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STEVE ROPPOLO: For all those claims, but particularly the single plaintiff discrimination cases—potentially even class actions and in the way of trial litigation—if an employer has a working arbitration agreement that requires the employees to pursue the claim in arbitration as opposed to in a court of law, if done properly it can significantly reduce the number of claims that are brought.

In the process of litigating or arbitrating those claims, you can get a better control over the runaway claim because you’re not worried so much about being in a plaintiff-friendly jurisdiction. For some of my dealer clients that are in parts of the country that are known for being aggressively pro-employee or pro-plaintiff, an arbitration agreement can be a great way to manage risk. Jury trial waivers can be helpful as well. Arbitration agreements that have class action waivers can be very effective, too, because that waiver will prevent the individual from getting a class action up and running. Class action cases are very costly because the damages awards can escalate quickly, and the attorney’s fees can be brutal.

There has been pushback by the National Labor Relations Board on the class waiver issue. The Board has taken the position that arbitration agreements that contain class action waivers are in violation of the National Labor Relations Act. The Board’s thinking there is that an arbitration agreement with a class waiver can’t be consistent with the NLRA, which prohibits employers from taking steps to prevent employees from acting in concert with one another, and that’s what employees are trying to do when filing a class action.

Now, employers say, “Well, wait a second.” Participating in litigation isn’t a term and condition of employment. It’s not the same thing. It remains to be seen how that’s going to shake out. I think we have to wait to see what the new administration and its Department of Labor will think about this. I would suspect the NLRB’s approach to arbitration agreements won’t get much traction in the DOL, but it remains to be seen. So, arbitration agreements are one best practices we can look to in order to keep claims down and manage them effectively.

Another thing that is helpful is having some system in place that would enable an employer to produce those documents in an efficient way at the beginning of a case. For example, if there’s an arbitration agreement, it’s knowing that there’s a system, methodology, or automation process that enables the employer to quickly locate and produce relevant records. You can then produce the arbitration agreement the employee signed, the harassment policy that the employee signed, the reporting procedure and the open door policy that the employee signed. Getting those things quickly and effectively in litigation and getting them produced in discovery can help change the direction of litigation at an early stage.

In the old days, it used to be that was just your personnel file. But technologically savvy dealerships and other employers have a lot of this automated now in a way that can make sure they always have this information instead of simply hoping it’s in the personnel file when they need it for a case.

Be candid with the employee. Tell the employee the truth about what you’re actually doing. Many employers are softies and don’t want to hurt anybody’s feelings. What they’ll wind up doing is telling the employee who’s a bad performer: “Oh, don’t worry about it. It’s not you—it’s us.” Or: “Things are slow now. We don’t have enough work to keep you busy, so we’re going to have to let you go. We’re eliminating your position.”

And then, of course, a week later you’re posting to replace that person and then the former employee now says, “Well, wait a second. Why did they lie to me?”

Most former employees—and their lawyers—assume that the lie was for a bad reason: to cover up some ulterior motive instead of trying to be nice. So, what I always tell employers is: of course, treat employees with dignity and respect, but when it comes to counseling and disciplining employees, be candid, be direct, but be fair. If you can do that, then you’re going to avoid the problem of having someone say, “Well, you told the employee when you were letting them go that the reason was lack of work. That’s not true, is it?”

It’s a corollary to performance evaluations. If you’re not going to take doing performance evaluations seriously, then just don’t do them at all. There’s almost no point if you’re not going to dedicate the time and energy necessary to running an effective performance appraisal process.  Telling employees that their performance is “above average” when it’s really not doesn’t help anybody. It’s a real problem when a dealership is trying to establish a “poor performance” termination and is confronted with a recent performance appraisal that says the employee’s performance is just fine.

Unfortunately, we don’t know how issues will wind up. For example, dealerships have had to grapple with the Affordable Care Act and decide what health plans to offer to their employees and what benefits should they contain in order to be in compliance with the ACA. Now that there’s talk of replacing the ACA, it’s not clear what parts will be scrapped. I think that certainly over the coming years, it bears watching: pay attention to whatever is going to come out in the way of compromise with respect to the ACA.

It’s entirely possible that the federal government passes some form of paid leave requiring employers to pay for a portion of the 12 weeks of Family and Medical Leave. It may be through unemployment taxes, but ultimately, it’s likely to be fairly expensive for dealerships.

Another thing you may see by 2020 is an increased minimum wage. I don’t think it’s going to go to $15 per hour. It’s not as big a deal for companies that employee highly skilled workers making big wages, but it does come into play when you look at car salespeople, since there can be periods when a salesperson doesn’t earn a commission big enough to cover minimum wage.

If minimum wage becomes $10 per hour, you may see dealers advancing pay more often to cover the minimum wage. Our clients in states where there already is a higher minimum wage are already dealing with that issue.

Finally, the automotive industry has been moving more online, to internet shopping, and the internet sales manager is a role that is becoming more prevalent in dealerships. That position occupies a gray area for exemption purposes. If the internet sales manager is engaging in sales work—working with the customer if they don’t have inventory they’re looking for or maybe encouraging the customer to consider a different color or a different package—all of that sales work converts that role to a salesperson and makes them exempt, just like the floor salesperson. But, if that internet salesperson is just flipping leads, then they probably shouldn’t be considered a salesperson and therefore are not exempt. Pay attention in this wage-hour review to make sure that you’re properly classifying everyone.