Business Viewpoint: Big legal risks lurk for small employers
BY CHRIS THRUTCHLEY Business Viewspoint
Thursday, January 03, 2013
1/03/13 at 3:36 AM
On Nov. 26, the U.S. Supreme Court heard oral argument in Vance v. Ball State University, a case of major significance for employers.
The court, in a decision expected early this year, will decide who is a "supervisor" for purposes of holding an employer strictly liable for acts of unlawful harassment. It could expand the scope and risk of liability that employers face for the harassing behavior of its employees who are supervisors.
The decision has even greater significance for small Oklahoma employers. Here's why.
Until recently, federal and state law immunized small employers (those with fewer than 15 employees) from liability for claims of harassment, discrimination or retaliation. Lawmakers did not turn a blind eye to discrimination. Rather, as the U.S. Supreme Court observed, they meant to "spare very small firms from the potentially crushing expense of mastering the intricacies of the anti-discrimination laws, establishing procedures to assure compliance, and defending against suits when efforts at compliance fail."
While federal courts have upheld the constitutionality of the small business exclusion, the Oklahoma Supreme Court disagreed. In so doing, it exposed all small Oklahoma businesses to the "potentially crushing expense" of harassment, discrimination and retaliation claims.
According to the Equal Employment Opportunity Commission, the average cost for an employer to resolve just one claim exceeded $235,000. Making matters worse, the federal agency also reported that the number of claims filed in 2010 and 2011 hit historic highs, and the trend continued in 2012.
In response to the Oklahoma Supreme Court's ruling, the Legislature amended the Oklahoma Anti-Discrimination Act. On whole, the changes were helpful, but the Legislature left small businesses exposed to liability.
The Legislature tried to help by limiting the damages an employer may be forced to pay. Now, employers can no longer be held liable for unlimited emotional distress damages or punitive damages. That's certainly good news. But upon careful analysis, it's nothing to get excited about. Small employers can still be held liable for staggering amounts of "back pay," "liquidated damages" and attorneys' fees.
As is clear, the Legislature's "limitation" on damages still leaves small employers exposed to "potentially crushing" liabilities. And the limitation may not survive the Oklahoma Supreme Court's review. According to a well-known plaintiff's employment lawyer in Oklahoma City, several plaintiffs have already filed suit, challenging the legality of the limit on damages.
What should Oklahoma employers do to protect themselves? Without question, the best defense is a good, proactive, cost-effective offense. While many employers have policies prohibiting harassment, discrimination and retaliation, court decisions make clear that policies alone are simply not enough. A good offense includes training owners, managers and supervisors at all levels not only to understand the seriousness of the legal issues but also to learn best practices and pragmatic strategies for managing daily employment relationships in a manner that will help them avoid catastrophic employment disputes.
Our firm, for instance, offers in-house training for employers, annual workshops and a special monthly training session for smaller employers called "Training for the Trenches." It covers such things as what constitutes unlawful harassment and what owners, managers and supervisors should do to prevent harassment from occurring, as well as how to effectively and properly respond to issues of potential harassment.
To be sure, the cost of years' worth of regular training is minuscule compared to the high cost of a single suit. The risks are simply too great to bury one's head in the sand and hope for the best.
Original Print Headline: Big legal risks lurk for small employers
Chris Thrutchley is a lawyer with Doerner Saunders Daniel & Anderson LLP. He has served as chairman of the Oklahoma Bar Association's Labor & Employment Law Section, vice president of Legal and Legislative Affairs for the Tulsa Area HR Association, and vice president of the Tulsa EEO Coordinator's Association.
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