The most fundamental issues are often the ones that get employers in trouble with the law. The following tips, provided by John K. Skousen and Christopher J. Boman, partners with the law firm of Fisher & Phillips LLP, cover key areas that can help employers create fair work environments and stay out of the courtroom:

1. Employee handbooks. There are several misinterpretations about the purpose of handbooks, according to Skousen and Boman. Some items absolutely have to be included, such as meal and rest periods, to ensure employees are aware of the rules and expectations. Without an employee handbook, it’s difficult to prove a policy was in place and understood by the staff.
2. Compensation plans. Every employee who begins work for an employer has an implied contract for compensation, and employers must share what their rate is before they start working. Such written policies are usually put in employee compensation plans, which detail specific information that must be in writing for them to be binding. In particular, companies operating with sales positions or other roles where commission or bonuses may be offered must have compensation plans presented to employees. According to the experts, this is as important as the job application, but is often overlooked. Employers also must ensure modifications to compensation plans are in writing, and that employees understand that oral agreements are not valid.
3. Job applications. Applications are often outdated, asking questions that could trigger liability for employers. For example, if a high school diploma is an essential qualification for a position, in order to avoid a possible age discrimination claim, employers should ask candidates whether or not they graduated from high school instead of asking when they graduated. Perhaps more importantly, many companies don’t require applications and instead opt for resume submissions — which are advocacy pieces in comparison to applications. With a well-drafted application, employers elicit “just the facts.” In addition, applications allow employers to obtain approval to conduct various background checks. It’s also important that employers obtain a signature and affirmation from the applicant confirming that the information is accurate and complete. Doing so may provide grounds for termination if applicants misrepresent themselves. Finally, employers should ensure the information submitted by the applicant is verified, consistently conducting background checks for every applicant to ensure discrimination claims are avoided. Finally, employment applications and a well-executed pre-hire due diligence program will help prevent and defend against claims for negligent hiring and negligent retention.
4. Arbitration agreements. Skousen and Boman advise employers to utilize a binding arbitration agreement as part of their employee handbook and personnel policies — and note that arbitration agreements are necessary for all candidates, not just those who are actually hired at the company. For example, some applicants may claim that they were not hired due to alleged discrimination. Including an arbitration provision in all job applications ensure that those who are not hired by the company will have to arbitrate claims for “failure to hire.” While some states like California require the employer to pay for the arbitration, it remains a smart strategy for companies and could save big bucks in some instances.
5. Performance evaluations. Despite packed schedules, if employers don’t conduct performance reviews when they’re supposed to be done or skip them altogether, it will be difficult to terminate problem employees when there’s a lack of notice regarding issues that need to be improved, or if there are inconsistent patterns of providing performance evaluations (which could be perceived as a bias). Performance evaluations can also prove helpful in preventing misclassification claims.
6. Exit interviews. If a company conducts exit interviews, it needs to ensure that they are done every time a staff member leaves the organization. Aside from providing information about the industry and market conditions, exit interviews can help companies defend a lawsuit if a disgruntled employee decides to sue. Specifically, if a departing employee signs an exit interview document saying everything was fine, it will be difficult for him to claim otherwise in support of a later lawsuit.
7. Timekeeping. It’s the employer’s obligation to track hours worked, and these records are imperative to an employer’s compliance with wage and hour laws. Employers should document employees’ meal and rest periods in writing each day, including when they were taken, how long they lasted, whether they were waived and, if so, why they were waived. Additionally, at the end of every pay period, the total hours worked for each employee should be verified. One prominent problem facing companies is employees refusing to take their meal periods. Employers must monitor those situations and ensure employees are taking and documenting the proper breaks to avoid class action lawsuits that can reach millions of dollars in settlements. Know your state’s meal/rest period requirements, as they differ state to state. “Stolen” hours from manipulated time cards is outright theft, and dishonest employees will take advantage if employers are not watchful. Create documents that are irrefutable in court, and be fair and respectful to your staff.
8. State and federal wage/hour laws. Although both state and federal wage/hour laws are operating simultaneously, the most favorable one to the employee always applies. Employers must understand the interaction between state and federal laws, and know when to refer to the appropriate rules. For example, there are exemptions from overtime under federal law that don’t apply to certain states that may have stricter exemption requirements. Both federal and state law may apply depending on the situation and locality. Companies could be sued for federal law in one state, and sued for the same thing elsewhere under a state law. Companies also could be sued in one court (state or federal court) for violations of both state and federal law.
9. Termination. Many companies, in an attempt to save money, don’t seek the proper legal advice when terminating employees. One of the biggest mistakes employers make is to involve legal counsel after an employee has already been terminated. Sometimes it may just be a five-minute phone call to the qualified legal expert that saves the company from a lawsuit. Even at-will employment has its risks with termination. Specifically, an employer should document the reasons for the employee’s termination. For example, if the employer simply states “at will employment,” the employee can state whatever unlawful reason he or she wants.

Source:  Fisher & Phillips LLP; http://www.laborlawyers.com.