A. Can't cover all the substantive law

B. Concentrate on practical suggestions you can use

C. If these suggestions had been followed, most of my cases
would never have been brought or could easily have been disposed of.

A. Four most common ways to get sued and how to avoid them

B. How to document your defenses

C. How to keep your policy manual from biting you

D. How to hire and how to fire

A. Wrongful discharge

B. Claims for unpaid leave and overtime

C. Defamation

D. Discrimination and sexual harassment

Formerly, punitive damages were available. Foley eliminated
punitive damages making this less attractive to plaintiffs. However,
these cases are still being brought for compensatory damages.

A. Theories
 
1. Breach of express contract
 
a. Oral or written contract

b. Personnel manual or memoranda

c. Job application
 

2. Breach of implied contract.  Where the circumstances give
rise to reasonable expectation of tenure on good behavior

3. Covenant of good faith and fair dealing used to be
grounds for tort damages. It does not turn at will to
tenure.

4. Negligent or intentional infliction of emotional
distress
 

B. How to Avoid
 
1. Most suits are brought because:
 
a. Litigant is motivated

b. Triable case
 

2. Avoid motivating employees
 
a. No surprises
 
(1) Document and review with employee areas
needing improvement.

(2) Review needn't be all negative

(3) Signed reviews are a good practice
 

b. Don't put off the inevitable.
 
(1) Procrastination is the biggest problem
causing:
 
(a) A bigger emotional investment in the job

(b) A buildup of resentment

(c) A stronger case for implied in fact
tenure--longevity a factor in
determining whether an implied in fact
contract exists

(d) More time to make a mistake

(e) Possibility of enhanced damages for
emotional distress
 

(2) Best time to terminate is during the
probation period
 
(a) Don't extend the probation period
without a really good reason

(b) Don't keep a questionable employee
without formally extending the
probation

3. Make the case untriable
 
a. Strengthen and document the key defenses

b. Preserve the "at will" relationship

c. Use the probationary period

d. Document the existence of good cause

e. Document the lack of bad cause

f. Get a good release
 

C. Preserving the "at will" relationship
 
a. Presumed by statue where no definite term (Labor
Code Section 2922)

b. Can be rebutted by:
 

(1) express written agreement

(2) express oral agreement

(3) implied in fact agreement
 

D. How to rebut tenure
 
1. Watch what you say!
 
a. Orally - praise is okay, promises are not.

b. Read the policy manual and personnel memos
 

(1) Make any vague promises or assurances?
Eliminate them.

(2) Contain any specific causes for discharge?
Include a disclaimer.
 

2. Get periodic acknowledgments of the "at will"
relationship
 
a. Job application

b. Policy manual

c. Periodic reviews

d. Annual acknowledgment of reading of manual and
explicit disclaimer
 

E. Acknowledgment
 
1. Should contain both magic words and plain language and
both acknowledgments and agreements

2. Specific points
 

a. That continued employment only so long as bothemployer
and employee wish

b. Termination for any reason or for no reason, i.e.,
no showing of good cause required

c. No contrary promises or statements have been made
3. Value--Can be dispositive of claims based on facts
accruing on or before their date.
 
a. Must be periodic, at least once a year

b. Need not cause a morale problem
 

(1) Can be part of routine performance review

(2) Certification of reading of the policy manual
 

F. Use the probationary period

G. Have and document good cause and warnings. This is
different for contracts with a term (Labor Code section
2924)
 

1. Backup defenses

2. Reasonable belief may be good enough

3. Good causes
 

a. failure to perform

b. reduction in force

c. misbehavior

d. failure to follow proper instructions
 

4. Include non-exclusive list of causes in policy manual
H. Document lack of bad causes. An employee often claims bad
motive on the part of one or more managers
 
1. Always involve more than one manager.

2. Where complaints involve someone who is immune from
that complaint.
 

a. gender

b. race

c. personal conflicts
 

I. Get a release
 
1. Can be dispositive if
 
a. Properly drafted to give fair notice of all claims

being released

b. Voluntary

c. Employee given an adequate opportunity to consider

with the advice of counsel
 

2. Can be part of severance agreement

3. If you're going to offer a severance benefit, like
extended medical coverage or a severance payment, you
might as well get something for it!
 

J. Summary of Preventative Measures
 
1. Avoid motivating employees
 
a. No surprises

b. Don't put off the inevitable
 

2. Make the case untriable by strengthening and documenting the
defenses
 
a. Preserve the at will relationship
 
(1) Watch what you say and write

(2) Get periodic acknowledgments
 

b. Use the probationary period

c. Have and document good cause and warning

d. Document lack of bad cause by involving proper managers
in each discharge.

e. Get a release.

This is a fertile area. Most claims can be avoided

A. Overtime

 1. Required by federal statutes under certain
circumstances.

2. Most claims result from:
 

a. Failure to apply the appropriate standard to the
employee.
 
(1) Can't go into them at this time

(2) They are complex and federal and state rules
overlap.
 

b. Failure to track overtime
 
(1) Employee not permitted to volunteer

(2) Managers must not permit them to work early,
late, through lunch, or weekends without
compensation
 

c. Failure to document overtime or the lack of
overtime
 
(1) Time sheets are a good tool.

(2) Should be signed by employee and kept in file

(3) Should include a disclaimer of any hours
other than what is shown, not just a
statement that it's accurate
 

3. Policy manual should say
 
a. No unpaid overtime

b. Employees required to report work outside
normal hours in writing
 

4. Even for employees who are not supposed to be
working overtime, and have regular hours, a time
sheet can be helpful
B. Vacation Time
 
1. The most common causes of problems
 
a. Invalid forfeitures
 
(1) Leave, once accrued, cannot be forfeited and
cannot be waived! It must be used or paid.

(2) Trap - Use it or lose it vs. cap on accruals
 

(a) Use it or lose it - invalid
Any accrued vacation time in excess of two
weeks will be lost if it is not used by the
end of each calendar year

(b) Cap on accruals - enforceable
Once an employee has accrued a total of
two weeks of vacation time no additional
time will be earned.

b. Failure to track and document usage.  Reasons for problems
a. Tracking accruals easy, tracking usage is not.

b. Burden of proving that accrued overtime has been
taken is on the employer

c. Top management and professional employees are
often overlooked

d. Often find inaccurate computer generated records,
such as computer generated pay stubs.

C. Solutions
 
1. Make sure your policy manual clearly articulates a
valid cap on accruals and not an invalid forfeiture

2. Record all usage of vacation time. Don't forget the
managers and professionals.

3. Get periodic acknowledgments of amount of leave taken
and balance left.

4. Check your pay stubs.

A. Includes libel and slander. Can accompany claims for wrongful
discharge or be an independent suit. Defamation is a false,
unprivileged, statement to a third party that causes damage to
reputation.

B. Avoid and document the avoidance of each element
 

1. Statement - don't say anything about an employee that
you don't need to.
 
a. Job reference -- Best policy is to say nothing
other than to confirm
 
(1) fact of employment

(2) dates of employment

b. Twin dangers
 
(1) bad reference--defamation

(2) good reference--liability for negligence

2. False -- when you must say something bad, document its
truth

3. Unprivileged--Section 47 of the Civil Code
 

a. Say it with litigation

b. Say it only to someone who has a legitimate
interest in the information

4. Third Party
 
a. Say it to the employee, not his co-workers, your
customers, or other persons

b. Especially important when conducting an internal
investigation

5. Damage -- certain kinds of statements are especially
risky and per se damaging
 
a. Allegations of dishone�

b. Allegations of incompetence

A. A morass of statutory and common law rules

B. Among the protected classes are: race, color, religious
creed, sex (including gender harassment, and harassment due
to pregnancy, childbirth, or related medical conditions),
marital status, age, national origin, physical or mental
disability, medical condition, ancestry, and, in some
places, sexual orientation.

C. How to avoid suit
 

1. Have an anti-discrimination and anti-harassment policy
and put it in the policy manual.

2. Set clear procedures for reporting problems, with
plenty of alternative options, so that there will be
ways to get around alleged perpetrators in the chain of
command.

3. Require non-victim employees to report

4. Encourage victims to report

5. Document every complaint

6. Investigate every complaint thoroughly and involve
legal counsel where appropriate.

7. Tell the complainant your conclusions and action, but
do not convey the substance of a particular witness'
statement.

8. Include this area in the annual acknowledgment

9. When you must take action against a member of a
protected class, document your reasons.

10. Model the behavior you seek to establish
 

a. A respect for others

b. See employees as people not as representatives of
a class. Avoid:
 

(1) crude jokes & references

(2) nicknames that may be seen as pejorative or
references to age, gender, or ethnicity.

A. Make and document reasonable accommodations of persons who
arguably have a handicap

B. If you need to take adverse action against a person with an
arguable handicap, document
 

1. Inability to do job, even after reasonable
accommodation, or

2. Reason for action unrelated to handicap

C. There will be problems

A. Hiring
 
1. Use an employee application

2. Check job references

3. Check litigation databases

4. Don't inquire about protected status issues
 

a. Marriage

b. Health

c. Childcare

5. Drug testing--sometimes permissible, depending on the
circumstances and the nature of the job
B. Firing
 
1. Don't procrastinate

2. Don't surprise

3. If possible, and always where arguable disability,
offer and document reasonable accommodation

4. Document good cause

5. Follow sound procedures in exit interview

A. Include a prominent disclaimer saying that it is not and
does not constitute a contract of employment

B. Include a general section affirming either party's right to
terminate the employment at will with or without notice and
the employer's right to change the conditions of the
employment at will.
 

1. Include a statement that no one is authorized to
represent anything to the contrary, except in a formal
written contract of employment signed by a designated
officer.

2. Require employees to report any instances of
unauthorized promises or representations.

C. Repeat the disclaimers in connection with specific issues
 
1. Grievance procedures--include a statement that they are
subordinate to both parties' right to terminate with or
without notice and with or without cause

2. Lists of prohibited activities or infractions--affirm
nonexclusivity

3. Probation provisions--ending probation does not alter
the "at will" relationship

4. Factors that may be considered in promotions. Make it
clear that they are nonexclusive and do not guarantee
anything.

5. Lists of vacation days. Say that they may be changed
with or without notice.

D. Analyze the entire manual
 
1. Is any of it superfluous? Eliminate.

2. Look for "employer shall" or "employer will." Change
all the "shalls" and "wills" to "mays."

3. Look for anything that looks like a promise and take it
out.

4. Look for anything that, taken in isolation, might
create an expectation of tenure, modify it, and tack on
a specific disclaimer.

5. Carefully review and update the manual at least once a
year.

6. Distribute it and get an acknowledgment at least once a
year.

7. Keep a file with all revisions of the policy that will
allow you to say which version was in effect at any
given time. The acknowledgments must be specific
enough to enable you to identify the exact document to
which it refers.

A. Four areas of frequent claims
 
1. Wrongful discharge

2. Unpaid leave and overtime

3. Defamation

4. Discrimination and Sexual Harassment

B. How to avoid these four areas
 
1. Treat people equally and fairly

2. Documentation and acknowledgment

3. Don't procrastinate or surprise

4. Don't say anything to anyone about employees

5. Hire and fire using sound procedures

6. Get a good release
 

C. Use your employee manual wisely, read it for traps, keep it
updated, make it required reading, and get and keep your
acknowledgments

For more information, e-mail me at vdicarlo@dicarlolaw.com

This page last updated April 9, 2008
Copyright © 1998-2008 Vincent DiCarlo