Legal Matters: 9 Employment Law Landmines

In the U.S., employment regulation and litigation have a significant impact on the way companies, including not-for-profit companies (NFPs) operate. Federal, state, and local laws govern just about every phase of employment, and NFPs must comply with these laws in the same way as for-profit companies. In addition, NFPs are equally subject to the same types of litigation and potential jury verdicts as for-profit companies. Here are a few steps you can take to reduce the risk of litigation:

1. Have an employee handbook that identifies and communicates all of your employment-related policies. This handbook should be prepared with the assistance of an attorney or, at minimum, reviewed by a qualified attorney.

2. Prepare and adopt an ethics policy that applies to all areas of employment, including hiring, firing, promotions and assignments, and bases employment only on merit, qualifications and competence. This policy also should state that the company will comply with laws pertaining to fair employment practices and that no employee or applicant for employment will be discriminated against because of race, age, sex, religion, color, national origin or ancestry, disability, sexual orientation, marital status, citizenship status or other protected status under federal, state or local law. This policy also should state that the company provides an environment that is free of unlawful harassment of any kind, and on any basis prohibited by law.

The policy further should state that conduct such as making unwelcome advances, offensive language, requests for sexual favors, jokes or other verbal, graphic or physical conduct relating to an employee's race, sex, religion, color, national origin or ancestry, age, disability, sexual orientation, marital status, citizenship status, status as a veteran, genetic information or any other factor protected by law, whether implied or explicit, will be viewed as harassment.

3. Make sure you properly document any employee evaluation, especially if discipline is warranted.

4. Identify and designate an individual, such as the executive director, who is responsible for implementing, interpreting and enforcing your policies.

5. Be consistent with applying the policies. A company is not required to have the same policy for all levels of employees—however, your policies should be applied consistently among your various departments and individual employees.

6. If your company is subject to a collective bargaining agreement, be sure to comply with it. Sometimes company practices have to be bargained with a union official before being implemented.

7. In the hiring process, be sure to carefully screen potential employees, as employers may be liable for an employee's misconduct or actions that arise during their employment if the employer knew or should have known that the employee posed a threat of harm to others. However, avoid screening processes that make inquiries based on or that relate to (even indirectly) an applicant's race, color, sex, age, national origin, religion, disability or genetic information as a basis for making any hiring decisions. Keep in mind too that individual states may have stricter requirements.

8. A substantial amount of employment related litigation arises as a result of terminations. When necessary to terminate an employee, be sure to ask the employees who are being terminated or laid-off to sign a waiver or release. A waiver or release is a written agreement from the employee stating, among other things, that the employee will not sue you or your company.

Without a waiver or release, an upset employee may sue you and your company (and management) for employment discrimination, contending that the real reason they were terminated was because of their age, gender, religion or race.

9. When preparing waivers or releases, it is critical to comply with federal and your state's employment laws. For example, under certain laws, a waiver or release is only effective if it contains very specific language. That language is set forth in the applicable statutes (or laws). The release or waiver also must be easily understood so the employee may waive his or her claims knowingly and voluntarily.

Many exceptions apply to employment laws. Thus, it is always best to consult with an attorney regarding your company's employment practices and policies. Litigation and potential liability can be avoided with proper advice.

While consulting with an attorney may cost a few dollars now, the ultimate costs associated with defending litigation and a potential judgment against your company can be ever greater.

Lisa A. Lori. Esq., is a partner in the law firm of Klehr Harrison Harvey Branzburg LLP and a member of the NonProfit PRO Editorial Advisory Board. Reach her at llori@klehr.com.