Seven Tips to Avoid Legal Trouble with Employees

All owners will have to deal with a problem employee at some point, no matter how carefully they hire employees or how diligently they try to create a good work environment. For many owners, deciding whether and how to discipline or fire an employee is one of the most stressful parts of the job.

“Owners can't afford to ignore or mishandle employment problems, since a botched employment situation can be costly if it turns into a lawsuit,” says Manhattan attorney Jonathan Weinberger, an employment law expert. Lawsuits brought by former employees are increasingly common and costly. And the time spent dealing with problem employees can reduce productivity and affect your bottom line.

Having a second-rate building staff can lead to damage to your buildings, unnecessary violations, and angry tenants withholding rent. With the help of Weinberger, we have put together seven tips for avoiding legal trouble when dealing with or terminating employees, and we will discuss each one following the list.

• Give regular performance evaluations;

• Adopt and follow sound policies;

• Keep good records;

• Take action when necessary;

• Make fair job-related decisions;

• Allow open communication with employees; and

• Be discreet.

1. Give Regular Performance Evaluations

A performance evaluation is your early warning system for employment problems, and—in case you wind up in court—your proof that you acted reasonably. In the worst cases, evaluations can be valuable proof in a lawsuit, illustrating that you put a poor performer on notice and gave him a chance to improve. In the best situations, evaluations can motivate a poor performer to turn into a valued worker.

An effective evaluation system can help you identify and reward good employees, thereby fostering loyalty and providing motivation. And it reduces the risk of complaints and litigation by ensuring that employees feel that they are treated fairly.

2. Adopt and Follow Sound Policies

An employee handbook is an indispensable workplace tool that can help you communicate with and manage your staff, and help protect you from lawsuits. Firing an employee may not survive a union arbitration proceeding unless you can prove that your disciplinary standards and procedures were spelled out to both the employees and their union in a handbook.

What you include in your employee manual or handbook will depend on how you run your building. For example, you may insist that your doorman open the door. Or, instead, you may want him to stay behind the lobby desk.

But once you adopt policies, you must follow them. If you bend the rules, your employees will not take them seriously. Apply the same standards of performance and conduct to all of your staff. Employees quickly sour on an employer who plays favorites or punishes scapegoats. Successful discrimination lawsuits start when you treat employees differently even though they are in the same situation.

3. Keep Good Records

If a worker sues you, you will have to not only remember and explain what happened but also prove that your version of the story is accurate. To make your best case, keep careful records of every major employment decision or event for each employee—including evaluations, disciplinary warnings, and reasons for firing.

A written record is especially important if the employee belongs to a union, such as Local 32B-32J of the building service employees. Under the collective bargaining agreement, an owner can fire a union member only for good and just cause. If a contract arbitrator rules that your employee was unjustly discharged, the employee can get reinstated—with back pay. By documenting specific instances of misconduct and poor performance, an owner will have a far better chance of proving just cause for the dismissal.

4. Take Action When Necessary

Once an employment problem comes to your attention, don't hide your head in the sand. Take action quickly, before it turns into a mess.

Start with an oral warning. Give the employee at least one oral warning about any conduct you want stopped. The warning should explain exactly what the employee did or did not do, and why you don't want the misconduct repeated.

If the employee ignores the oral warning and breaks the rules again, give him at least one written warning. Write a letter to the employee, describing the misconduct in general terms, and warn him that if the misconduct continues, further disciplinary action will be taken—including suspension and dismissal, if necessary. In this issue, see our Model Warning Letter: Use Warning Letter if Employee Ignores Oral Warning, for an example of a written warning.

When you give the employee the warning letter, have him sign your copy of the letter to acknowledge that he has received it. Otherwise, at a future arbitration hearing or court date, the employee could deny having gotten it. Also, send copies of the letter to the building service employees union and your realty advisory board, if applicable.

If the employee continues to ignore your warnings and repeats the same misconduct, it is time to fire the employee. In this issue, we give you a Model Termination Letter: Written Statement of the Reasons for Termination, which you can adapt and use to satisfy any written notice requirements.

The Apartment Building Agreement between Local 32BJ of the Service Employees International Union and the Realty Advisory Board on Labor Relations requires owners to give a discharged union employee a discharge letter that must be mailed to the employee within five working days after the discharge date. Be sure to send copies of the discharge letter to the union and to the realty advisory board.

5. Make Fair Job-Related Decisions

Every workplace decision should be guided by job-related criteria—not by an employee's race, sex, or personal life, or by your personal biases. Make sure your decisions are business-related. Not only does this make economic sense, it will also help you avoid lawsuits for discrimination.

As a general rule, you should treat your employees with respect. Employees who are deprived of dignity, who are humiliated or treated in ways that are just plain mean, are more likely to look for revenge through the legal system, and juries are more likely to sympathize with them. For example, if you publicize an employee's personal problems or shame an employee in front of his coworkers for poor performance, you can expect trouble.

6. Allow Open Communication with Employees

Employers get in trouble when they discipline employees who complain of harassment or discrimination. Owners should take action to deal with the problem itself, and not with the employee who brought the problem to your attention.

Adopt an open-door policy and put it into practice. This will help you find out about workplace problems early on, when you can nip them in the bud. And it will show your employees that you value their opinions, an important component of good employee relations.

7. Be Discreet

Loose lips about employee problems are a surefire way to bring the law down upon your head. An employee could sue you for defamation or could haul you into court for causing her emotional distress, for creating a work environment that is hostile toward her, or for poisoning prospective employers against her. The stakes are high, so protect yourself by giving information on a need-to-know basis only.