Scandal Alert

Scandal Alert Scandal Alert The same kind of fallout from recent NCAA scandals can occur in business. Employers must be alert and cautious.

By Leslie L. Hunt
Decker Jones, P.C.

In big-bucks deals, greed and even a sense of entitlement can be the basis for gifts of everything from steak and whiskey, to escorts, to sports cars, to envelopes stuffed with cash. Scenarios like this go viral when an FBI investigation becomes publicized or the NCAA assess sanctions.

Recent federal charges implicate an Adidas’ marketing director, four assistant coaches at NCAA Division I programs and several others in college basketball. The Louisville men’s basketball coach, Rick Pitino, lost his job in the fallout.

The same kind of thing can occur in the business world, where careers can be derailed. When businesses get in hot water, some will survive, but others are forced to close. Employers must be diligent when it comes to employee management issues.

Ten mistakes employers can make:

1. Misclassification of employees as exempt from overtime when they aren’t. Because an employee is paid a salary doesn’t mean he/she is exempt. Many exemptions are not black and white, and chances are good that you have misclassified employees. A business can have multiple claims for improper classification, and plaintiffs’ lawyers are eager to pursue violations of the Fair Labor Standards Act. Remedies typically include double recovery of wages plus attorney’s fees.

2. Not having a policy prohibiting working overtime without prior, written approval. Some employers will benefit from a policy prohibiting overtime without prior, written approval. This means employees are not permitted to work more than 40 hours per week without permission.

3. Having blanket rules for employee background checks and inquiries about criminal history. If a business does, it is asking for trouble. Such a policy can have a discriminatory effect and be disliked by regulatory agencies. Policies should be reviewed by an employment attorney to ensure they relate to the job position and are not overly broad. 

4. Asking improper questions or too many about medical-related issues. Have you asked the interviewee if he/she is married? Do you ask employees for unnecessary details about medical matters? Every improper question increases the possibility of a lawsuit.   

5. Failure to keep up with hours worked for all employees. Whether an employee is exempt or non-exempt from overtime pay, employers are required to keep up with hours worked.

6. Not understanding the concept of respondent superior. Business owners can be liable for an employee’s conduct, even if he/she didn’t do anything wrong.

7. Not training managers on basic employment law such as what to do when someone reports discrimination or sexual harassment in the workplace.

8. Failure to properly investigate and document poor performance, bad attitude, or complaints by co-workers.

9. Not knowing what laws apply to your business. If you have 15 or more employees, you must comply with the Americans With Disabilities Act. It’s tricky. Seek counsel.

10. Paying severance to an employee without getting anything in return. The law does not generally require payment of a severance benefit regardless of the number of years worked. If you choose to offer a severance, be sure to get a release of claims from the departing employee.