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PROFESSIONAL LIABILITY SPOTLIGHT

Mitigating employment

practices liability risks

By Laura Lapidus, Esq.

hile CPA firms may think their personnel claims. Many interactions with employees take place
Illegal Wwould never sue them, the prevalence of verbally and are not subsequently memorialized in
reprisals employment practices claims says otherwise. Firms writing. There also may be miscommunications about
may feel that there is little that they can do to avoid
56% becoming a statistic. However, employers can imple- prior to taking a potentially adverse employment
the level of detail and/or documentation needed
ment policies and practices to assist in mitigating the
action against an employee.
risk of these claims. We interviewed Brandon Saxon,
The portion of all J.D., a partner and chair of the employment practice Why is documentation so important?
charges filed with group at the law firm Gordon & Rees in San Diego, Saxon: As with professional liability claims, documen-
the U.S. Equal to obtain his perspective on what firms can proac- tation is the foundation of any good defense of an
Employment tively do to manage employment practices risks. employment practices claim. Without it, these cases
Opportunity become “he said, she said” claims, where the finder
Commission Which types of employment claims against profes-
during fiscal sional firms do you see frequently? of fact (jury or arbitrator) will make a determination
year 2021 that based on the credibility of the witnesses. It is in the
included a claim Brandon Saxon: Claims of discrimination, harassment, best interest of the firm to record as much detail as
of retaliation. and retaliation are most common in employment possible. The proper documentation of performance,
litigation against professional firms. As expected in employee interactions, and any potential instances of
Source: U.S. EEOC.
an industry primarily staffed by highly educated and conflict, including the resolution of such, can be used
financially competent employees, employment claims by your attorney as proof that the firm took neces-
against professional firms tend to be highly complex. sary steps leading up to the employment action. A
performance review may feel like a tedious task in the
What makes retaliation claims dangerous? moment, but it is imperative for the longevity of the
Saxon: Retaliation is any adverse action taken against firm.
an employee after they have exercised a right consid- In legal actions involving discrimination, the
ered to be a legally protected activity, such as engaging narrative of a case is first established by the employee
in whistleblowing. Due to the broad scope of retalia- upon filing their complaint. The employer must
tion, there is often confusion as to how an employer change that narrative. This is possible if they have
can address retaliation claims, especially when the followed recommended practices when engaging
claim may be applied to any protected activity engaged with employees and in the handling of complaints or
in by an employee during their employment with the before taking any adverse action — including, but not
firm. Documentation of employee performance, as limited to, writing detailed accounts of all employee
well as the reasons for any adverse action, can assist a reprimands; the signing and dating of all documents
firm in defending a retaliation case. by supervising personnel, witnesses, and the employee;
and proper structuring of employee action reform,
What common issues do you see when defending such as a performance improvement plan.
employment practices claims?
Saxon: When defending claims related to discrimina- What should a firm do when it is made aware of
tion, harassment, and/or wrongful termination, lack allegations of discrimination, harassment, and/or
of documentation is the biggest hurdle. Insufficient retaliation?
documentation of the employee’s interactions during Saxon: An effective response is swift and thorough.
their employment makes the defense of claims shift Generally, we recommend the below plan. Prior to
from somewhat manageable to downright challenging. establishing any policy, it is essential to consult with
Documentation of the employee’s interactions is an employment attorney to tailor recommendations to
critical. Unfortunately, insufficient documentation is your organization.
the norm, rather than the exception, in employment ■ Document, distribute, and discuss. Bring the

4 | Journal of Accountancy April 2023