Category: Business Law Blog

Hostile Work Environments: Uncomfortable for You and Your Employees

As an employer, you probably already know you can’t discriminate in hiring or firing people based on protected characteristics (race, gender, religion, disability, etc.). But you also can’t harass an employee based on those characteristics. If harassment creates a “hostile work environment” you could be legally responsible.

What is a hostile work environment?
A hostile work environment is when the harassment becomes so severe as to interfere with an employee’s ability to do their job. Isolated incidents usually aren’t enough to create a hostile environment. Having a “crappy job” isn’t enough, either, so it can be difficult to make a hostile environment claim.

I would never harass an employee, so I’m clear, right?
Unfortunately no. The Wisconsin Department of Workforce Development (DWD) notes that an employer might be liable for actions of their employees or even customers if the employer knows or should have known of the harassment and didn’t take appropriate action.

If it’s hard to make a successful claim, do I really need to worry?
Yes! Even if you don’t end up being sued, harassment can lead to low employee morale and productivity. It can even affect your reputation in the community (and we know people in the Fox Valley care about a business’ reputation).

So what can I do to protect my business?
Talk with an experienced employment attorney to create fair and workable policies. Then, make sure your employees know the policies and enforce them! Take all claims seriously and address them before they create a hostile work environment. You’ll avoid many problems and have something to fall back on if you do get sued.

You started your business because you enjoy what you do and hopefully your employees feel the same. Setting down some ground rules can protect you and help all employees feel comfortable at work.

Property Exemptions

If you have a judgment against a debtor, there are several options you have to try and collect it. One of those options is execution, or seeking to collect assets of the debtor to satisfy the debt. Unfortunately, Wisconsin has a long list of exemptions—certain assets that you can’t reach as a creditor.

Some of the more common exemptions are:
•The value of the debtor’s home up to $75,000;
•Child support or alimony payments;
•Social security or disability benefits;
•Some business and farm property, some household goods and some savings accounts;
•Retirement benefits; and
•75%, 80% or even 100% of the debtors’ wages (depending on the circumstances).

For some debtors, all of these exemptions might make them “judgment proof”—in other words, there’s nothing left to go after. But for others, it might just take some investigation. For example, the home exemption might mean a debtor’s Appleton house is off-limits but their cottage up near Green Bay is still fair game.

Because execution is complicated and full of these exemptions, it’s never a good idea to tackle it on your own. Always consult an attorney who can help you identify if execution is the best approach for you. This is especially true if the debtor is married—their spouse can claim all of those exemptions as well, making execution even trickier. Your attorney can help you identify what property you can actually reach and how to navigate the process.

Putting a Judgment to Work: Why Docketing Should Be Your Next Step

Winning a judgment against a debtor doesn’t mean you automatically get paid. In rare cases, a debtor may pay the judgment voluntarily (usually just to make it go away). But in most cases, you’ll need to docket your judgment to help you collect.

What is “docketing” a judgment and why should I do it?

Docketing means you formally record your judgment with the court. It creates a lien on any property the debtor owns in that county. In Wisconsin, the lien is good for 10 years.

Where do I docket a judgment?

Because a docketed judgment only creates a lien on property in the county where it was docketed, you should docket the judgment everywhere the debtor has property. For example, if you get a judgment in Outagamie County, the debtor might own a house in Brown County and a cottage in Winnebago County.  Docket the judgment in Outagamie, Brown and Winnebago County.  A business debtor might own a store in Calumet and Outagamie County.  In some cases, you may even need to docket your judgment in another state.

How do I docket a judgment?

Generally, to docket a judgment in the court where you obtained it, you’ll need to file the judgment form and pay a docketing fee. If you’re docketing a judgment in another county, there are additional steps (especially if you’re filing in another state). Unfortunately, even within Outagamie, Brown, Winnebago and Calumet Counties, the process isn’t identical.  Always work with your attorney to make sure you follow the right process.

What happens once I docket a judgment?

You could wait to see if the lien on the debtor’s property is enough—the debtor may pay up to improve their credit rating or in order to sell the property. But in the meantime, you can pursue other options, like garnishment or execution against property.

A court may grant you a judgment, but the court won’t collect it for you. It’s up to you to seek payment, so docket any judgment you have and talk to your attorney about additional enforcement options.

Employment Contracts 101: The Top 5 Things You Need to Know

A written employment contract can be a great way to protect your business. It can lay out your expectations and give you certain rights. But, like any contract, an employment contract is a two-way street that imposes some obligations on you as well. Before you sign up for something you didn’t want, it’s important to understand what employment contracts can do. Here are the top 5 things you need to know about employment contracts:

  1. An employment contract can and should be tailored to your individual business and the employee’s position. Include what’s important to you, like a confidentiality clause or how commissions are calculated.
  2. You can set a specific period of employment (like 3 years) or require an employee to give extra notice (like 90 days) before they quit. But remember: you’re bound to those terms
  3. Along those same lines, some employment contracts limit your right to fire employees withoutThis is especially true if you set a specific period of time for employment, so make sure you know what you’ve agreed to.
  4. 4.Not every employee needs an employment contract. You might need one if you’re offering perks to work for you over a competitor or if the employee would be difficult to.

    And most importantly:

  5. ALWAYS consult an attorney before signing an employment contract. Employment law is complicated and you need someone who fully understands what you need and what you’re potentially agreeing to—they aren’t always the same

Good employment contracts reinforce your rights as an employer and protect your business. But in return they impose some obligations on you. Understanding the basics of employment contracts will help you get the contract you need.

Avoiding Bad Debt: Tips to Help You Get Paid

The easiest, and cheapest, way to collect on a bad debt is to avoid it in the first place. There’s no foolproof way to avoid bad debts, but you can limit them.

  1. Talk to an attorney before you do sales on credit. An experienced attorney can tell you what rights you have if a customer fails to pay and help you draft a sales contract that states your business’s policy on payment (including incentives for early payment), interest calculation, personal guarantees, and recovery of attorneys’ fees for collection. They can also tell you what you can’t do to collect what you’re owed.
  2. Most clients show red flags before they default, like repeated late payments or asking for extensions. Make sure you have a system to spot those flags and address them early.
  3. Contact the customer immediately if their payment is late and stay in contact until you get paid. Be clear with the customer what will happen if they continue to not pay and document any conversations you have, especially the reasons for being late and any payment plan you work out.
  4. Send out invoices promptly and regularly. The longer you give the customer to pay, the more likely it is that they won’t.
  5. Follow through and be consistent. Follow your policies in every case. Stick to the deadlines you set for payment, especially if you negotiate a payment plan with a customer. Even if one client absolutely refuses to pay, future clients will see that you take collections seriously and think twice before failing to pay their bill.

Some customers, unfortunately, can’t or won’t pay their bills. But preventing most of your accounts from becoming problems in the first place will keep you and your business in the black.

Good Employees Gone Bad: What Your Disciplinary Policy Should Do

In an ideal world, you’d never have to discipline an employee. In the real world, though, it’s important to have a disciplinary policy that’s both clear and consistently enforced. A good disciplinary policy can help protect you and your business, especially if discipline results in terminating an employee. When creating a policy, there are several things to keep in mind:

  1. Put it in writing! Your policy should always be written down so that you can refer to it when needed, but also so that employees can read it and have a clear understanding of how it works. Equally important is to show the policy to your employees so they have a chance to read and understand it. That way you can avoid problems that happen just because an employee didn’t know your expectations.
  2. Write your policy with a view towards the process, such as how many warnings you’ll give, who should give them, and how to give them. Don’t try to address specific violations, because you can’t anticipate all of them.
  3. Be consistent with enforcement. Enforcing the policy with only some of your employees is unfair to all of them. Also, if you only enforce the policy sometimes, employees may not know when they’ve actually done something wrong.
  4. Document every step in the employee’s personnel file. Write up a summary of any verbal warnings and include a copy of any written ones. This helps you identify if problems continue to occur. It can also serve as evidence to support you if you have to terminate an employee.

A disciplinary policy should give you a road map to addressing employee problems, up to and including termination. But most importantly, a well-written policy will tell your employees what you expect of them and help you avoid problems before they start.

Being Reasonable: The Key to an Enforceable Non-Compete Agreement

Many employers now ask employees to sign non-compete agreements as a way to protect business interests. But having a non-compete you can actually enforce is easier said than done.

Wisconsin law requires non-compete restrictions to be “reasonably necessary for the protection of the employer.” It sounds simple, but in practice, courts interpret non-competes in favor of employees.  That means a lot of agreements aren’t enforced because they’re too restrictive.

There’s no guarantee your non-compete agreement will be enforced, but there are things you can do to increase your chances:

  1. Decide ahead of time what the business reasons are for having a non-compete (protecting a customer base or confidential information, for example). You’ll need those reasons if the agreement is challenged, but thinking about them first can also help you tailor the agreement to protect them better.
  2. Limit restrictions to a definite time period. What’s “reasonable” will depend on your situation, but usually it’s no more than 2 years.
  3. Limit restrictions to a definite geographical area. Again, this depends on the situation, but the area should be related to your business presence, like the area you advertise in and draw most of your customers from.
  4. Use non-competes as part of a policy, not based on individual employees. If you ask one person in a position to sign one, ask everyone in that position to sign one.

And most importantly:

5. Talk to a lawyer at the beginning. The law on non-competes is constantly changing. A lawyer will tell you where the law stands and how to write the agreement so it’s most likely to be upheld.

A non-compete agreement is useful only if it’s enforceable.  Take the time to plan your agreement so that you have the best chance of success.

Job Descriptions

When talking with our business clients in Northeast Wisconsin, we generally hear that creating and updating job descriptions for employees is a huge waste of time. Nothing could be further from the truth.

Well-written job descriptions can help you run your business, save time down the road and avoid costly employment litigation. The trick is creating job descriptions that are useful.

What does a useful job description have?

Job descriptions will vary. However, whether your business is located in Appleton, Oshkosh, Green Bay or Neenah, there are some common things all job descriptions should have.

  • Details.  It’s tempting to leave a job description vague (e.g. Sales Representative for Outagamie and Brown County). But a vague job description won’t give your employee any guidance on what you expect of them. It also won’t help you figure out if your employees are meeting those expectations (e.g. I AM a sales representative in Outagamie and Brown County even though I haven’t sold anything!). Always err on the side of adding details.
  • Job duties and qualifications.  A job description should always include the job title, basic responsibilities and the title of the position’s immediate supervisor. The job should report to a particular position (for example, an Appleton customer representative reports to the Appleton customer service manager), rather than an individual person. It’s also a good idea to add specific qualifications/requirements the position requires (e.g.  familiarity with NEW North family businesses).  Specific requirements are often the key to defending employment litigation.
  • Monitoring policies.  The job description should also lay out how and when you’re going to evaluate whether expectations are met. The job description should provide a benchmark for evaluating an employee. An annual performance review is a good start. Most expectations, though, should be addressed more often so that you can prevent minor issues from becoming problems or, worse yet, a lawsuit.

Why do job descriptions matter?

Job descriptions are certainly important for avoiding employment litigation. For example if an employee has a disability, you can look to the job description to see what kinds of reasonable accommodations you legally need to make. Additionally, If an employee sues for discrimination, the job description can often come to your defense.

But job descriptions are equally important for “business” reasons.  Job descriptions tell your employees what’s expected of them, how they will be measured and who will measure them. This inevitably eliminates costly employment litigation, but also enhances employee productivity by ensuring everyone knows what they need to do.

Hiring in the World of Social Networks

Social networking sites, such as Facebook, LinkedIn, and Twitter, have given employers access to more information about job candidates than ever before. This can be extremely useful, especially for small businesses without a fully-staffed HR department to screen candidates. It’s not always clear, however, what you can legally do with that information once you find it.

Let’s start with the easy part: if you Google a job candidate or find them on a social network site, you can look at the information posted there. Public profiles are fair game and, if used correctly, can provide valuable insight into the candidate. For example, a candidate may have many LinkedIn contacts in your industry or link to relevant articles on Facebook.

The potential danger for employers is that social network sites also contain information that, legally, you can’t use to make a hiring decision. Wisconsin prohibits employers from discriminating against job applicants for a variety of reasons, including race, sex, age, religion, family status, arrest record, and disability (just to name a few). That means you can’t directly ask a candidate about these and, if you find them in an online search, you can’t take them into account.

Fortunately, there’s a relatively simple way to protect yourself as an employer. If possible, separate your social network search from the hiring decision. Have your assistant or another employee search for the candidate, then have that employee give you only the information you can legally use. Not only do you remove the temptation to use protected information, but you give yourself a defense in case a candidate does sue.

Social networks give you a lot of information on a candidate, including some that’s protected by law. Being careful with the information you find can help you make the right hiring decision while protecting your business.

Surviving an Employee Lawsuit: What Every Employer Should Know

As a business owner, you hope to have good relationships with your employees. Unfortunately, the sad reality is that at some point in time most employers will face a lawsuit from an employee or former employee. While you can’t prevent employees from suing, here are the Dos and Don’ts to help you get through the lawsuit and protect the business you’ve worked so hard to build.

Do call your attorney as soon as possible: employment laws are complicated and often favor the employee. Your attorney will help you determine how serious the lawsuit is and whether you should fight it or settle.

Do call your insurance company: your policy might not cover employee disputes, but if it does, you need to notify your insurer immediately. Not filing a claim guarantees you won’t be covered.

Do collect and save important information: important information can come from other employees, such as supervisors, or from performance reviews and company policies, just to name a few.

Don’t panic: knee-jerk reactions can cause more problems than the original lawsuit. Instead, talk to your attorney and let them help you figure out what to do next.

Don’t apologize: it might be tempting to plead your case or smooth things over with an employee who sues, but you can bet that anything you say will be used by the employee’s attorney. On the other hand…

Don’t retaliate: retaliating (like firing an employee who sues or making it difficult for them to work for you) gives the employee another claim to add to their lawsuit and makes it look like you have something to hide.

Even if you treat employees fairly, you can’t prevent them from suing. Instead, knowing how to handle the situation if an employee does sue will protect you and your business.