Training Slashed Even As Employees File Lawsuits

One of the ironies of recession is that businesses tend to cut back their training of their employees at the same time that layoffs are spawning the filing of higher numbers of employee lawsuits. This is happening again during the present deepening economic crisis. Unfortunately, this is one of those situations of businesses “cutting off their noses to spite their faces.” (Do people still say that or am I showing my age?).

During 2008, studies show that average training expenditures in U.S. businesses decreased 11%. The studies don’t pinpoint which types of training, i.e. safety, skills or sexual harassment prevention, are being cut, but I can guess. Few companies understand the incredible effectiveness of providing employment law training to defeating expensive and time-consuming litigation. Therefore, if they ever offered training to their supervisors on avoiding discrimination or to their staffs on recognizing and preventing harassment or violence, they probably will slash that expense this year.

At the same time that the finance department is telling their bosses that the training budget has to go, employees are being terminated in record numbers. The national unemployment rate for January, which will be released tomorrow, will probably be around 7.5%, a 17-year high.*

And what do employees do after they are fired? They look for someone to blame, which in many cases will be the company that fired them. So they file unemployment claims, discrimination complaints, and lawsuits. During the fiscal year 2008, the Equal Employment Opportunity Commission already experienced a 15.2% annual increase in charges of discrimination and retaliation filed. Just wait until FY 2009.

I can already tell from my own law practice that even in the Texas Panhandle, which has been unusually sheltered from the current economic storm, employee complaints and lawsuits are increasing. Many of my clients are starting to face the investigative powers of the EEOC or the Texas Workforce Commission’s Civil Rights Division. Many of those charges will turn into lawsuits alleging discrimination and retaliation.

If you are regular reader of this blog, you know I always advocate written policies and employee training as your first line of defense against an employee lawsuit. If you start cutting your budget for those things, you may see short-term financial relief, but in the long run you are leaving your company very vulnerable to very costly employment lawsuits.

*Note from February 6, 2009: As it turned out today, the national unemployment figure was even higher: 7.6% for January 2009. That means that almost 600,000 jobs were lost in January. That is the worst showing for number of job losses since 1974. In all, 3.6 million Americans have lost their jobs since this recession started 13 months ago.

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