4 steps to lower the risk of employee lawsuits

Barbara Cusumano and Alison Davis

After years of seeing employers embroiled in costly, lengthy litigation, one thing is clear: Periodic review of policies for compliance with employment laws is essential. Being proactive in the following ways can help you avoid “jumping from the frying pan into the fire” by reducing the risk of litigation and ultimately save your restaurant time, money and headaches.

1. Conduct a wage and hour audit.

Wage and hour lawsuits are soaring, and pay issues are further complicated when owners open restaurants in multiple states and localities, possibly subjecting each restaurant to different laws and regulations. In a fast-paced environment like a restaurant, the technicalities of these complex laws are easily overlooked.

Violations of these laws can subject employers to a smorgasbord of potential liability and expenses, including unpaid wages or overtime, double the amount technically owed to the plaintiff in “liquidated” damages, defense fees and costs, as well as the plaintiff’s attorneys’ fees. Moreover, wage and hour suits typically involve multiple plaintiffs, thereby drastically increasing potential costs.

A wage and hour audit can help an employer determine whether:

* individuals are properly classified as “exempt” employees, “nonexempt” employees, or independent contractors;

* recordkeeping procedures are complete, accurate and properly maintained;

* employees are receiving overtime pay, as well as pay for all time worked (including “waiting time,” working during unpaid meal breaks and working before punching in or after punching out);

* individual managers are following company procedures;

* tip pools or tip credits are being calculated correctly; and

* uniform and pay deduction policies are consistent with local laws.

Additionally, because wage and hour laws are constantly changing, actions that are lawful one year may be outdated the next. The U.S. Department of Labor (“DOL”) recently released proposed regulation changes that, if adopted, could mean certain managers and office workers may no longer qualify as “exempt,” entitling those employees to overtime pay. The DOL has also undertaken an initiative to investigate whether individuals are properly classified as independent contractors, even where no employee complaints have been made. Conducting an internal wage and hour audit can help restaurants comply with wage and hour laws, prepare for the possibility of a DOL investigation, provide a defense against liquidated damages and limit potential liability.

2. Conduct a human resources audit.

A restaurant’s human resources policies and practices are often the first ingredients in in the defense of an employment claim. An audit would help ensure that your company’s employee handbook and other policies and practices comply with applicable laws by examining:

• at-will employment, background check and leave policies

• equal employment opportunity, anti-discrimination, anti-harassment and anti-retaliation policies

• complaint procedures

• employment applications

• performance reviews

• compliance with the Affordable Care Act

• Wage Theft Prevention Act notices

• compliance with the National Labor Relations Board’s 2015 report on handbook policies.

3. Regularly provide anti-harassment training to employees and managers

Mix together a large staff, managers who supervise former coworkers, a fast-paced environment, close quarters, smartphones and social media, and you have a five-star recipe for harassment (and other employment law) claims.

Conducting regular training that teaches your employees what types of behavior are impermissible, what to do if they encounter unwelcome conduct and that your company is serious about preventing inappropriate behavior can help reduce the risk of claims of unlawful harassment.  Furthermore, teaching employees about your company’s harassment and discrimination policies and complaint procedures can provide a defense to certain harassment claims and help to limit your financial exposure.  Providing training on investigation procedures to your HR staff or managers who are charged with investigating complaints provides additional protection against these dangerous claims.

4. Address common employment issues occurring in restaurants.

With hazards like hot stoves, swinging doors and the weight of bulk pantry items, few industries involve such a high risk of injury—and the need to be familiar with the Occupational Safety and Health Act and workers’ compensation laws—as the restaurant business   An employment lawyer can help your restaurant understand its responsibilities under those laws, as well as issues involving immigration, accessibility specifications under the Americans with Disabilities Act and whether corporate owners may be liable for the actions of franchise owners and the working conditions at individual restaurants.

In the restaurant business, innovators who are able to foresee the next food trend and stay one step ahead of the game are often the ones who are rewarded. Applying this principle by anticipating potential legal risks and asking an employment attorney to address them head-on can go a long way towards minimizing legal expenses and potential liability. By being proactive, you can save time and money down the line and, instead, focus on perfecting the next hot dish.

Barbara Cusumano is an associate and Alison Davis is the office managing shareholder in the Washington, DC office of Littler Mendelson, the world’s largest employment and labor law practice representing management.