Address the Causes of Personnel Claims

In the last decade, the obligations of human resource professionals – those in charge of employee issues – have mushroomed. Your dealership probably has coped with this by assigning office staff to deal with these issues. The demands can be dizzying.

You are properly concerned with personnel lawsuits. They are expensive to defend, particularly if federal agencies such as the Equal Employment Opportunity Commission became involved. You should have a program that is designed to protect against employee lawsuits. In developing a program, dealers should give attention to those things that lead to problems. Here are some tips that you should consider to lower your chance of becoming a defendant in a personnel lawsuit.

  • Do background checks. The most common source of lawsuits are employees who are “bad hires”. Do what you can to protect against bad hires. Checking references and contacting past employers is the most basic protection. Dealer personnel sometimes dismiss this because many past employers will only confirm the person’s employment and time on the job. However, even that sort of information is valuable. If you find that an employee has skipped a significant time period in reporting past employment, that can be important. And you may find a past employer willing to be candid, especially if you have the applicant sign a document releasing prior employers from liability for providing candid responses to background questions. Beyond these steps, consider criminal background checks. In many states, the government licensing agency will perform a criminal background check for positions that require a sales license. However, how about those employees who don’t require a license where trust is critical, such as cashiers or others handling funds and confidential data? And don’t forget about driving records since many employees will be driving your cars.
  • Have updated applicant and new employee materials. The laws are changing rapidly. When was the last time you reviewed your applicant forms packet? Your new employee packet? Your personnel handbook?

  • Make sure all personnel documents are completed. It does not help if you have up to date applicant and new hire packets if the forms are not properly completed. Have in place a checklist for those responsible for employee records to make sure all forms are completed and signed before an employee is put on the payroll.

  • Make sure your senior staff understand your personnel handbook. It is one thing to adopt a personnel handbook and make sure it is updated. It is something else entirely to make sure that those in charge of recruiting, hiring, disciplining and firing know your personnel policies. Take the time to train those with managerial authority on your policies.
  • Make sure all job actions are well documented. Too often, we encounter cases involving employee terminations where the dealer claims the employee has been counseled repeatedly on unsatisfactory performance. Yet the personnel file is pristine – no record of disciplinary notices, no notes about counseling, perhaps even a glowing review. If an employee’s performance is below par and you discuss it with the employee, make a record.

  • Terminate employees properly. Donald Trump popularized the phrase, “you’re fired”, but just saying it and expecting everything to turn out all right is not the best way of terminating an employee. Review an employee’s performance before taking action for job effectiveness. Investigate thoroughly and be sure your action is consistent with prior discipline for a policy violation. If you must fire an employee, do it with another manager present. Determine beforehand how you will explain the termination. You do not owe an employee a detailed legal brief of reasons, but a succinct explanation of why the employee’s performance was unsatisfactory or the policy breach was serious to the point of termination is important. Make a record of your decision-making and actions in the employee’s personnel file.

  • Always recruit. Many problems arise in car dealerships because dealers must get a backside into a chair when a vacancy develops, the most common reason for “bad hires”. It helps if the dealer has list of qualified individuals to contact in the event of a job opening. Constantly recruit new applicants. Hand out business cards, even think of having an employment brochure you and your managers can use to recruit individuals. Build a list of employment suspects to turn into prospects when the need arises.