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8 Ways for Employers to Avoid Getting Sued in 2016

Are You Going to Roll the Dice in 2016, Or ...
"8 Ways for Employers to Proactively Avoid Getting Sued in 2016"

As a business owner, the beginning of the New Year is the perfect time to implement your resolutions for growing your business, retaining valued employees, and minimizing legal risk (like avoiding lawsuits from employees and lawsuits or audits from government agencies like the U.S. or State Departments of Labor).

Here are just eight (8) of the many ways to be proactive in 2016 to minimize the risk of legal trouble in your workplace in 2016:

  1. Update your employee handbook.The start of the New Year is an opportune time to review your employee handbook and policies to ensure they reflect recent legal developments and any operational changes. Having a current employee handbook is a fundamental, necessary tool in minimizing legal risk. New York has recently added new legally protected categories and you will want to include those in the handbook, including policies on reasonable accommodation of pregnancy (and in NYC, reasonable accommodation for pregnancy, childbirth and related medical conditions, and those undergoing a gender transition). You may also want to review your electronic communications policies to make sure you are properly protecting your business and assets from cybercrime and other risks, and you will want to review that policy and others to ensure they do not run afoul of the National Labor Relations Board's ("NLRB") recent rulings.

    As you may know, the NLRB recently found employers--even non-union employers-- guilty of violating the National Labor Relations Act by having unlawful handbook policies, including policies on social media, electronic communications/use of email, workplace audio/video- recordings, standards of employee conduct, media relations, at-will disclaimer, and confidentiality, among other standard handbook policies. Additionally, under New York Labor Law Section 194, effective January 19, 2016, employers may not prohibit employees from inquiring about, discussing or revealing compensation, a topic that you may want to address in your handbook or managers' training. (Employees covered under the NLRA already enjoy that protection).

  2. Conduct trainings for managers and employees on preventing sexual harassment and other unlawful discrimination, harassment, and retaliation. One of the wisest investments you can make in your business and employees this year is to train your managers and employees on:

    Employers should train their managers on what recent law requires with respect to reasonable accommodation of pregnancy, disability, religion and if located in New York City, what the law requires with respect to reasonable accommodation of pregnancy, childbirth and related medical conditions, disability, individuals undergoing a gender transition, and religion. You may save your business literally millions of dollars by investing in an effective training program for a fraction of what a litigation would cost you. Last year, a jury awarded more than $17 million to female employees in a sexual harassment and retaliation lawsuit brought by the U.S. Equal Employment Opportunity Commission against an employer. See: The New York City Commission on Human Rights can impose civil penalties up to $125,000 for violations of NYC's Human Rights Law, and up to $250,000 for willful violations, in addition to other legal remedies like back and front pay, and compensatory and punitive damages. This is, of course, in addition to any remedies under federal and State anti-discrimination laws for violation of those laws.

    • your policies prohibiting workplace discrimination, sexual and other unlawful harassment and retaliation (including in NYC, discrimination based on actual or perceived gender identity/transgender discrimination);
    • what the laws require, and
    • your policies for reporting instances of discrimination, sexual and other unlawful harassment, and retaliation for complaining about discrimination, and for requesting reasonable accommodation for pregnancy, childbirth and related medical conditions, disabilities, religious observance/practices, and individuals undergoing a gender transition.
  3. Review your pay practices and workplace labor postings.

    Employers should review their current pay practices and workplace postings to ensure they reflect any State minimum wage increases and other legal developments.

    • Gender Equity Laws. Are you paying your female employees fairly? New York and California have recently passed gender pay-equity laws prohibiting employers from paying women less than men for performing the same work. New York's law takes effect on January 19, 2016. Specifically, New York Labor Law Sec. 194 (1) will prohibit an employee from being paid a lower wage than another employee of the opposite sex "working in the same establishment, when they perform equal work in a job that requires equal skill, effort, and responsibility, and that is performed under similar working conditions." The amendment to New York's Labor Law also increases penalties for unpaid wages from 100% of wages due to 300% of wages due where the failure to pay is willful.

      In consultation with your employment counsel (to preserve any privileges) when conducting a self-audit of your pay practices, review each position to ensure that men and women performing the same work are being paid equally. What's more, effective January 19, 2016, employees who sue for sex discrimination and win may recover their attorneys' fees under New York State's Human Rights Law. (Note that disparate pay based on sex is a form of sex discrimination). Previously, plaintiffs could not recover their attorneys' fees under New York's Human Rights Law. Additionally, in New York now, even if you employ just one employee, you can be sued for sex harassment.

    • Increases to state minimum wages. Many States, including New York, have recently raised their State minimum wage (New York's minimum wage is currently $9/hr. and $10.50/hour for "fast food" workers). Make sure your required labor postings are up-to-date.

    • Paid Sick Leave. Employers with 5 or more employees in New York City must provide paid sick leave and written notice of the right to paid sick leave upon hire. Many other jurisdictions outside of New York City also require paid sick leave. Confer with your employment counsel regarding all of the requirements of the law (there are many) and coverage and ensure your sick leave and attendance policies comply with New York City's Earned Sick Leave Act. Failure to comply with the law can result in large monetary penalties for employers.

    • Pre-Tax Transit Benefits for NYC Employers. As you may know, New York City employers with 20 or more full-time employees must provide pre-tax transit benefits to their employees, effective January 1, 2016.

  4. Update employment agreements. When was the last time you reviewed the employment agreements for your high-level executives? It may be time to take a fresh look at the agreements to ensure they are current and reflect legal developments.

  5. Review hiring documents and practices in light of "ban-the-box" laws and laws prohibiting inquiries into credit history. New York City joins other cities like Philadelphia, Portland, and other States like New Jersey and Oregon, in enacting "ban-the-box" legislation which, in New York City, prohibits covered employers from inquiring about a job applicant's criminal history until after a job offer has been extended. New York City also recently passed a law prohibiting covered employers from inquiring about a job applicant's credit history at any time, with limited exceptions. Employers should review and update their employment applications and hiring documents, practices and policies, accordingly, to ensure compliance with laws in their jurisdiction.

    These laws are in addition to already existing laws like the federal Fair Credit Reporting Act ("FCRA") and sometimes also State Fair Credit Reporting Act laws—as in New York State—that require employers who use third parties to conduct criminal background checks to adhere to certain procedural requirements and practices, or face liability and monetary damages. Currently, there are several multi-million dollar class action lawsuits pending against employers for allegedly violating the federal FCRA.

  6. Update Job Descriptions and Review Worker Classifications. As an employer in this changing economy, you may be looking for ways to do more with more limited resources. This sometimes means revamping job functions to have employees take on more work, consolidating positions and the like. It is imperative to regularly review and-- where needed-- update your job descriptions. Why?

    This trend in both government enforcement in worker misclassification and wage/hour litigation is expected to continue—if not grow-- in 2016. Employers with unpaid interns, trainees or volunteers, should also beware. Confer with your employment counsel to ensure all workers are properly classified and properly paid.

    • Exempt vs. Non-Exempt. Because employers continue to face multi-million dollar lawsuits challenging their classification of workers as "exempt" from overtime pay laws when those workers may, in fact, based on their salary and job duties, be "nonexempt" from overtime pay laws, and thus, entitled to overtime pay.
    • Independent Contractors. Both the New York State and the U.S. Departments of Labor continue to aggressively pursue employers of all sizes that have allegedly misclassified employees as "independent contractors " and there are currently plenty of class and collective action lawsuits to go around against employers regarding such alleged misclassifications.
  7. Consider conducting an internal audit of your FormI-9s. FormI-9Employment Eligibility Verification Form is used by employers to verify that employees are authorized to work in the US and to comply with the prohibition under the Immigration and Nationality Act of 1952 (INA) on knowingly hiring unauthorized workers. The penalties for non-compliance with the Form I-9 form or even for completing the form incorrectly can be staggering since each section of the Form I-9 completed incorrectly can bring a separate penalty ranging from $110 per error up to tens of thousands of dollars. A few years ago, ICE fined a New Jersey clothing manufacturer $625,000 for employing illegal aliens. Additionally, employers may face jail time for employing illegal aliens. One former restaurant owner was sentenced to three years in prison for employing illegal aliens, following an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

    In light of the legal risks, you may want to consider conducting a self-audit of your Form I-9s. Employers typically conduct Form I-9 self-audits to assess whether their completion, updating, and storing of Form I-9 complies with the INA. On December 14, 2015, the DOJ's Civil Rights Division and the Department of Homeland Security (DHS) ICE division announced they had jointly issued guidance for employers conducting internal audits of their Form I-9 Employment Eligibility Verification Form program. The joint guidance is intended to ensure that employers conduct Form I-9 audits properly and accurately, and do not discriminate or retaliate against their employees; and create barriers to employment for work-authorized individuals. It may be wise to confer with your employment counsel and/or immigration counsel if you plan to conduct such a self-audit.

  8. Restrictive covenants. More than ever, employers must take proactive steps to protect their trade secrets, confidential information, and the goodwill they have built with their clients. Ensure you have enforceable confidentiality agreements, non-solicitation or non-compete agreements, and have taken clear, proactive steps to protect your company's assets and trade secrets. Confer with your employment counsel regarding best practices for doing so.

As Ben Franklin wisely cautioned: "An ounce of prevention is worth a pound of cure." Don't "roll the dice" this year. Instead, be proactive in 2016 in protecting your business assets, retaining employees, and minimizing legal risk.

Lisa M. Brauner, Esq., is an employment law partner in the Employment, Employee Benefits, Executive Compensation and Immigration Law group at the law firm of FisherBroyles LLP., 212.580.5279 or 347.695.0025.

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