Negligent retention one of many employment lawsuits on the rise...

[Mel Kleiman]

Here is a link to part of a post I wrote on Retail Wire the other day. It is worth taking the time to log in and see the comments readers posted.

According to Jury Verdicts Research 2007, the fastest growing lawsuits in this country affecting retailers are related to employment law and one of the newest, growing type of case is negligent retention.

• Employee lawsuits have risen 400 percent in the past 20 years to the currently level of 6.5 claims per 1,000 employees annually.
• In any employment case filed in federal court, there is a 16 percent chance the award will exceed $1 million and a 67 percent chance that the award will exceed $100,000 (not including attorney fees).
• The average compensatory award in all federal court employment cases was $493,534 and reflects a 45 percent increase since 2000. (A compensatory award does not include punitive damages or attorney fees.)
• In State courts, compensatory awards are up 39 percent while wrongful termination claims are up 260 percent.
• If an employment lawsuit goes to trial, plaintiffs are more likely to win 67 percent of cases in State court and 63 percent in federal court.
• The cost to settle an employment lawsuit has grown significantly over the last five years, from an average of $130,476 in 2001 to $310,845 in 2006.

These general statistics are sobering and are cause for concern to all employers. Compounding these are recent changes in federal and State laws that affect almost all organizations. In light of these facts, there are a number of safeguards and procedures that management should have in place:

• Make sure you have a structured interviewing and performance appraisal process;
• Make sure all of your managers have had adequate interview training and training on how to deal with difficult employees;
• Make sure you check references and document the answers you get;
• Check for criminal records;
• Drug test prior to hiring and random testing after hiring;
• Investigate and/or take corrective action when any complaint is made about an employee;
• Make sure an employee who does something to jeopardize another employee or customer is removed from the payroll.

I have found the responses to my article so far quite interesting. I did not post it to scare retailers into thinking they could not do anything when they have hired the wrong person or when someone they have hired has for some reason "gone bad." The article was written to say, "Yes, you can do something and here are a couple of my suggestions:"

1. Train every hiring manager how to Hire Tough. The most important decision every manager makes each day is who they allow in the door to take care of their customers and their business.
2. Learn to fail fast. If you hire the wrong person get rid of them fast. The best time to get rid of a new employee is the first time you think about doing it. The longer you keep them the more you owe them.
3. Tell new employees why you hired them, but, more importantly, tell them why you'd fire them. (If you would like a copy of an employee commitment card drop me a note: [e-mail])
4. If your State has Employment at Will you can always fire the person. But make sure you do not give them a reason. The minute you give them a reason, you will have to prove it. You will be responsible for unemployment insurance, but this is cheaper than keeping the wrong employee on board.
5. Teach managers how to have tough conversations with employees and hold them accountable. Our research shows that the number one reason great employees quit is that "A" players do not have to play on "C" teams and great employees quit when the have to carry the weight of poor performers. What this really means is great employees get tired of putting up with managers who do not do their job.

Hope this helps to clarify.