When an Employee Becomes a Legal Threat

Dealing with employee issues is a regular part of HR procedure, but sometimes what begins as a regular HR issue can snowball into something that opens the company to potential legal liability. It can be easy to overlook a problem that might become a lawsuit, or alternatively, to escalate an issue that might lead to nothing.

“Rather than trying to read the tea leaves, organizations are much better positioned to recognize developing legal issues when they have good, consistent systems in place,” says Leo Tyree, Senior Counsel at Constangy, Brooks, Smith & Prophete. “That means clear policies, regular policy review and updates, practical training, standard operating procedures where appropriate, good recordkeeping and tracking, and clear responsibilities among management, HR and legal. Everyone should understand what they own and when to escalate.”

Below are four examples of signals that an issue could evolve into a legal liability, whatever it looked like when it landed on your desk.

• The same complaint keeps coming out of one department. Repeat complaints from one team point at a condition rather than an incident.
• A complaint names a protected characteristic. “Under federal anti-discrimination law, protected characteristics include race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), national origin, age (40 and older), disability, and genetic information. State and local laws may protect additional characteristics,” says Tyree. Once race, age, disability, pregnancy, religion or national origin shows up, the company is on notice. “Legal issues can arise from protected activity or other statutory rights, such as reporting discrimination or harassment, requesting an accommodation, taking protected leave, raising certain wage or workplace concerns, or participating in an investigation,” points out Tyree.
• It’s the second complaint about the same manager, even if the first one was resolved. Two complaints can point to a pattern the company knew about.
• A matter you’d normally settle informally turns formal or adversarial. When a category of issue you’ve always handled in a conversation starts arriving in writing, that change is the signal.

Triage is the whole job here. You won’t resolve the complaint in 48 hours and shouldn’t try to, but the decisions you make in that window are crucial.

1. Handle any safety issue first. A credible threat moves ahead of everything else on this list.
2. Get it to the right people, which is not automatically the most senior people. “A credible threat of workplace violence may require immediate involvement from security, facilities, law enforcement, or others responsible for workplace safety,” says Tyree. “A wage-and-hour dispute calls for a very different group, perhaps HR, payroll, legal, or those responsible for timekeeping and compensation. The nature of the problem should determine who is brought into the room.” Depending on the matter, that group can include HR, management, in-house legal, compliance, or outside counsel. Know where the law limits what you can disclose, and to whom.
3. Take everyone named in the complaint out of the response to it. No one implicated gets a hand in how the company answers.
4. Check what the company has already decided. “Don’t assume that because the company has a good process on paper, that process was followed in practice,” says Tyree.
5. Make an initial assessment. What is actually being alleged, what management already knew, and what you hold that supports or contradicts the claim. That sorts what needs attention today from what needs a fuller review.
6. Find out what’s underneath it. Is there a history here, a prior incident, a dispute the complaint is the latest chapter of? You can’t solve a problem you only know one side of.
7. Preserve the evidence now. Before anything routine deletes it. “I would make a distinction between preserving relevant information and issuing a formal litigation hold. I would not say that every employee issue with potential legal implications automatically requires a litigation hold in the first 48 hours,” says Tyree. “Generally, the trigger is when litigation is reasonably anticipated. Sometimes that is obvious, such as when a lawsuit or agency charge has been filed. But the obligation can arise earlier depending on the circumstances, including a demand letter, a threat of litigation, a preservation request, or other facts showing that litigation is reasonably foreseeable.”