Tips for the Missouri Employer about Employment Litigation and Human Resources (HR) Issues & Law

This article gives some tips for Human Resources professionals and management regarding how to reduce the employer’s defense costs and avoid litigation. It also links to some resources on the internet to assist in further study.

I also talk a little bit about the services I provide to small businesses. Most of the time I represent individual employees, but I also sometimes assist small businesses with human resources and employment problems.

• TIPS to help reduce legal expenses in human resources and employment law.
• Links to management and human resources related employment law information.
• Links to St. Louis employment law defense firms.
• Business and Human Resources services offered by Tim

Cost-Saving TIPS for Companies
in Employment Law matters:

Mediation, settlement, reducing defense costs, arbitration, non-competes, etc.

The TIPS that follow are fairly short and to the point. If you have had any experience dealing with the matters addressed in the TIPS then you can probably immediately relate to them. If you have not yet had experience with, let’s say, “mediation”, then click the associated links for more info, so you can decide if the TIP sounds right for you.

Most cases settle at mediation.

More than 50% of employment related lawsuits settle at the court-ordered mediation. Some settle long before the court-ordered mediation. In a typical employment case, long before any lawsuit is filed, you will have the opportunity to settle at the time of the EEOC charge (see my Discrimination article if you are unaware of the EEOC).

One of the easiest ways to hold down legal expenses in employment litigation is to make a good faith effort to settle the case at the EEOC level.

One of the surest ways to drive up legal expenses (and perhaps settlement costs) is to refuse to enter into good faith settlement talks with a plaintiff’s attorney early in the case.

The inherent conflict of interest between hourly fee defense lawyers and settlement issues

Hourly fee defense lawyers have an inherent conflict of interest when they are advising you about settlement-related issues. The conflict is that when the case settles, the hourly fee lawyer’s income stream is cut off. Usually, fees are earned only while fighting is occurring. There’s no money in making peace and resolving cases economically.

I believe that this conflict of interest prevents many defense lawyers from encouraging their clients to enter into good faith settlement talks early in the case.

The majority of cases settle anyway, so who benefits from delaying the settlement? The hourly fee defense lawyer is the primary beneficiary of delays in settlement, in most cases, so it seems to me.

Settlement costs are usually lowest early in the case before plaintiff has spent a lot of time and money on the case. The more the plaintiff has invested in the case, the harder the bargain he will drive, and this means you will have to spend more to settle, or spend more to defend if you don’t settle. So I usually suggest considering engaging in good faith negotiations at the earliest opportunity. That doesn’t mean cave in, but it does mean be willing to approach settlement like the good business person you no doubt are.

More about settlement:
Get past your anger and be a good business person, or the defense lawyer rides the gravy train.

If you get sued, you’re probably angry. You’d probably rather pay your lawyer a lot of money than settle modestly with some disgruntled former employee and his lawyer who filed a “frivolous” case against you, right? Hourly fee defense lawyers may count on and even encourage you to have that attitude.

The hourly fee defense lawyer rides the gravy train when you have that attitude. But consider the following please. Very few lawsuits filed by lawyers are, for technical legal reasons, “frivolous.” So you are really in court legitimately with that disgruntled former employee and his lawyer, in most cases, no matter how angry you might be about it.

If you can get past your anger and remember that you are a good business person, maybe you can get out of this little problem in a reasonable manner under the circumstances, with reduced costs all around. If a case against you is truly frivolous, the law provides remedies for that.

Bring a lawyer in early, at the first sign of potential trouble

One of the surest ways to weaken your legal position is to fail to bring a lawyer in at the earliest opportunity when you learn that a potential employment dispute may be brewing. Everything you say, and everything you do not say, may be used against you in court. It’s probably wise to have a lawyer review the circumstances and advise you about how to handle the situation. I have an article from the employee-perspective about the dangers of what is said and not said, Complaints, and those dangers apply to companies as well.

Have proper employment policies and follow them

Your legal position is weakened if you don’t have proper written employment policies, or you have such written policies but don’t follow them.

As part of trying to prove a discrimination or wrongful termination case, lawyers will look to see whether you followed your preferred procedures regarding the plaintiff. If you did not, and if you usually follow your preferred procedures for others, then legal arguments are now available to the plaintiff to show your animosity toward him. This evidence is especially useful in a retaliation case, but can be useful in just about any case, including contracts cases.

The “at-will” employment rule doesn’t mean what you think it means.

See my article about At-will employment for more info about what the “at-will” rule really means. It may not mean what you think it means. There are potential advantages, especially in small companies that like to use non-competes, to having employees under contracts of a definite duration, even if the contract term is short.

Write fair arbitration agreements

Mandatory Arbitration Agreements are all the rage right now. They have their usefulness, but I suspect that many companies are jumping on the bandwagon without being fully informed.

For example, the majority of the arbitration agreements I’ve seen are written so unfairly toward the employee that many or even most courts will seriously consider challenges to their validity. The agreements are so one sided that they are inviting major legal challenges by plaintiffs’ attorneys, thereby guaranteeing high legal expenses to the company in defending the agreements.

Thereafter, if the trial court upholds the unfair agreement, there will be even greater expense to the company in defending the agreement on appeal to the Court of Appeals. Why don’t companies write fair arbitration agreements from the start, and get the best of both worlds: reduced future legal defense costs, and more readily enforceable agreements?

When writing non-compete agreements, it’s better to be less restrictive

Non-Compete Agreements are commonly written so overly-broad as to invite legal problems (driving up legal expenses).

I look at a lot of non-competes. In the majority of cases, the non-competes are so overly-broad that I feel confident that I can fashion powerful legal arguments to try to get a judge to refuse to enforce them in whole or significant part.

Why do companies permit such overly-broad non-competes to be written? Overly-broad non-competes invite litigation in several respects:

First, such agreements cause employees to see lawyers about how to avoid the overly-broad restrictions, and the lawyers look for legal claims to make against the company. This invites litigation (driving up legal expenses).

Second, overly-broad non-competes are subject to legal challenges and might not be enforced by the court. This invites employees to bring suit to determine the enforceability of the non-competes (driving up legal expenses).

Third, overly-broad non-competes give management a false sense of power over the post-employment work life of the employee, encouraging management to have counsel send “cease and desist” letters and file lawsuits to prevent conduct that should not be restricted in the first place (driving up legal expenses).

LESSON: Keep the restrictions narrow, short and simple. This will save you lawyer money in drafting and in enforcing, and will improve the enforceability of the core restrictions that mean the most to you.

Links to internet legal information websites of potential interest to small businesses who are interested in employment law matters

• US Dept of Labor ELaws Interactive Guide for businesses – which laws apply to you?
• Cornell university Employment Law page
• Washburn law center employment law links
• Independent Contractor guidelines from IRS – Pub 1779 (PDF file)
• BusinessWeek employment law interactive book for Human Resources reps
• EEONews.com
• AHI’s employment law resource center
• Management tips for handling workplace problems

Links to St. Louis Missouri law firms that do a lot of Employment Defense and otherwise represent a lot of employers

These firms are the cream of the crop. You’re in competent hands with any of them. Their resources are massive and they can take on the most complicated matters. Some of these firms have a nationwide practice, and will go anywhere to represent you.

• Armstrong Teasdale Law Firm
• Brown & James Law Firm
• Bryan Cave Law Firm
• Lewis Rice Law Firm
• McMahon Berger Law Firm
• Thompson Coburn Law Firm

Business and Human Resources services offered by Tim:

I’m a solo practitioner who maintains a reasonable and modest office suite. I can afford to take on matters that are too little for the big guys in town. I work closely with business clients to find ways to hold down litigation expenses during the representation. So some small businesses might want to consider talking to me about assisting them. Just in case someone wants to talk to me, here’s a list of some of the services I will consider providing to your business:

• Advice and counseling as you grow and become covered by more, and more, of the employment laws, because a stitch in time saves nine.
• Litigation of many kinds of contract disputes and employment disputes
• Employment contract drafting and negotiation
• Non-compete agreement drafting and negotiation
• Severance agreements, and severance programs for layoffs
• Ad hoc advice about employment issues that arise day to day (retainer agreement)
• Training and Education about the discrimination, wrongful termination and retaliation laws
• Administrative agency problems, Federal and State, related to employment issues
• Employment Policy Handbook development (usually involves advising your in-house author)
• Unemployment benefit issues and appeals
• Your issue not listed above? Call me and we’ll talk about it.