By Sheryl L. Johnson
While some top 10 lists have a humorous topic, this one does not. This top 10 list draws your attention to the 10 most common employer mistakes so that your organization can avoid the costly consequences of “getting it wrong.”
10) Not providing adequate management and supervisory training
Promoting from within is commendable and has many business benefits. One of these benefits is that it is less expensive than hiring externally. However, such cost savings can be quickly lost with expensive mistakes accruing where employers fail to provide leadership training to newly appointed supervisors and managers. Being a supervisor or manager, particularly of your former colleagues, is not a skill that comes naturally to all.
New supervisors and managers need to:
(i) be provided with knowledge of their legal obligations, basic human resources tools and etiquette as well as standards of professionalism; and
(ii) understand that their words and actions, including their inactions, can result in costly employment outcomes. The insufficiently trained charged with performance reviews, applying discipline and setting schedules are apt to engage in costly errors that result in lower morale and job satisfaction, increased absenteeism and turnover as well as exposure to constructive and other wrongful dismissal damages, human rights applications and union applications for certification.
9) Failing to properly administer a termination
Many inadvertent or administrative mistakes made at the time of termination can result in increased potential liability for employers. One way is by creating perceptions of unfairness that increase the odds and grounds of litigation or can lead to unwanted public criticism on social media and rating websites. This can be accomplished by failing to provide vacation pay on termination pay or other entitlements under the Employment Standards Act, 2000 (the “Act”) in a timely manner. Another is by not understanding employees’ entitlements upon termination. For example, deciding not to continue disability benefit insurance during an employee’s statutory and common law notice period can be a very risky decision where there is no severance agreement because if the employee becomes totally disabled in this timeframe, the employer will be liable to provide to the employee the equivalent of the benefits that would have been received from the insurer under the terms of the plan until the employee no longer qualifies.Employers mistakenly overlook the cooperative process necessary to comply with the their legal obligations under the Human Rights Code (the “Code”).
8) Failing to properly deal with workplace harassment issues
Timely, fair, unbiased and complete investigations are critical for employers to:
(i) determine the existence or extent of any alleged harassment and measures necessary to appropriately address the harassment and its impact as well as prevent future occurrences;
(ii) ensure compliance with their legal obligations under employment statutes and the common law; and
(iii) avoid increasingly negative ramifications such as:
(a) decreased morale and productivity together with increased absenteeism, employee disengagement and turnover; and
(b) costly court awards.
Recent awards include: (i) $98,000 for an “inexcusable” delay that lead to an “improper investigation”; (ii) $410,000, including $110,000 in punitive damages awards and 20 weeks’ salary, where there was a failure to investigate and “reprehensible” employer actions; and (iii) $734,095 (plus agreed upon 12 months’ wrongful dismissal damages) for “reprehensible” employer conduct in conducting an investigation post-employment to try to establish cause for termination.
7) Not treating requests for accommodation as good faith requests
Employers mistakenly overlook the cooperative process necessary to comply with the their legal obligations under the Human Rights Code (the “Code”). Employers need to: (i) ask whether an employee’s request for accommodation establishes an actual undue burden for it, which is difficult legally to establish; and (ii) canvass: (a) internally what can be done; and (b) of the requesting employee details of their individual circumstances, when considering requests for accommodation. Employers who outright deny a request for accommodation without engaging in the cooperative process or who require employees to self-accommodate face increased costs and liabilities of human rights applications or constructive dismissal claims with a human rights component. In a recent human rights decision, an employee was awarded $420,000 in back wages where the employer failed to adequately accommodate its employee.
6) Offering an inadequate severance package
Employers can increase their potential liability and the odds of litigation by increasing the “upside” of litigation through either: (i) not knowing what components should be factored into creating a reasonable severance offer; or (ii) not offering adequate compensation so as to constitute a reasonable severance offer. A reasonable offer includes in addition to a reasonable notice period adequate compensation for outstanding “wages” as defined by the Act (i.e., overtime, bonuses, incentive pay, commissions and vacation pay – including vacation pay on outstanding incentive pay). Given the combined effect if increased public knowledge and use of contingency fee retainer agreements, gone are the days of offering to pay pennies on the dollar for outstanding “wages,” ignoring or overlooking all outstanding “wages” or low-balling notice entitlements.
5) Failing to check references and engage in other pre-employment screening
It is prudent for every employer to conduct pre-employment screening; however this task is so infrequently done, notwithstanding new means and tools available to quickly and efficiently accomplish it, leaving valuable sources of information untapped. Failing to do so increases employer exposure to unnecessary recruitment, training, severance and legal costs where the employee is not a good fit. Examples of untapped resources are: (i) verifying resume information and authenticity of degrees, certificates and licenses; (ii) Google searches; (iii) public profiles to ascertain an applicant’s public image, character or personality (e.g., LinkedIn); and (iv) conducting, where appropriate, criminal background or police checks (i.e., where vulnerable persons are involved (e.g., children and the elderly.Standardized policies and procedures assist with filling the gap between employment contracts and employer expectations.
4) Not properly applying employment policies and procedures
Standardized policies and procedures assist with filling the gap between employment contracts and employer expectations. Having such policies is not enough. Employers need to: (i) provide them to their employees; (ii) ensure employees sign off that they agree they have received and both understand and will be bound by them – at their outset and upon any amendments or updates being made; (iii) apply their policies consistently; and (iv) audit and update their policies to make sure they are: (a) working to accomplish the desired outcomes; and (b) are compliant with employers’ evolving statutory and common law requirements.
3) Not having employment contracts
Employment contracts govern the basic terms and conditions of employment and can reduce an employer’s liability at the time of termination in relation to such matters as severance and competition. While an employer may think it has an enforceable employment contract in place, there will none where: (i) the employer provides a promotion or other significant change to an employee’s terms and conditions of employment without first implementing an updated or amending the employment agreement; (ii) the employee does not sign the employment contract before starting work; (iii) an employee is misclassified as an independent contractor; and (iv) the employer is unaware of the law and/or changes to it.
2) Having void termination, restrictive covenant and other clauses
Employers – despite the plethora of recent employment cases – have employment contracts in place that are unenforceable in relation to important but outdated or never enforceable terms and conditions. This is often the result of: (i) using old, outdated or poor precedents; and (ii) not tailoring the clauses to the employee or the employer’s business that the employee was involved in. This results in the loss of application of valuable cost saving clauses and the incurring of additional legal fees to negotiate enforceable terms or a severance package.
1) Not knowing the law
Employers fail to educate themselves continuously on their legal obligations. This includes: (i) not being aware of changes in the law or statutory requirements; and (ii) not knowing how to properly apply their legal obligations (e.g., not knowing how to calculate and properly pay statutory overtime, vacation pay or public holiday pay or failing to understand employees’ rights (i.e., compassionate care, bereavement and other statutory leaves) and not updating policies or conducting annual workplace audits as statutorily required).
Sheryl L. Johnson is a partner in the Employment and Labour Law Practice Area at Fogler, Rubinoff LLP.