FIVE FATAL ERRORS COMMITTED BY BUSINESSES

By Albert G. Marquis, Esq.

I have been practicing law for 28 years. During that time, I have seen business owners making the same mistakes over and over and over, that end up costing thousands or millions of dollars. The most unfortunate aspect is that these mistakes were avoidable. They generally fall into five categories: Deficient employment manuals; inadequate corporate records; incomplete contracts; inadequate insurance; and no buy-sell agreement. Today we discuss the dangers of an inadequate employment manual. If that sounds dry, consider the alternative: Hiring a law firm to defend your company in federal court.

Many Nevada employers are misled by the fact that Nevada is an at-will employment state. “At-will” does in fact mean that an employee can basically be terminated for any reason at any time EXCEPT for a prohibited reason such as race, sex, national origin, age, etc. This is a big “except”. In fact, everyone falls within the exception except white males under 40.

Many Nevada employers compound the error by assuming that only bigots get sued for discrimination. In truth, any employer may face a discrimination claim whenever they discharge someone in a protected class. Furthermore, even if there was no intent to discriminate, the employer may be liable because its employment manual is inadequate or employees were treated inconsistently.

More than ever before, employees know their rights. Every individual in a protected class knows that he or she can file a claim with the Nevada Equal Rights Commission and pursue a lawsuit in federal court for discrimination. They also know that the employer may be liable even if there were just grounds for termination. Right or wrong, it means you have to defend yourself. Lawyers. Depositions. Monthly invoices. (Now aren't you glad you read further?)

To protect itself, the business must ensure that it has a comprehensive employment manual and that it adheres to that manual. If employees are treated differently, either because there is no policy within the manual or because the employer fails to follow the manual, the groundwork is being laid for a discrimination suit.

Suppose, for example, a “MPC” (member of a protected class) is given two weeks vacation but a non-MPC is given three weeks. Or suppose an MPC is denied sick leave but a non-MPC is granted sick leave. Or suppose an MPC is fired because they are routinely late to work, but a non-MPC, who is also routinely late, is not fired? Each of these factual situations establishes a prima facia case of discrimination--meaning that the burden shifts to the employer to prove that it lacked a discriminatory intent--virtually an impossible burden. Therefore, the employer loses.

Consider another scenario: A supervisor, unbeknownst to the board of directors, has been harassing a female employee. If the employer does not expressly prohibit such conduct in the manual and does not provide a method by which the affected employee can seek redress, then the employer is liable--whether it knew about the misconduct or not.

These are simply a couple of the reasons why every business needs a comprehensive employment manual. You might say: “Well, I've never had a manual, and I've never been sued.” My response is that you can also run across the road several times without being hit by a car, but your past experience does not justify the future risk. If a business continues on with no manual or with an inadequate manual, it is courting disaster. Why take the chance?

If you do not have an employment manual, I just so happen to know where you can get one. If you have such a manual but are not sure whether it is up-to-date and legally sound, send us a copy and we will review it free of charge . What do you have to lose?