, and understood the handbook. Keep the acknowledgement form on file.

If you find that a manager has strayed from an established policy, you must discipline accordingly. Get the message across that policy deviations that can potentially harm the company are prohibited. The signed acknowledgement prevents managers from using an ignorance excuse.

Double check that the language of the policy manual doesn’t contribute to managers’ slip-ups:

Make sure your handbook is consistent with other documents related to employment policies and procedures.
Use easily understandable language. Avoid technical and legal terms that may muddle the meaning of your company’s policies.
Maintain flexibility by avoiding mandatory terms. Mandatory language that states your company “will” do something may create a contractual obligation in employees’ minds. Build in flexibility with words like “may.”
Customize your handbook to the needs of your company and the characteristics of your workforce. Avoid using boilerplate policies or simply copying someone else’s handbook.

Mistake #4:

Failing to follow harassment/discrimination policies

Managers are supposed to lead by example. So if they don’t adhere to harassment/discrimination policies, why should employees? And why should employees fear the consequences of not following company policies, if they know managers let harassment/discrimination complaints slide? Break this vicious monkey-see-monkey-do cycle in which your managers and employees may be caught up, before a court breaks it for you.

Managers who discriminate

The fact that a manager takes action following an employee’s discrimination complaint doesn’t always mean he/she has taken the right action.

One way to get managers to buy into company policies is to solicit their feedback when crafting new policies or updating existing ones. If they have a stake in drafting the policies, there’s a better chance they’ll associate a sense of ownership and/or pride in carrying out those policies.

Also, get in the habit of reiterating to managers that an evaluation of their performance will be based, in part, on how well they uphold and enforce company policies. Complaints of discrimination or harassment on their watch will count against them in terms of raises, bonuses, promotions, and job security.

Managers who allow others to discriminate

Managers who stick their heads in the sand when an employee complains about harassment can be equally as dangerous to your company’s legal health as the manager who actually engages in harassment.

Managers are responsible for stopping harassing behavior about which they know or should have known. This means that they can’t wait for an employee to file a complaint with them. These steps should be taken in response to a harassment situation.

» Step 1: Set the tone. Reassure the employee that he/she was correct to come forward with the charge. Get details of the complaint down on paper, review the company’s anti-harassment/discrimination policies and next steps in the investigation process with the employee, and highlight the anti-retaliation provision.

» Step 2: Get HR or Legal involved.

» Step 3: Separate the two parties so that no further incidents occur.

» Step 4: Question the accuser, the accused, and witnesses, and look for corroborative evidence. To do that, follow these tips.

Analyze the employee’s story for sufficient detail, internal consistency, and believability.
Listen to the accused’s side of the story. Do not attach much significance to a general denial. Look at his/her explanation for supporting details, consistency, and believability, as well.
Interview potential witnesses to the alleged event(s); obtain testimony from individuals who observed the accuser’s demeanor immediately after the alleged incident(s); and question those with whom the employee may have discussed the incident.
Ask other workers if they noticed changes in the employee’s behavior at work or in the accused’s treatment of the employee.

» Step 5: Keep an eye out for retaliation by the accused, the accuser, or co-workers.

» Step 6: Take actions to ensure the complaint is resolved. The situation may not be black and white, where the accused deserves to be fired, for example. If the situation lands in the gray area of the accuser being genuinely offended, but not illegally harassed, you still need to act. Explain to the accuser that your findings don’t justify disciplining the accused, but also warn the accused not to engage in further inappropriate behavior.

Mistake #5:

Creating a perception of retaliation

An employee who files a complaint or returns from a leave of absence and shortly thereafter suffers an adverse employment action is likely to smell a retaliation rat. But what’s considered an adverse action? The answer to that question has left courts divided.

It used to be that some courts decided that adverse employment actions cover only “ultimate employment decisions,” such as termination, demotion, refusal to hire or promote, compensation, and granting leave. But a 2006 U.S. Supreme Court ruling defined adverse employment actions more broadly to include actions that result in a significant change in employment status; actions that materially alter the terms and conditions of employment.

The following actions may or may not support an employee’s retaliation claim. It would depend on the specific facts of the situation. But even if your company doesn’t suffer a courtroom loss, an employee’s perception of retaliation can put a drain on company coffers. Consider these managerial actions that often give off a perception of retaliation to employees and a court.

Transfers. Lateral transfers are generally not considered an adverse employment action where there is no loss in benefits or decrease in responsibilities. It’s not enough if the employee merely does not like the new position. However, if the transfer can be seen as a demotion, it might be.
Low performance ratings. Sudden and uncharacteristic drops look fishy — unless you have legitimate proof that they are justified. Also beware of managers holding employees to higher standards or stricter levels of scrutiny than co-workers.
New work assignments. A change in work assignments typically will not constitute an adverse employment action if the employee retains his/her same shift, benefits, and pay, and the new assignment is consistent with previous job duties. Singling an employee out for grunt work or menial tasks, or giving an employee a heavier workload for no apparent reason, however, could be considered retaliatory.
Doling out discipline. Okay: discipline that is deserved. Filing a complaint does not shield employees from the consequences of any subsequent misbehavior. Risky: issuing harsh discipline for minor infractions or disciplining an employee for infractions that others are allowed to get away with.

When employees complain that their managers have engaged in perceived-to-be-retaliatory actions, take a closer look. Investigate whether the manager had a good reason for taking the action. If the manager did, have him/her meet with the employee and explain why the action was taken. Stress to managers that it’s important that they communicate the reason behind employment actions that have a direct — and negative — effect on employees.

If the manager’s rationale behind why he/she took the adverse action seems a little suspect to you, track the employee’s personnel file for other signs of retaliation, such as drops in performance ratings, increased disciplinary action, missed promotions, etc. Make managers aware of this practice. In certain cases, individual negative actions may not rise to the level of an adverse employment action, but combined they may.

Key move: Require managers to review any adverse action they plan to take with a third party (like a member of HR) who can view the “evidence” from an impartial position. That way, if the employee challenges the adverse action, you can feel confident that a judge and jury will view that objective evidence in the same light, and conclude that retaliation had nothing to do with the situation at hand.

Mistake #6:

Failing to understand the FMLA

Managers are usually the first to know about employee absences and must make decisions about attendance-related issues. Without proper knowledge of the FMLA, it’s easy for managers to run afoul of the law. Manager training on FMLA leave should focus on these problem areas.

Notice requirements: Although employees must give notice about the need to take leave, they don’t have to specifically say the magic words “FMLA leave.” That sets the stage for all sorts of misunderstandings. Employees are only required to provide verbal notice that is sufficient to make their manager aware that they need FMLA-qualifying leave and the anticipated timing and duration of the leave. It is then the manager’s responsibility to get more information to determine whether the FMLA actually comes into play or not. When in doubt, set the FMLA wheels in motion and give the employee the proper certification to fill out. This makes it possible for the manager to make an informed decision about designating the leave as FMLA.

Eligibility requirements: Another source of FMLA confusion is recognizing a serious health condition. The law sets out guidelines for determining the seriousness of a health condition, but there is no set list to fall back on. When employees are out for more than three days, or are out for less than that but have a chronic illness, managers should never automatically write off the absence as non-FMLA. Again, the safest course of action is to get the proper certification.

Attendance policy requirements: It is important to designate FMLA absences as such as soon as possible because those absences may not be held against employees under the company’s normal attendance policy, including no-fault attendance policies. Managers must keep detailed and accurate attendance records to ensure that FMLA absences will not put employees on the path toward termination for excessive absenteeism.

Reinstatement requirements: Employees are entitled to be returned to the same or an equivalent position at the end of leave, unless there is a bona fide business reason for not doing so (e.g., the position would have been eliminated whether or not the employee had been on leave) or the employee is unable to perform the essential functions of the job.

Review job descriptions regularly to determine whether the essential and marginal functions have changed. If there are plans to place a returning employee in an equivalent position, up-to-date job descriptions will help in determining whether it truly is equivalent to his/her prior position.

Jobs with substantially lower pay, benefits, or working conditions will probably not make the “same” or “equivalent” cut.