the top ten reasons dealerships get sued by employees

Lawsuits Waiting To HappenLawsuits Waiting To Happen

John BoggsFine, Boggs & Perkins LLP

March 8, 2012

The Top Ten Reasons The Top Ten Reasons DealershipsDealerships

Get Sued By Employees Get Sued By Employees

Speakers

Moderator Presenter

Becky RossMarketing Manager

[email protected]

John P. Boggs, Esq.Fine, Boggs & Perkins LLP

[email protected]

Questions

• If you have questions during the presentation, please submit them using the “Questions” feature

• Questions will be answered at the end of the webinar

Employers are required to comply with a myriad of complicated local, state and federal employment regulations. These regulations are difficult to understand, poorly communicated by regulatory agencies and continually changing.

As the cost of non-compliance continues to skyrocket in both punitive fines and employee litigation costs & settlements, the challenge is made worse by economic downturn and the increase in employee ligation that results from hard times.

EVER FEEL LIKE YOU ARE PREY?

Webinar Overview

Lawsuits Wait ing To Happen: Lawsuits Wait ing To Happen:

The Top Ten Reasons The Top Ten Reasons Dealerships Get Sued By Dealerships Get Sued By

Employees Employees

REASON NO. 1

HIRING THE HIRING THE

WALKING LAWSUITWALKING LAWSUIT

Through Forced FunctionThrough Forced Function

The only way to WIN THE BATTLE is to fol low a standardized step-by-step process

Application InterviewConditional

Offer

Drugand/or Background

Screening

New Hire Packet

Company Policies & Training

FIND QUALITY EMPLOYEESELIMINATE THE “WALKING LAWSUIT”

Bullet-Proof Your Employment PracticesBullet-Proof Your Employment Practices

APPLICATION

New Hire Packet


Conditional Offer


Screening

Application Interview

THE APPLICATION

• Application with Legal Protections

• Review The Application--Look For The Key Indicators of the Walking Lawsuit– Blanks– Multiple Employers and/or

Short-term Employment– Reasons for Leaving

Employment– Gaps in Employment– The Victim Mentality

Web-Based Employment Application

REASON NO. 2

DOING THE TYPICAL DOING THE TYPICAL INTERVIEW INTERVIEW

(Worthless)(Worthless)

INTERVIEW

New Hire Packet


Conditional Offer


Screening


Interview

Studies show that interviewing a candidate for a job position is only 14 percent effective in determining “job fit.” On a nice day, it would be just as effective and more enjoyable to sit on a park bench and hire every seventh person who walks by!

HIRING IS LIKE COURTING FOR MARRIAGE

The interviewer concludes, “Well, he/she is not perfect, but I’ll train him after I hire him.”

HOW DO YOU IMPROVE THE INTERVIEW PROCESS?

Sound familiar? Have you ever regretted hiring someone on the very first day? It hurts, doesn’t it? Or someone asks, “What idiot hired that person?”

But you don’t give up. You pay for training, trying to mold the person to do a job he will never do well. Eventually you begin the sad process of firing the employee. This, too, is a traumatic and often costly process.

In our litigious society, it can be very costly.

VELVET HAMMER INTERVIEW

• LISTEN!• STOP TALKING• ASK OPEN ENDED

QUESTIONS• DON’T ASK ILLEGAL

QUESTIONS

Questions to Ask:Work Ethic and Attitude

What skills are required to get along with and work cooperatively with others?

Describe the qualities of a good boss? Employee?

What do you believe is characteristic of bad management? Good management?

What does being motivated mean to you?

What would your supervisor have to say about you? Co-workers? Subordinates?

How were problems resolved at your last job?

How many weeks did you work without interruption over the past 12 months?

Remember: Open Ended Questions!

•Age or birth date

•Marriage status or child care

•Nationality or background

•Disability

•Club memberships

•Pregnancy

•Can you work weekends?

It is UNLAWFUL to ask for information pertaining to:

InterviewInterview

REASON NO. 3

FAILING TO MAKE EXPECTATIONS CLEAR BEFORE EMPLOYMENT BEGINS

CONDITIONAL OFFER

New Hire Packet


Conditional Offer


Screening


Is it UNLAWFUL to obtain a drug screen BEFORE extending an offer to hire?

False Hiring Promises Eliminated

CONDITIONAL OFFERCONDITIONAL OFFER

REASON NO. 4

DON’T BOTHER TO DODRUG TESTING AND

BACKGROUND SEARCHES

DRUG AND BACKGROUND SCREENING

New Hire Packet


Conditional Offer


Screening


Background Screening

Background checks include• Credit hits • Character Checks • Criminal background information • DMV records, etc.• Worker’s Compensation Claims History• Civil Claims History• Sex Offender Registry

Background Screening

Background checks require:1. Initial written authorization2. Proper legal disclosures and info3. Opportunity to get a copy of report4. Intent not to hire and copy of report and federal and

state disclosures5. Final rejection letter

$10,000.00 per violation minimum penalty

REASON NO. 5

HAVING INADEQUATE NEW HIRE PAPERWORK

NEW HIRE PACKET

New Hire Packet


Conditional Offer


Screening


Employment Agreements

REASON NO. 6

FAILING TO DO NEW HIRE TRAINING

COMPANY POLICIES AND TRAINING

New Hire Packet


Conditional Offer


Screening


An employee must have access to the employee handbook to be held accountable to the policies

New signatures should be obtained when any significant change is made

COMPANY POLICIES AND TRAININGCOMPANY POLICIES AND TRAINING

PoliciesPosters

Training

The law requires that dealerships take reasonable steps to prevent harassment

Reasonable steps means:

Anti-Harassment Training

REASON NO. 7

FAILURE TO FOLLOW GOOD WAGE/HOUR RECORD KEEPING PRACTICES

MEAL BREAKS & REST PERIODS

#1 Basis for Wage/Hour Suits Against Dealers30 minutes for each five hours, unless less then six or less than 12

hours (can be waived only if first not waived).• Must clock in and out or at the very least keep a record that the

lunch break was taken

10 minute rest period (paid) for each four hours of employment

What Should You Do?Contact legal counsel to ensure that your policies reflect

the most prudent practices relating to meal and rest breaks and tracking employee time.

Always track hours worked and not worked by all nonexempt employees.

Make sure supervisors and managers consistently enforce your policies and procedures, in particular, as they relate to meal and rest breaks for exempt and nonexempt employees—Strongly consider a written certification under penalty of perjury confirming that all meal breaks and rest periods were taken.

POPULAR WAGE- HOUR LAWSUITS

• Meal Break and Rest Period Claims• Commission Pay Plan Problems

• Overtime Exemptions Challenges• Unlawful Deductions from Pay

• Charge-Backs• “Costs of Doing Business”

• Proper Overtime Calculations• Regular Rate of Pay Issues

• Bonuses• Variable/Hybrid Pay Plans

COMPENSATION PRIMER: THE BASICS

Fine $100/$200 per Pay Period per Person fineProblem AreasLunch Periods for Sales, F&I, Service Writers

Record KeepingAccurate record of hours worked each day/week and amounts paid and deducted

DEALERSHIP PROFIT-BASED PAY PLANS UNDER ATTACK!DO YOU NEED TO CHANGE YOUR PAY PLAN?

“Packs” represent potential problems, if they are used, they should be specifically identified by dollar amount (no “hidden” “undisclosed” packs) in a signed pay plan. Packs should never be identified as a way to allocate overhead or expenses, but instead should be described as “an amount of the gross profit on which the salesperson is not paid a commission.”

If salespeople are not paid on under-allowances, or if over-allowances are charged against commissionable gross, that should also be identified. Likewise, if salespeople are not paid on factory incentives and/or holdback, that should be made clear in the pay plan.

PAID VACATIONNo Use it or Lose ItMaximum Accrual is Okay

PTO treated like Vacation

PAID HOLIDAYSBe Careful On Floating Holidays

PAID SICK LEAVEA Good Thing for Salaried Managers

REASON NO. 8

HASTY DISCIPLINARY DECISIONS

1. Do you feel comfortable after your investigation that you will be able to prove, with evidence, that the employee violated the rule, or the standard of performance was not met, and that you have treated other similar situations with the same level of discipline in similar circumstances?

Legal Liability Checklist

2. Are there any prior commitments (written agreements or promises) in employee's personnel file regarding a specific term of employment, continued employment or a requirement of just cause for termination of employment?


3. Are there any complaints or claims (formal or informal) that the employee has made against the company, any co-worker, customer or vendor? (e.g., harassment, discrimination, retaliation, unpaid wages, workers compensation claims, safety issues, labor regulation violations, dishonesty, customer fraud or other claims that the company violated the law in any way, etc.)


4. If the employee falls into a "protected category" (e.g., minority, race, religion, color, sex, sexual orientation, national origin, ancestry, citizenship status, uniform service member status, marital status, pregnancy, age/over 40, medical condition—cancer related or HIV/AIDS related, disability, or transgender status), does the employee's "protected category" represent a relatively small portion of your workforce or the employee's work group.


5. Has the employee taken any leaves of absence within the last year? (Medical leave, Family Care leave, Pregnancy leave, Drug/Alcohol Rehabilitation leave, Workers Compensation leave, etc.)


6. Have you disciplined others for this same general rule violation or performance deficiency?


7. Has the level of discipline imposed been substantially the same for the same violation or performance deficiency for other employees?


8. Have you failed to discipline anyone for the same general rule violation or performance deficiency, even though some other employees may have been disciplined for it?


9. Have you given different levels of discipline to different employees for the same general rule violation or performance deficiency?


10. Do you plan to terminate the employee?


REASON NO. 9

LOSE THE BATTLE OF THE WITS ON CALIFORNIA LEAVE AND

DISABILITY LAWS

TYPICAL TYPES OF LEAVETYPICAL TYPES OF LEAVE

- VACATION (PAID), PAID TIME OFF (PTO OR PDO)- SICK LEAVE (PAID AND UNPAID)- MILITARY LEAVE (non-FMLA)- FLOATING HOLIDAY (PAID)- CIVIC DUTY LEAVE (E.G. JURY DUTY, WITNESS DUTY, VOTING LEAVE)- UNPAID FAMILY SCHOOL PARTNERSHIP LEAVE- PREGNANCY DISABILITY LEAVE OF ABSENCE (non-FMLA, PAID OR UNPAID)- FAMILY LEAVE (non-FMLA, UNPAID OR PAID)- LEAVE FOR VICTIMS OF FELONY CRIMES - LEAVE FOR VICTIMS OF DOMESTIC VIOLENCE & SEXUAL ASSAULT- TIME OFF FOR EMERGENCY DUTIES- BEREAVEMENT LEAVE- ALCOHOL/DRUG REHABILITATION LEAVE- PERSONAL LEAVE OF ABSENCE (OTHER)- FAMILY AND MEDICAL LEAVE ACT (AND STATE LAW EQUIVALENT)- WORKER’S COMPENSATION INJURY/ILLNESS LEAVE- DISCRETIONARY MEDICAL LEAVE (non-FMLA for ADA)

FMLA and Workers’ Comp Conflicts

• Employees injured on the job under the Worker’s Compensation provisions may still be eligible for FMLA leave.

• Employees on Workers’ Comp must be put on FMLA leave -- just as if they were on a non-work related injury medical leave

• Employees on FMLA leave are entitled to have their health insurance covered for the first 12 weeks of Workers’ Comp, then they should be put on COBRA if your Health Plan is governed by ERISA.

What if the Employee Won’t Return the Health Care Provider Certification?

• Reasonable period of time of not less than 15 days - what’s that?

• What action can you take against the employee?– Deny the leave retroactively?

• What happens to the leave?– It becomes absence without approved leave.

FMLA vs. CFRA

Under FMLA, pregnancy is a serious health condition

Under CFRA, pregnancy is not a serious health condition.

PREGNANCY

Result is that a pregnant employee gets:– Up to 4 months of pregnancy leave due to

pregnancy or pregnancy-related disability– Up to 12 weeks of leave under FMLA as

pregnancy is a serious health condition– Up to 12 weeks of leave after the baby is born

for “bonding” purposes.

YES, that’s up to a total of 7 months of leave.

American with Disabilities Act

• A qualified individual with a disability who, with or without reasonable accommodation, can perform the essential elements of the employee’s job

• A physical or mental impairment that substantially limits one or more of the employee’s major life activities. A record of such an impairment. Or being regarded as having such an impairment.

• Interactive process

• Provide a Reasonable Accommodation– Discretionary Medical Leave, for example.

Definitions Overlap and Conflict

ADA –Disability is not always FMLA serious health condition.

FMLA – A serious health condition is not always ADA disability.

Employees on Workers’ Comp Disability may not be covered by ADA or FMLA.

Temporary impairments are not covered by the ADA.

FMLA and Workers’ Comp Conflicts

• An available light duty position must be considered as a form of reasonable accommodation under the ADA.

• Workers' Compensation gives employers the option of providing light duty, but it is not required. The system encourages employers to provide light duty by financially penalizing those who do not.

• Yet FMLA prohibits employers from requiring employees to return to light duty positions during their 12-week protected period.

Reminders

• FMLA and Workers’ Comp may run concurrently

• Make sure the employee has received written notice re: FMLA designation

• Rely on medical opinions

• Make sure FMLA poster is displayed

REASON NO. 10

IGNORE PROBLEMS

UNTIL THEY BOIL OVER

ACT FAST AND FIX THE PROBLEM

1. Use the HotlinkHR Employee Hotline2. Use the HotlinkHR HR Advice Hotline3. Talk to the Employee4. Talk to Witnesses5. Make a decision6. Follow-up with the Employee

FREE CONSULTING TIME!!!

Contact Information

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[email protected]

866-356-1735

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