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Every year, I read the Jury Award, Trends, and Statistics report on employment law published by Jury Verdict Research. I used this report during my litigation career to help position cases for settlement purposes.

Because it takes a long time to gather these statistics, the report doesn’t appear until October of the following year. The good news: JVR reported that the median compensatory award in employment practices cases dropped from $285,000 in 2008 to $253,000 in 2009 (the second highest level ever recorded). There has been an upward trend in EPL verdicts since 2003. Although the median award was $253,000, the mean award came $753,332. Here are some other statistics from the report:

• The highest average EPL award between 2003 and 2009 was for retaliation, coming in at $245,500. The second highest average verdict was for wrongful termination at $232,500.
• Approximately 37% of the cases result in a verdict between $100,000 and $500,000.
• In 2009, 24% of the cases had a jury verdict of $1 million or more.
• The highest average compensatory verdicts came against government entities, with manufacturing/industrial companies coming in second place. Transportation firms had the lowest average verdict.
• Between 2003 and 2009, the most common claims for discrimination involved sex (35%), race (25%), disability (15%), age (13%), and other (12%). Age and disability cases had the highest median awards, both more than $250,000. Sex and race cases averaged approximately $200,000.
• As has been the case every year, state court verdicts are dramatically higher than those in federal courts. This is one reason why plaintiffs’ attorneys prefer to try their cases in state court.
• When it comes to the recovery probability for employment practices liability, employers received a break: Employees won 58% of their cases, down from 60% in 2008.

You can order a copy of this report from Jury Verdict Research for approximately $40 by going to www.lrp.com or calling (800) 341-7874.

The DFEH has released a summary of the cases filed in 2008-2009. The breakout of claims is similar to those filed nationwide. As you can see, disability and retaliation claims are the two biggest areas of concern. The second tier of exposures includes age, race, and sexual harassment claims. Here’s the question: No matter where you are, are you using HR That Works proactively to help avoid these claims?

Employers often believe that they need a certain type of person to do a certain job because of physical requirements, client demands, privacy reasons, and tradition. Understand this: Any such discrimination will come under judicial scrutiny unless there’s a high level of correlation between gender, race, or nationality and the ability to perform job functions. For example, a 9th Circuit opinion held that a women’s correctional facility could not limit its correctional employees to females in an effort to reduce sexual abuse in the environment. On the other hand, it’s hard to argue that an employer doesn’t have the right to hire whom they want to as their next bikini model.

Bottom Line:

Be prepared to prove your BFOQ, as well as any efforts you’ve made to mitigate the situation. For example, if employees have to lift a 200-pound box once a day, and this imposes a disparate impact on women, a reasonable alternative would be to not have anybody without the ability to lift those boxes. Our members continue to be plagued with questions such as, “Can I only hire Chinese waiters for my Chinese restaurant?” (Answer: No. As another article in this newsletter stated, customer preference cannot override discrimination laws.) “Can I hire only English-speaking employees at my hotel, even if they have limited customer interaction?” (Answer: Probably not.)

If you’re not sure, contact the HR That Works Hotline.

At the end of September 2010 – and with little fanfare – the Department of Homeland Security and Immigration and Customs Enforcement (ICE) announced settlement of an enforcement action against Abercrombie & Fitch, the nationwide clothing retailer. This settlement is remarkable for several reasons.

The settlement amount is $1,047,110, which is an enormous monetary penalty in today’s economy. More shocking is the fact that this penalty is for paperwork violations only. There are no allegations that Abercrombie & Fitch employed illegal workers or otherwise violated immigration law. Instead, this penalty is solely for improper completion of I-9 forms.

The settlement results from a compliance audit initiated in November 2008. It’s common for ICE to take two years or more to conclude an I-9 paperwork audit.

The second surprise about this settlement is that the I-9 inspection involved the clothing retailer’s Michigan stores, and is apparently not the result of a nationwide compliance audit. The ICE press release states that the company “was fully cooperative during the investigation and no instances of the knowing hire of unauthorized aliens were discovered.” If that is the case, the agreed-upon penalty either reflects an enormous number of violations or very severe fines per violation.

Third, the violations uncovered during the inspection involved “numerous technology-related deficiencies in Abercrombie & Fitch’s electronic I-9 verification system.” This suggests that the company’s I-9 software vendor was negligent and failed to confirm that its software system achieved proper I-9 compliance or that the company was poorly trained in implementing and administering the electronic I-9 compliance program. In either case, this settlement serves as a wake-up call to all employers using electronic verification systems: Make certain the system ensures proper I-9 compliance and that you are using it correctly.

Even employers that don’t use electronic I-9 compliance systems should note the heavy fines imposed because of this investigation. The ICE press release confirms that the agency has implemented a new, comprehensive strategy to audit and investigate employers, and that this effort has resulted in a record number of civil and criminal penalties against employers. Now is the time to ensure that your compliance will survive an ICE investigation!

To obtain the free 14-step self-audit checklist, click here.

Article courtesy of Worklaw® Network firm Elarbee Thompson (www.elarbeethompson.com).

The June 2010 issue of INC Magazine featured an excellent article entitled “Learning from the Best,” by Lee Buchanan, which discusses strategies from the Top Small Company Workplaces winners and finalists. Here’s a brief summary of the article’s recommendations:

1. Engage in open-book management. No surprise there. I’ve been preaching this ever since Jack Stack published his Great Game of Business. We had an excellent Webinar on open-book management presented by Coach George from the Great Game of Business. According to the article, 83% of these companies practice open-book management. We do here at HR That Works. Everybody knows every number, including what everybody gets paid. When I do my Vistage presentations and ask CEOs using open-book management about their experience during the depth of the recession, they said they were first concerned that it would scare the employees and some would run off; however, just the opposite happened and employees were very glad to have open-book management. If you don’t have it, what are you waiting for?
2. Be flexible. 95% of companies offer flexible work arrangements.
3. Keep learning. In some of the companies, employees provide courses, usually in the evenings, to other employees. For example, the employees at Snag-a-Job teach finance fundamentals 101, HTML Basics, Peer Coaching, Texas Hold ‘Em, Goal Setting, and Women’s Self-Defense. If you’re an HR That Works member, there are more than 70 separate training videos that your regular members or management can watch at any time. Never stop learning.
4. Develop “Level 5” leaders. This term, coined by Jim Collins, talks about Level 5 leaders in terms of humility and inclusion.
5. Focus on orientation. See the Orientation Checklist on HR That Works. Make your orientation process more exciting, motivating, and presented in such a way that instantly builds rapport with new employees, as opposed to the opposite. I also encourage you to use the 60-Day New Employee Survey on HR That Works.
6. Add a little bit of sunshine. Companies help to lessen employees’ stress by allowing them to telecommute, and assist their parents or loved ones even if they’re not obligated to do so by the Family and Medical Leave Act.
7. Think inside out. The top companies focus on building a great culture which, in turn, can deliver great products and services – Southwest Airlines comes to mind. What are your company values? How do you define and celebrate them? How happy are your employees? In our Webinar on Happiness in the Workplace, the presenter offered a free analysis of your happiness level. Go to http://www.iopener.com/report to see how happy you are at work. I couldn’t be happier to say that my employees and I all scored very high on this index.
8. Help maintain employee health. Many small companies are entrepreneur driven. In my experience, if the CEO is a health nut, then so is the rest of the workplace. Savvy companies bring in ergonomics and wellness to help employees. Whether it’s concierge services, healthy lunches, or a wellness day off, there’s no substitute for a healthy workforce.
9. Finally, you can change a toxic workplace. In his book How to Turn Around a Toxic Workplace, Jeffrey Pfeiffer states that you can turn around a toxic workplace in four ways: 1) Let people make decisions, 2) Share the economic results either through profit-sharing or gain-sharing, 3) Share information, and 4) Invest in people. Sounds like a great summary of the article!

I’m an environmentalist. I’ve even hugged a few trees, but I don’t claim that they’ve talked back to me. I’ve also sat on environmental non-profit boards and ran a non-profit environmental agency. That was the three-year environmental phase of my career. Then I had to start making money again. But during this period I learned that companies can have a significant impact on the environment — and that HR and a volunteer team can spearhead this effort. Here are some basic guidelines that you can consider:

• Consider telecommuting – Do employees really have to spend the time, energy, and money to drive to work every day or can they be more effective working from home or from remote offices?
• Go paperless – I’m impressed by how many insurance agencies I work with have gone paperless.
• Encourage carpooling and public transportation – You might even help pay for some of the gas.
• Recycle – Paper, glass, and plastic should all be recycled. Take one good look at a local shoreline and you’ll understand why.
• Beware of indoor air pollution – For many people, the building they work in has more air pollution than any other environment. Indoor air inspections can help prevent sick days and attendant non-productivity.
• Turn off the lights and computers – I’m amazed at how many building keep the lights on at night, and you know the cleaning crew isn’t there any longer. Turn off your lights and turn off your computers.
• Think in terms of sustainability – Although this is a broader objective, focus on how you can manufacture things or deliver services in a way that produces less of an environmental impact. For example, I can do a webinar rather than flying across the country to speak.
• Finally, encourage employees to offer green suggestions – Perhaps it’s a rooftop garden, organic lunches, or supporting a local environmental cause.

Going green is important to all of us. Our current ways are unsustainable. Fact is, HR can make a green difference.

Medical Examinations. Requiring an employee to undergo a fitness for duty examination (FFDE) does not violate the Americans with Disabilities Act, if the employer has an objective, legitimate basis to doubt the employee’s ability to perform his or her duties. Under the ADA, an employer may require an employee to undergo medical testing only where the testing is job related and consistent with business necessity. In Brownfield v. City of Yakima, a police officer argued that the City violated the ADA by requiring an FFDE, after he had engaged in a number of emotional outbursts, without showing that his job performance had actually suffered due to any health problems. The Court disagreed, finding that requiring a “preemptive” medical examination may be permissible under the ADA. It cautioned, however, that the standard for establishing the validity of such a requirement is quite high – the employee’s behavior cannot be “merely annoying or inefficient to justify an examination; rather, there must be genuine reason to doubt whether that employee can perform job-related functions.”

The court ruled that The City of Yakima had a legitimate basis to doubt the plaintiff’s ability to perform the duties of a police officer. In coming to its conclusion, it used these words, which everyone should remember:

“We agree … that prophylactic psychological examinations can sometimes satisfy the business necessity standard, particularly when the employee is engaged in dangerous work. However, we must be keen to guard against the potential for employer abuse of such exams … Employers are prohibited from using medical exams as a pretext to harass employees or to fish for non-work-related issues and the attendant ‘unwanted exposure of the employee’s disability’ and the stigma it may carry … An employee’s behavior cannot be merely annoying or ineffective to justify an examination; rather, there must be genuine reason to doubt whether that employee can perform job-related functions.”

This case reassures employers that sending an employee for a fitness for duty examination will not violate the ADA if the employer has a reasonable belief that the employee is not capable of performing his job. Of course, the ADA’s requirement that a medical examination be consistent with business necessity is an objective one and the employer bears the burden of demonstrating this business necessity.

Religious Accommodation. The U.S. Court of Appeals for the Third Circuit held that a prison that prohibited female Muslim employees from wearing religious head coverings called khimars did not violate Title VII’s religious accommodation obligations. Under Title VII, an employer must provide accommodation for an employee’s religious beliefs and needs unless the accommodation would pose an undue burden to the employer. In EEOC v. The GEO Group, Inc., the Court credited the employer’s identified safety and security risks associated with the wearing of head coverings in prison: Smuggling of contraband, interference with identification of the wearer, and the potential use of the head covering as a strangulation weapon. This case demonstrates that an employer’s position in refusing a religious accommodation is stronger where significant safety concerns exist.

NLRB Decisions. The Supreme Court ruled that the National Labor Relations Board was not authorized to issue decisions during the more than two years that three of its five seats were vacant. The NLRB has compiled a list of the 595 decisions issued by the two-member Board. Most of the cases were already closed under the Board processes or are at some point in compliance proceedings; the remaining open cases were returned to the Board for reconsideration by at least three members. The Board has just begun to issue rulings on those cases.

Courtesy of Shaw Rosenthal (www.shawe.com).

You just might be lucky enough to hire or manage employees that want to help improve the company. How you handle their ideas greatly impacts the future of your relationship. Mishandle this conversation, and you’ll pay the price. Here are some approaches that won’t burn bridges:

• Sounds interesting; keep talking so I understand this better.
• Where did this idea take root? Anyone else involved? What got you to this point?
• How will this help the company meet its vision, mission or goals?
• What assumptions are you making and how do they factor into your idea?
• Why are you so excited about it?
• If it worked the way you envision, what would it look like?
• If we were to pursue this idea further, what would be the next step?
• What needs to change if this is going to work?
• What impact can it have on the bottom line?
• I like it. How would you like to fill out this Great Idea Form so we can study the idea further?