Lawsuits Waiting To Happen
John Boggs
Fine, Boggs & Perkins LLP
March 8, 2012
The Top Ten Reasons Dealerships
Get Sued By ...
Speakers
Moderator Presenter
Becky Ross
Marketing Manager
303-228-8753
bross@kpaonline.com
John P. Boggs, Esq.
Fine, Boggs...
Employers are required to comply with a myriad of complicated local, state
and federal employment regulations. These regul...
Lawsuits Waiting To Happen:
The Top Ten Reasons Dealerships
Get Sued By Employees
REASON NO. 1
HIRING THE
WALKING LAWSUIT
Through Forced Function
The only way to WIN THE BATTLE is to follow a
standardized step-by-step process
Application Interv...
APPLICATION
Application
THE APPLICATION
• Application with Legal
Protections
• Review The Application--
Look For The Key
Indicators of the Walking...
REASON NO. 2
DOING THE TYPICAL
INTERVIEW
(Worthless)
INTERVIEW
Interview
Interview
Studies show that interviewing a candidate for a
job position is only 14 percent effective in
determining ―job f...
HIRING IS LIKE COURTING FOR MARRIAGE
The interviewer concludes, ―Well, he/she is not
perfect, but I’ll train him after I h...
HOW DO YOU IMPROVE THE
INTERVIEW PROCESS?
Sound familiar? Have you ever regretted hiring
someone on the very first day? It...
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?
D...
What would your supervisor have to say
about you? Co-workers? Subordinates?
How were problems resolved at your last
job?
H...
•Age or birth date
•Marriage status or child care
•Nationality or background
•Disability
•Club memberships
•Pregnancy
•Can...
REASON NO. 3
FAILING TO MAKE EXPECTATIONS CLEAR
BEFORE EMPLOYMENT BEGINS
CONDITIONAL OFFER
Conditional
Offer
Is it UNLAWFUL to obtain a
drug screen BEFORE
extending an offer to hire?
False Hiring Promises
Eliminated
CONDITIONAL OFF...
REASON NO. 4
DON’T BOTHER TO DO
DRUG TESTING AND
BACKGROUND SEARCHES
DRUG AND BACKGROUND SCREENING
Drugand/or
Background
Screening
Background Screening
Background checks include
• Credit hits
• Character Checks
• Criminal background information
• DMV re...
Background Screening
Background checks require:
1. Initial written authorization
2. Proper legal disclosures and info
3. O...
REASON NO. 5
HAVING INADEQUATE
NEW HIRE PAPERWORK
NEW HIRE PACKET
New Hire
Packet

Employment Agreements
REASON NO. 6
FAILING TO DO NEW HIRE
TRAINING
COMPANY POLICIES AND TRAINING
Company
Policies &
Training
An employee must have
access to the employee
handbook to be held
accountable to the policies
New signatures should be
obta...
Policies
Posters
Training
The law requires that dealerships take
reasonable steps to prevent harassment
Reasonable steps m...
REASON NO. 7
FAILURE TO FOLLOW GOOD
WAGE/HOUR RECORD
KEEPING PRACTICES
MEAL BREAKS & REST PERIODS
#1 Basis for Wage/Hour Suits Against Dealers
30 minutes for each five hours, unless less then s...
What Should You Do?
Contact legal counsel to ensure that your policies reflect
the most prudent practices relating to meal...
POPULAR WAGE- HOUR LAWSUITS
• Meal Break and Rest Period Claims
• Commission Pay Plan Problems
• Overtime Exemptions Chall...
COMPENSATION PRIMER:
THE BASICS
Fine
$100/$200 per Pay Period per Person fine
Problem Areas
Lunch Periods for Sales, F&I, ...
DEALERSHIP PROFIT-BASED PAY PLANS UNDER ATTACK!
DO YOU NEED TO CHANGE YOUR PAY PLAN?
―Packs‖ represent potential problems,...
PAID VACATION
No Use it or Lose It
Maximum Accrual is Okay
PTO treated like Vacation
PAID HOLIDAYS
Be Careful On Floating ...
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 viola...
2. Are there any prior commitments (written
agreements or promises) in employee's
personnel file regarding a specific term...
3. Are there any complaints or claims
(formal or informal) that the employee has
made against the company, any co-
worker,...
4. If the employee falls into a "protected
category" (e.g., minority, race, religion,
color, sex, sexual orientation, nati...
5. Has the employee taken any leaves of
absence within the last year? (Medical
leave, Family Care leave, Pregnancy
leave, ...
6. Have you disciplined others for this same
general rule violation or performance
deficiency?
Legal Liability Checklist
7. Has the level of discipline imposed been
substantially the same for the same
violation or performance deficiency for
ot...
8. Have you failed to discipline anyone for
the same general rule violation or
performance deficiency, even though
some ot...
9. Have you given different levels of
discipline to different employees for the
same general rule violation or
performance...
10. Do you plan to terminate the employee?
Legal Liability Checklist
REASON NO. 9
LOSE THE BATTLE OF THE WITS
ON CALIFORNIA LEAVE AND
DISABILITY LAWS
TYPICAL TYPES OF LEAVE
- VACATION (PAID), PAID TIME OFF (PTO OR PDO)
- SICK LEAVE (PAID AND UNPAID)
- MILITARY LEAVE (non-...
FMLA and Workers’ Comp Conflicts
• Employees injured on the job under the
Worker’s Compensation provisions may still be
el...
What if the Employee Won’t Return
the Health Care Provider Certification?
• Reasonable period of time of not less than 15 ...
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-relat...
American with Disabilities Act
• A qualified individual with a disability who, with or
without reasonable accommodation, c...
Definitions Overlap and Conflict
ADA –Disability is not always FMLA serious health
condition.
FMLA – A serious health cond...
FMLA and Workers’ Comp Conflicts
• An available light duty position must be considered
as a form of reasonable accommodati...
Reminders
• FMLA and Workers’ Comp may run
concurrently
• Make sure the employee has received written
notice re: FMLA desi...
REASON NO. 10
IGNORE PROBLEMS
UNTIL THEY BOIL OVER
ACT FAST AND FIX THE PROBLEM
1. Use the HotlinkHR Employee Hotline
2. Use the HotlinkHR HR Advice Hotline
3. Talk to the E...
Contact Information
www.kpaonline.com
bross@kpaonline.com
866-356-1735
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The Top Ten Reasons Dealerships Get Sued By Employees

  1. 1. Lawsuits Waiting To Happen John Boggs Fine, Boggs & Perkins LLP March 8, 2012 The Top Ten Reasons Dealerships Get Sued By Employees
  2. 2. Speakers Moderator Presenter Becky Ross Marketing Manager 303-228-8753 bross@kpaonline.com John P. Boggs, Esq. Fine, Boggs & Perkins LLP 650-712-8908 jboggs@employerlawyers.com
  3. 3. 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
  4. 4. Lawsuits Waiting To Happen: The Top Ten Reasons Dealerships Get Sued By Employees
  5. 5. REASON NO. 1 HIRING THE WALKING LAWSUIT
  6. 6. Through Forced Function The only way to WIN THE BATTLE is to follow a standardized step-by-step process Application Interview Conditional Offer Drugand/or Background Screening New Hire Packet Company Policies & Training FIND QUALITY EMPLOYEES ELIMINATE THE “WALKING LAWSUIT” Bullet-Proof Your Employment Practices
  7. 7. APPLICATION Application
  8. 8. 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
  9. 9. REASON NO. 2 DOING THE TYPICAL INTERVIEW (Worthless)
  10. 10. INTERVIEW Interview
  11. 11. 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!
  12. 12. HIRING IS LIKE COURTING FOR MARRIAGE The interviewer concludes, ―Well, he/she is not perfect, but I’ll train him after I hire him.‖
  13. 13. 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.
  14. 14. VELVET HAMMER INTERVIEW • LISTEN! • STOP TALKING • ASK OPEN ENDED QUESTIONS • DON’T ASK ILLEGAL QUESTIONS
  15. 15. 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?
  16. 16. 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!
  17. 17. •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: Interview
  18. 18. REASON NO. 3 FAILING TO MAKE EXPECTATIONS CLEAR BEFORE EMPLOYMENT BEGINS
  19. 19. CONDITIONAL OFFER Conditional Offer
  20. 20. Is it UNLAWFUL to obtain a drug screen BEFORE extending an offer to hire? False Hiring Promises Eliminated CONDITIONAL OFFER
  21. 21. REASON NO. 4 DON’T BOTHER TO DO DRUG TESTING AND BACKGROUND SEARCHES
  22. 22. DRUG AND BACKGROUND SCREENING Drugand/or Background Screening
  23. 23. 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
  24. 24. Background Screening Background checks require: 1. Initial written authorization 2. Proper legal disclosures and info 3. Opportunity to get a copy of report 4. Intent not to hire and copy of report and federal and state disclosures 5. Final rejection letter $10,000.00 per violation minimum penalty
  25. 25. REASON NO. 5 HAVING INADEQUATE NEW HIRE PAPERWORK
  26. 26. NEW HIRE PACKET New Hire Packet
  27. 27.  Employment Agreements
  28. 28. REASON NO. 6 FAILING TO DO NEW HIRE TRAINING
  29. 29. COMPANY POLICIES AND TRAINING Company Policies & Training
  30. 30. 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 TRAINING
  31. 31. Policies Posters Training The law requires that dealerships take reasonable steps to prevent harassment Reasonable steps means: Anti-Harassment Training
  32. 32. REASON NO. 7 FAILURE TO FOLLOW GOOD WAGE/HOUR RECORD KEEPING PRACTICES
  33. 33. MEAL BREAKS & REST PERIODS #1 Basis for Wage/Hour Suits Against Dealers 30 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
  34. 34. 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.
  35. 35. 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
  36. 36. COMPENSATION PRIMER: THE BASICS Fine $100/$200 per Pay Period per Person fine Problem Areas Lunch Periods for Sales, F&I, Service Writers Record Keeping Accurate record of hours worked each day/week and amounts paid and deducted
  37. 37. 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.
  38. 38. PAID VACATION No Use it or Lose It Maximum Accrual is Okay PTO treated like Vacation PAID HOLIDAYS Be Careful On Floating Holidays PAID SICK LEAVE A Good Thing for Salaried Managers
  39. 39. REASON NO. 8 HASTY DISCIPLINARY DECISIONS
  40. 40. 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
  41. 41. 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? Legal Liability Checklist
  42. 42. 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.) Legal Liability Checklist
  43. 43. 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. Legal Liability Checklist
  44. 44. 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.) Legal Liability Checklist
  45. 45. 6. Have you disciplined others for this same general rule violation or performance deficiency? Legal Liability Checklist
  46. 46. 7. Has the level of discipline imposed been substantially the same for the same violation or performance deficiency for other employees? Legal Liability Checklist
  47. 47. 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? Legal Liability Checklist
  48. 48. 9. Have you given different levels of discipline to different employees for the same general rule violation or performance deficiency? Legal Liability Checklist
  49. 49. 10. Do you plan to terminate the employee? Legal Liability Checklist
  50. 50. REASON NO. 9 LOSE THE BATTLE OF THE WITS ON CALIFORNIA LEAVE AND DISABILITY LAWS
  51. 51. TYPICAL 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)
  52. 52. 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.
  53. 53. 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.
  54. 54. FMLA vs. CFRA Under FMLA, pregnancy is a serious health condition Under CFRA, pregnancy is not a serious health condition.
  55. 55. 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.
  56. 56. 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.
  57. 57. 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.
  58. 58. 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.
  59. 59. 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
  60. 60. REASON NO. 10 IGNORE PROBLEMS UNTIL THEY BOIL OVER
  61. 61. ACT FAST AND FIX THE PROBLEM 1. Use the HotlinkHR Employee Hotline 2. Use the HotlinkHR HR Advice Hotline 3. Talk to the Employee 4. Talk to Witnesses 5. Make a decision 6. Follow-up with the Employee
  62. 62. Contact Information www.kpaonline.com bross@kpaonline.com 866-356-1735

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