Lawyers
are often asked to audit the employment practices of clients; however,
attorneys or other advisers who conduct these audits could face malpractice
charges for missing issues that expose the employer to liability. Earlier this year, for example, a large,
international agri-food commercial co-operative brought a $5 million
malpractice lawsuit against its national full-service law firm for an allegedly
negligent employment practices audit.
This audit stated that the company’s exempt vs. non-exempt
classification of employees complied with the federal Fair Labor Standards Act
(FLSA), but failed to address California’s state counterpart, under which the
outside sales associates were not exempt from the law’s overtime
provisions. Wage and hour law is
somewhat unique in that both federal and state law needs to carefully and
separately be analyzed to determine compliance.
Relying on this audit, the employer did not change its classifications,
and was hit with a class action lawsuit.
The employer, in turn, sued the attorney for what it claimed was a
negligent audit.
This
is just one example of how an employment practices audit—in this case, of how
California workers are classified—can expose an attorney to major liability. Although
this type of audit would seem to require less specialized training than, for
instance, litigation of an employment dispute, it carries its own substantial
risks. Those with a more generalized
practice may wish to consult with an employment attorney, rather than attempt
to take on an audit alone.
For questions
or assistance with an employment practices audit, contact Wessels Sherman’s
Minnesota office at (952) 746-1700.
