Increasing employment-related litigation threatens dairies.
By Riley Walter, attorney
Now that the dairy crisis may be abating, it is time to turn attention to sound business practices, including HR practices.
As an insolvency lawyer, I often perceive patterns of things that are disruptive to businesses. Of late I have realized that, for the past 18 to 24 months, many of my new matters have involved employment lawsuits that threaten the very existence and survival of businesses, including dairy operations.
These lawsuits come in many different forms. There are wage and hour actions, complaints that compensation was not given for rest breaks, failure to compensate for changing clothes, inaccurate payroll records, nonpayment of overtime, and more. In every one of these instances, these suits bring significant exposure to the business enterprise, especially due to the huge fee requests made by attorneys for the plaintiffs. Some of these suits morph into class actions so they involve dozens of present and past employees. The claimed damages can reach astronomical heights
According to a recent study, the average American business has a 12% chance of having an employment law claim filed against it. However, the study reveals that employers in California have the most frequent incidence of employment law claims. California employers who employ at least 10 employees have a 42% higher chance of being sued by an employee over the national average. This should cause red lights to go on in the mind of every dairy operator.
What has surprised me is that in discussing this with dairy operators they generally do not express a high concern and they usually tell me it is because of the nature of the labor force. They believe that the corporation of their labor force means they have less fear of these suits then other types of businesses.
In my mind, this needs to be reconsidered. Just because you operate a dairy, it does not mean that you are not exposed. You are certainly not exempt from these proliferating lawsuits. You may very well want to reconsider your HR practices and come into conformity with the rest of California businesses. You need an Employment Manual. You need to post the warnings. You may want to get some training on HR matters, including payroll and wage and hour matters. You may want to use a payroll service.
Businesses outside of agriculture have wizened up a lot in recent years, and many of them have taken out employment practices liability insurance. However, I believe that very few dairy operators have done so. You may want to reconsider this.
You can be wiped out in just defending one of these lawsuits given the high legal costs, let alone the actual potential damage claim.
Dairy operators are not exempt, and I predict there will be an increase in the number of suits against dairymen.
Riley Walter is an attorney and founder of the Central Valley-based Walter & Wilhelm Law Group, a law firm specializing in agribusiness, reorganization and bankruptcy. Contact him at 559-435-9800 or RileyWalter@W2LG.com.