Wednesday, November 5, 2008

Another Cost of Litigiation: A Bad REputation

I suggest every business owner read all of's Lawsuit Side Effect: A Bad Reputation but here are some highlights

The seven-, eight- and even nine-figure jury awards and settlements paid out by employers in lunch-break-related wage and hour lawsuits are only one part of the cost, experts warn.

They say highly publicized allegations of employee mistreatment can tarnish a company’s reputation with consumers, damage its employment brand and diminish the company’s value in the eyes of investors.

"The reputational risk is real," says Tim Smith, senior vice president of Walden Asset Management, a Boston-based firm that specializes in sustainable, socially responsible investments. "A company that doesn’t deal with the public directly isn’t as vulnerable, but for a consumer-
oriented outfit like a big retailer, these sorts of charges can be troubling."

Some of the consumer-brand damage may be self-inflicted; experts say that employees unhappy over what they perceive as unfair treatment are less likely to provide good customer service. "That ill feeling becomes part of your image," says labor law attorney Reuben Guttman, who is representing meatpacking plant workers in a wage and hour suit against Tyson Foods.
E-mails, Phone Calls and Wage & Hour Problems |
While a search of the Nexis database failed to turn up any instances so far of wage and hour lawsuits hinging upon Blackberry use, employment law specialists seem to think it’s inevitable, given both the proliferation of such devices and the clarity of the law on the issue.

"Nonexempt employees are being tethered to the company with Blackberrys and other devices," says Dan McCoy, an employment attorney and partner in the Mountain View, California, office of law firm Fenwick & West. If a worker gets a message from the boss or a client during breakfast or dinner and answers it, that counts as work time, just as surely as if the employee had come in early to the office or stayed late. "Blackberry time is work time," he says.

Similarly, an hourly worker who participates in a conference call during the drive home is on the clock, if his boss requires him to participate or doesn’t stop him from joining in, according to Robin Bond, the managing partner of Transition Strategies, a law firm based in Wayne, Pennsylvania.

Paul Lopez, director of the labor and employment practice at the firm of Tripp Scott in Fort Lauderdale Florida, advises companies to move proactively to protect themselves from overtime claims and possible lawsuits related to electronic devices.

The first step is to establish a clear policy on the use of Blackberrys and other devices outside the office, he says. Employees should be told that overtime spent using such devices must be documented, with possible disciplinary penalties for noncompliance.

However, a company should be careful not to state categorically that it will refuse to pay improperly documented overtime, Lopez explains.

"A lot of clients come to me and say, ‘I don’t have to pay this employee overtime, because they violated the overtime policy,’ " Lopez explains. "My response, is, ‘Eeehh, that’s not quite true.’ You can discipline them or fire them, but under the law, technically, you have to pay them. You don’t want to promulgate a policy that will lead to an FLSA complaint."

The burden of proof in overtime litigation rests primarily upon the employer, so it’s critical to have an effective system for documenting work done with electronic devices, Lopez says. One simple method is to require employees to copy any mail messages they send to their supervisor, as well as any spreadsheets, reports or other documents that they work on outside the office.