Sunday, August 22, 1999
ENTREPRENEURS
Employee lawsuits increasing
BY JOHN ECKBERG
The Cincinnati Enquirer
Getting sued by an employee is one of the last things an entrepreneur considers when starting up a new business.
After all, a company with a handful of employees working for a common economic goal — a paycheck — does not have the same veneer as the workplace climate at a multinational megopoly with thousands of employees.
But a recent survey of human relations managers indicates that being the target of an employee's lawsuit should be a top consideration of any start-up firm — maybe the first consideration.
The survey by the Society for Human Resource Management managers found that 53 percent of the managers' companies have been named as defendants in at least one employment-related lawsuit with nine of 10 from former employees. Another 37 percent of the companies reponding to the survey were sued by a current employee, while 8 percent were sued by unsuccessful candidates for employment.
In other words — watch out.
“I can tell you this, that labor employment litigation is the fastest growing areas of practice at Dinsmore,” said George Wilkinson, partner at the law firm Dinsmore & Shohl. “There isn't any question about it.”
Michael S. Glassman, also a partner who has 23 years of experience defending companies, said the stakes are high for large and small firms. “With smaller companies, it may be even more important because of all that is at risk.”
He advises companies to regularly review policy statements and procedures and provide frequent training for supervisors and managers. A paper trail of negative performance reviews really doesn't matter either. One client, he said, received a summary judgment in a federal court. But then he had to fight the former employee through a federal appeals court even though the company was able to produce years of documentation showing the worker was a slacker.
The litigation trend may be occurring, in part, because employees no longer feel loyalty to employers, said Paul E. Fiorelli, professor of Legal Studies at Xavier University. Baby Boomers differ from their parents because abiding loyalty has gone the way of the phonograph.
“Boomers' parents had tolerance. They expected to be there for their whole life,” he said. “With the new work force, employees expect to work for up to eight employers so it's not shocking that they will be quicker to jump to the trigger (of a lawsuit). They don't have any expectation of working there their whole life.”
Local business owners packed a recent seminar at the Goering Center for Family & Private Business at the University of Cincinnati.
“There are subtle things somebody may not even realize they are doing that could end up in a lawsuit,” said W. Kent Lutz, director of the center. “The issue has a tremendous impact on our members.”
One option for businesses is to buy insurance. But that can be pricey, Mr. Glassman said, beyond the reach of some small firms. “These cases are always time-consuming and expensive to defend,” he said.
John Eckberg covers small-business news for The Enquirer. Have a small-business question, concern or quandary? Call him at 768-8386 or e-mail him at jeckberg@enquirer.com, and he will find the expert with the answers.
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