If you own a business or are an employer responsible for the wellbeing of any size workforce, lawsuits and business disputes will always be a stressor that you try your best to avoid. You not only have to worry about your brand reputation when a disgruntled employee makes a claim but how it will affect the financial stability of the company that you have worked hard to build. To help you and your facilities steer clear of the hefty fines associated with these lawsuits, we have compiled vital information on 3 of the most common litigation risks for businesses.

Business Litigation Risk #1: ADA Website Lawsuits

When you hear about the Americans with Disabilities Act (ADA), most people assume you are discussing the accessibility of spaces, such as accessible parking spaces, doorways, and bathrooms. However, the latest eruption over ADA compliance comes from customers filing lawsuits against company websites that do not contain the coding that complies with assistive technology. This leaves large corporations and home-based sole proprietors alike vulnerable. Making your website ADA compliant for blind users, deaf users, and those who require further assistance could save you from high-cost penalties.

Case Studies

The legality of ADA compliance on websites discussion began in 2007 when New York federal courts reviewed justifiable class actions against the food industry chain Five Guys, Markett v. Five Guys, No. 17-CV-788 (S.D.N.Y. July 21, 2017), and art retailer, Blick, Andrews v. Blick Art Materials, No. 17-CV-767 (E.D.N.Y. Dec. 21, 2017). The Five Guys’ website allowed customers to place food orders online for delivery or carry-out; however, some features (adding or removing ingredients) were unavailable for use with screen reader devices. Similarly, Blick’s website allowed customers to purchase products online but was also not compatible with screen readers. As a result, blind customers could not access product descriptions or prices. In both cases, the plaintiffs claimed that businesses’ websites were subject to and in violation of the ADA. The two New York courts agreed. 

What’s next

This area of law is evolving. There is currently no federal or state legal requirement in place and the circuits are divided as to whether there should be laws requiring websites to be fully accessible to customers with visual impairments if there is no connection between the website and the brick-and-mortar location. However, what we do know is that the First, Second, and Seventh Circuit agreed with plaintiffs that websites are places of “public accommodation” and the Third, Sixth, Ninth, and Eleventh Circuits required a connection, or “nexus”, between the website and a physical place. To avoid potential litigation and prepare for any upcoming regulations from the current administration, businesses should refer to the Web Content Accessibility Guidelines, an internationally recognized set of principles and techniques, and review their site with this ADA compliance checklist.

Business Litigation Risk #2: Wage & Hour

As always, wage and hour lawsuits are a risk for any company, whether they hire employees or independent contractors. Class actions under the Federal Labor Standards Act (FLSA) and class & representative actions under state laws can lead to staggering costs in terms of damages and penalties. Ensuring proper timekeeping, recordkeeping, and compliance with an ever-evolving body of law is key, especially in states that have laws far more protective of workers than federal law. 

California, for example, has its own restrictive statutes, Wage Orders, which are codified as regulations, and the Private Attorneys General Act (PAGA), under which plaintiffs can seek high penalties on behalf of all employees without the normal constraints of class actions. 

Case Studies 

When retailers require their employees to have their belongings checked on the way out of the store, are they entitled to be paid for that time? The answer can vary by state. In the case of Apple, employees of retail stores in California are required to undergo mandatory bag searches before leaving or they face disciplinary action, including termination. However, employees would be asked to clock out before having their belongings checked. This resulted in the case, Frlekin v. Apple, Inc., 870 F.3d 867. Though Apple contested that they did not require searches if the employee decided to not bring any personal belongings to the store, the California Supreme Court granted the Ninth Circuit Court of Appeals’ request to hold employers accountable for paid wages for the time that employees are on the premises and under their control. This conclusion was influenced by a similar case, Morillion v. Royal Packing Co, 22 Cal. 4th 575. The general question that this case imposed was whether or not employees should be compensated for their travel time to the worksite while using required company transportation. Ultimately, the Court ruled that the time workers spent traveling on the employer’s buses did qualify as “hours worked.” 

What’s Next 

To avoid inadvertently violating the law of the state(s) in which your company does business, it is advisable to hire experienced employment counsel. As a general matter, you must pay your employees for all time worked, ensure all time worked is recorded, provide meal and rest breaks and pay overtime as required by law. These may seem like simple directives, but there is a considerable gray area. In California, employees who feel they have been unlawfully denied wages will take class action by filing a claim with the California Division of Labor Standards Enforcement (DLSE). In these instances, it is important to pay particular attention and retain counsel as the laws for wages are complex and always subject to change. As soon as you receive a PAGA letter or are faced with wage and hourly litigation risks, ensure that you have a detailed process in place that is compliant with paycheck stub reporting and seek legal counsel. 

Business Litigation Risk #3: Sexual Harassment

Last but not least, sexual harassment lawsuits continue to be an ever-present risk for businesses of all types. We’re repeatedly seeing sexual harassment claims within the entertainment and food service industries, especially within breweries, which goes to show that no workplace is exempt from the detrimental effects it can have. The #MeToo Movement has led to a greater awareness of harassment’s pervasiveness, and companies should carefully review and update their harassment and discrimination policies. As soon as a sexual harassment allegation arises, employers need to take the claim seriously by taking immediate action and launching an in-depth investigation.

Since its inception in 1964 as part of the Civil Rights Act and California’s Fair Employment and Housing Act (FEHA), Title VII has continued to evolve to protect employees in a broadening range of scenarios. Given the wide range of conduct violations that have been brought to the surface, it is vital to know all the most recent rulings and to make sure supervisors and employees are receiving the proper prevention training.

Case Studies 

Going as far back as 1976 in the Anita Hill vs. Justice Clarence Thomas case, the Supreme Court and Senate have been asked to take action on harassment claims that involve inappropriate language, discrimination based on sexual and gender orientation, and unwelcome advances in the workplace. In a very recent case (Reeves v. Hologram USA, Inc.), a California jury ruled in favor of the plaintiff, Lauren Reeves, on her claims of battery, sexual battery, and sexual harassment inflicted by her employer, David Alkiviades. The award for this employment case cost Alki David Productions, Inc. $5 million. Another case is the Lusardi v. Dept. of the Army, EEOC Appeal No. 0120133395, which brought the mistreatment of employees based on their gender identity to the forefront. The EEOC stated that the plaintiff was subject to disparate treatment when she was denied use of the female bathrooms after a gender reassignment procedure. The court ruled in favor of Lusardi which has since led to OSHA recommendations to offer single-occupancy restrooms to employees. 

What’s Next 

California legislators are continuously revising legislation that protects and prevents sexual harassment instances in the workplace. One such prominent regulation is Senate Bill 1343. In September 2018, the governor signed into action SB1343 requiring employers with 5 or more employees (inclusive of temporary and seasonal employees) to provide “at least two hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to all nonsupervisory employees” one every two years. The bill has since been recently revised to require training to occur within six months of hire or promotion and to include information on harassment based on sexual orientation, gender identity, and gender expression.

Key Takeaways

The topic of litigation risks may not be new to you, but it can be overwhelming to approach. As any employer should, staying up to date with all of the most important compliances regarding ADA compliance, wage and hour class action, and sexual harassment training will undoubtedly help your operations run smoother. With your business’s financial bottom line at risk, it is wise to seek legal counsel frequently to ensure you are staying compliant. If you need assistance with employment litigation risks, please contact Hackler Flynn & Associates. 

DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.