Avoid Being Sued
Business Trends

A Used Car Dealer’s Top 5 Ways to Avoid Being Sued

Here are the Top 5 Ways to Get Sued by Your Employees

Reason # 1: Bad Hiring Practices often lead to hiring claims and discrimination lawsuits. Dealers need to pay careful attention to who they hire and that important agreements are put into place in the application itself that are legally vetted and protect the dealer.

The application content should include drug testing consent, an understanding that all employment agreements are “At-Will” which allows the dealer to fire at will, an arbitration clause, termination for dishonesty which has long been the scourge of the auto remarketing, and a stated shelf-life of the application.

Although marijuana use is on the increase and medical marijuana is legal in California, Proposition 64 still allows an employer to enforce a drug-free workplace and the Fed still considers pot a schedule 1 drug and employers need not accommodate any employee who smokes weed for any reason.

Reason #2: Not Getting Paid will most likely get a dealer sued. A dealer needs to pay strict attention to wage/hour issues. Keeping strict attention to the time an employee puts in is a crucial stop-gap in preventing lawsuits. It’s important to note that even salaried employees are qualified for overtime pay unless they meet a certain exempt status such as being highly compensated, an executive, an administrative professional, legal professional etc. If a salaried person does some clerical work, it can jeopardize their exempt status.

Employees must be paid for all hours they work at all times, even working lunches, “unauthorized” overtime, and “pre” or “post” work tasks. We have a time clock app we use in my company which accurately tracks everyone’s hours throughout the day and logs breaks and lunches as well. “Off the clock” issues need to be addressed as do work at home, training and meeting times to avoid potential legal action. It cannot be stressed enough to review time cards on a regular basis and all issues immediately addressed to keep from being problematic.

Strict adherence to rest periods and meal periods will also help prevent any possible issues moving forward with litigious employees and aggressive lawyers looking to cash in on your oversights.

Reason #3: Blowing Off Complaints can be a huge mistake, especially complaints regarding harassment and discrimination. A dealer needs to have procedures in place to to prevent or respond to such complaints. Response needs to be rapid and well-documented covering all Federal, State, and Local mandates. A comprehensive “Harassment” policy needs to be implemented that includes examples, proper terminology, and guarantee of confidentiality.

Reason #4: Termination when a health issue arises. Employers who can an employee because he or she can’t do their job are in dangerous legal territory. Employers must give medical leave to protected employees via the Americans With Disabilities Act and the Family and Medical Leave Act . The FMLA requires an employer to give up to 12 weeks of leave time for a serious health condition.

Reason #5: Promising a Job for Life is really stupid. Employers are protected by the “At-Will” doctrine which means they can let an employee go without a reason. Layoffs are a prime example of this doctrine in use. This does not mean that employees can be axed for any reason. Having an employee handbook that copiously lists reasons for termination, rules of employment and includes acknowledgement of receipt of the handbook and understanding of its contents is important. If an employee is in the termination zone or has done something wrong, an employer should have the ability to do a proper write up so the employee not only signs the write up but has a clear understanding of the issues in the document.

Although there are more issues that can potentially pop up between dealers and their employees, most can be mitigated by having the right policies put in place and followed in a consistent manner. Dealers are frequently the targets of frivolous lawsuits by predatory lawyers and unhappy customers. The last thing they need is one of their very own employees suing them.

I strongly suggest getting in touch with Ms. Sandberg or a lawyer well-versed in setting businesses up with the kind of best practices we have touched on in this blog. An ounce of prevention is worth a pound of cure.

Kelly Kleinman

Content Manager/Dealership News


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