This column is my final contribution to the Informed Employer as I look forward to retirement at the end of the year after 43 years with Ice Miller. This is an appropriate occasion to provide a few nuggets of advice and predictions for the future.
1. I'll start with how to use your employment counsel and legal fees (the latter is often the elephant in the room). One prediction I can make with 100-percent certainty is that hourly legal rates will not go down. So, you need to be a smart legal consumer. One way to do that is to ensure that your employment counsel is positioned to provide you with efficient, effective, and targeted advice. That means making sure that your counsel has a solid understanding of your culture and your objectives before providing advice to you. Invite them to your workplace and let them spend a few hours there, meeting people and seeing how things work. This is an investment your counsel should be willing to make at no charge. It's an invaluable experience and allows us to better advise you. On the subject of legal fees, many clients over the years worked with me on a monthly retainer basis. Financially and otherwise, they came out better than if they had paid my hourly rate. Plus, the advantages are many: a more predictable legal budget; the ability to call for advice without being charged for every single conversation; and allowing your counsel to assist your HR team to become more effective in handling employment issues. I encourage you to explore that kind of billing relationship with your employment counsel.
2. I've been asked many times by clients to provide examples of policies or template agreements. Even when I provide them, I caution that there is no one-size-fits-all, whether you are talking about how one handles employee performance or misconduct issues, or in adopting new HR policies. Templates have inherent limitations. For example, you can reduce your initial legal spend if you purchase an employment contract or other employment-related document from any number of online companies. In the world of employment law, however, that's usually a huge mistake. Those documents are generic and may not be tailored to your (or the employee's) state, and they do not necessarily fit your organization's culture or the particular circumstances with which you are dealing. They may even be unenforceable if the author failed to make changes due to court decisions or legislative developments (that's why you see the small-print disclaimer with the online purchased document).
3. Civil rights laws will continue to expand the protections and remedies provided to employees at local, state, and federal levels. The list of legally protected categories will grow. I also predict increased litigation from individuals of Hispanic origin as they experience their own glass ceiling, just as women, African-Americans, other persons of color, and individuals with disabilities are experiencing now. According to the DOL, by 2024, Hispanic employees will constitute 20 percent of the U.S. labor force. They are projected to account for 78 percent of new workers in the next eight years. The number of American workers who qualify as "disabled" under the ADA has dramatically risen. Depending on the source, estimates are that either one in five, or one in six, Americans take some kind of prescription medication for a mental condition or disorder. "Stress" in the workplace will increasingly become a worker's compensation and ADA issue. Your organization must adopt a sincere and clearly communicated "How can I help you?" attitude if an individual with a medical condition requests an accommodation or when it's apparent that one is needed. Compliance with the ADA isn't difficult, and when employers fall short, it's often due to inadequate communication with employees or failing to adopt a helpful attitude.
4. Non-compete, confidentiality, and non-solicitation agreements will be increasingly restricted by state laws and possibly by federal legislation or agency rulemaking. One example is the enactment of new laws that require employers to provide job candidates with a copy of any non-compete agreement they are required to sign as a condition of employment. If you require employees to sign these types of agreements, it is money well spent to have the agreements reviewed by your employment counsel on a regular basis. The laws in this area do change and you don't want to find yourself trying to defend an outdated and unenforceable agreement. These agreements should be reviewed by your counsel at least every couple of years.
5. Union organizing is on the rise and you should prepare for it. Everything is cyclical, whether it's the economy, the weather, or union popularity. Too many people prematurely predicted the demise of U.S. labor unions. Don't expect unions to disappear. They are getting smarter and have become more appealing to younger workers. Acknowledge that your management team needs specific training to avoid the traps that make you vulnerable to union organizing and that can lead to unfair labor practice charges. I'll bet that if you took a poll of your managers and supervisors, most if not all of them have no experience with unions. This is one of the reasons training in this area is needed now.
6. I have defended countless employers in connection with claims made against them by employees. Most employers want to do the right thing. Unfortunately, many employers suffer litigation because they fell short in how they communicated with or treated individual employees. Poor or inadequate communication or treating employees disrespectfully leads to distrust, misunderstandings, discrimination charges, and lawsuits. A college degree (or a law or medical degree for that matter) does not prepare anyone to manage others. This is learned from experience and it's another area where management training is critical.
7. Don't be afraid to cut your losses with employees who do not perform satisfactorily or who engage in unacceptable conduct. Too often I have heard employers remorsefully say, "I should have terminated him/her/them when . . ." I agree that people deserve a second chance, and I am a firm believer that many individuals can benefit from effective executive coaching. However, once you lose confidence in an employee and you conclude that performance or conduct isn't likely to improve, or that executive coaching is not appropriate or has not worked, you should think quickly about cutting your losses. I understand that the current environment makes it difficult to find qualified individuals to fill job openings. I also know that no one enjoys an employment termination meeting. But tolerating an unsatisfactory employee and the costs of potential litigation will be exponentially more costly in the long run to your organization.
8. Wage-hour state and federal law compliance is absolutely essential and should receive your highest attention now. Just as I suggest that you regularly review your non-compete and other agreements, you should sit down with your employment counsel and walk them through your entire compensation system, pay practices, and policies. It's just too easy for employers to make an honest and inadvertent mistake in this area, and the legal rules can be counterintuitive. This has become low-hanging fruit for plaintiffs' lawyers because many employers are not compliant (plus, the federal law requires an award of attorneys' fees and costs to successful plaintiffs). For these reasons, the number of wage-hour lawsuits that are filed or threatened will continue to increase. In addition, states regularly enact new wage-hour laws and pay standards, and you must stay on top of those so that you don't fall into expensive and wide-open traps.
9. Within the next 10 years, or even sooner, I am confident that most organizations will have a presence in the metaverse and this will have an impact on employee relations that will not be universally positive. Your employees will interact with one another, and with clients, customers, and vendors in this digital space. We have already seen employees allege harassment by co-workers for conduct occurring in the metaverse. I also predict that the increasing reliance on artificial intelligence will lead to more employment litigation as the human element diminishes in importance with regard to employment decision-making. There will be companies that will allow software programs and their algorithms to drive hiring, compensation, promotion, and other decisions, and that is going to create more legal risk for employers. If your defense in employment litigation is that "Web3.0" made the decision not to hire a job candidate or to terminate an employee, you should make sure you have solid employment practices liability insurance coverage.
10. Appreciate what your HR team does. I include this because I have spoken to many CEOs who have very little respect for their HR department. Not only that, but they express this opinion behind closed doors and sometimes openly to others within and outside of the organization. Some executives consider HR as their internal law enforcement department, rather than treating HR team members as the strategic and tactical experts they are. In reviewing the company balance sheet, some C-suite executives consider HR to be an expensive and unnecessary drain on the bottom line. However, your HR team, often working with your employment counsel, will save your organizational rear end . . . and they will do it more than once. Don't forget this when you consider or speak about the economic and overall contribution of HR or when you place a value on that contribution.
If you have any questions or you would like to follow up on any of my advice or predictions, please feel free to contact your employment counsel at Ice Miller. Finally, I sincerely wish all of you the best of success, and I extend to you my most heartfelt thanks for allowing me the opportunity to be your partner for more than four decades.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.