According to the US Department of Labor, the number of suits filed in federal courts concerning employment grievances has grown over 400 percent in the last two decades. In addition, the Equal Employment Opportunity commission has received on average 90,000 discrimination complaints from across the country per year. The expansion of federal and state discrimination laws over the last couple of decades, coupled with recent National Labor Relations Board rulings, have dramatically increased employee rights in the workplace in the United States. As a result, administrative regulatory compliance in the workplace has imposed significant costs on employers. According to a study done by CNA, a large national insurance carrier, almost 75% of all litigation against corporations today involve employment disputes and, of those, over 40% of the claims filed against private employers involve employers between 15 and 100 employees. CNA’s study also indicated that nearly 25% of all litigation in federal courts involves employment disputes, and an even higher percentage in state courts, with the average defense costs (not settlements to employees or verdicts) being $100,000 per claim. Per US Labor statistics, for every dollar given to employees to resolve the dispute, an equal dollar is spent on attorneys. According to the EEOC, the most frequent type of claims involve sexual harassment, race, disability, sex and retaliation. In addition, state and federal wage and hour claims at both an administrative and judicial level has been on a significant rise.
Although not all encompassing, there are certain things employers can do to minimize and/or protect themselves against potential employment law exposures.
- Have legal counsel review corporate employment policies and procedures on a yearly basis.
- Have legal counsel develop an employee manual and related forms which provide written guidance on workplace policies, procedures and rules and provide statutory notices to employees on employment related rights.
- Have legal counsel review all corporate layoffs and/or terminations before they happen.
- Create internal corporate dispute resolutions systems/policies (e.g. open door policies and grievance procedures).
- Using outside mediators during employment disputes.
- Draft and implementing a binding employment arbitration agreement which avoids the court process.
- Utilization of Severance Agreements during permanent layoffs and/or discharges.
- Purchasing of Employment Practices Liability Insurance (“EPLI”) coverage through an insurance agent.
Restrictive Covenant Agreements
Restrictive covenant agreements are a useful tool for any business wanting to protect their interests and assets with current and past employees. These types of agreements commonly involve matters concerning trade secrets, non-disclosure, non-solicitation, confidentiality, and non-competition clauses. Some of these types of agreements are stand alone or are a part of an employment contract or severance package. So long as reasonable, Michigan law allows for non-compete agreements in employment (See Michigan Antitrust Reform Act, MCL 445.774a). In general, restrictive covenant agreements attempt to restrict employees who are currently employed and after a separation of employment from doing something or not doing something that they otherwise may have had a legal right to do. The most common practice of employers is to provide a restrictive covenant agreement at the time of the offer of employment or hire, but, under current Michigan case law, employers can require employees to sign a restrictive covenant agreement after the employee has already been hired. Far too often, employees are too eager to take an offer of employment and/or want to continue their employment with a business and, unfortunately, employees do not spend enough time reviewing these restrictive covenant agreements, and, it’s not until they separate their employment with a business do they realize the quagmire they might be in, especially in cases involving non-competes. Before signing any of these types of agreements, individuals should seek legal counsel for advice. .