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HR Insights with Ali: Department of Labor - Employee Lawsuits Costly to Both Employees and Employers


Posted on 12/8/2016 by Ali Oromchian, Esq.
According to a report by the U.S. Department of Labor, employee lawsuits are a costly and often ineffective way of resolving labor disputes. Their fact-finding report explains that “employment litigation has spiraled in the last two decades,” due to the fact that a number of laws rely upon individual lawsuits for enforcement, including the Fair Labor Standards Act, Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act. Unfortunately, individual lawsuits are having little effect on actual enforcement and are, instead, leading to costly expenditures for all parties.

Despite the fact that employee lawsuits have risen over 400 percent in the last 20 years, that process seems to be more of a black hole for expenses than a useful tool to fight worker exploitation. As detailed in the report, “for every dollar paid to employees through litigation, at least another dollar is paid to attorneys involved in handling both meritorious and non-meritorious claims.” In addition, as employers implement measures intended to protect themselves from lawsuits, those costs are reducing funds which would otherwise be available for employee programs and benefits: “as the firms’ employment law expenses grow, less resources are available to provide wage and benefits to workers.”

Unfortunately, until the Department of Labor finds a new way to protect workers with valid claims, lawsuits of all kinds (both meritorious and not) will continue to be a drain on the economy of the American workplace. Employers will benefit from taking actions to protect themselves as early as possible, in order to reduce their future expenses.

What You Can Do
One of the best ways to protect yourself and your practice is with a strong recordkeeping system. Record policy violations as soon as they occur, and maintain records of all discussions with employees with regard to office behaviors. These documents can serve as a shield against wrongful discrimination claims. Ensure that you are following all labor laws, including those related to sick time, breaks, and overtime compensation. And if you have not done so already, you should ensure that you have an enforceable employee handbook which outlines all workplace policies and which clarifies what is expected of both employee and employer.

You should contact legal counsel or an HR expert to address any concerns you may have and to help your practice protect itself against future costly litigation.
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