The HR team and legal = A friendship built on communication

One of the most important internal relationships for an in-house legal department is its relationship with the human resources (HR) team. HR deals daily with multiple legal issues and, potentially, some of the most headline-grabbing litigation involving employees and their claims alleging mistreatment, discrimination, malfeasance, sexual harassment, and more. This is why it is important that the legal department and the HR team cooperate and align on how to best protect the company from employment-related issues. Here is a checklist of several ways the two departments can best communicate and work together:

• Employee training. Most companies provide training to employees on a wide variety of issues, including sexual harassment, compliance, business ethics, and data security. Legal and HR should meet once a year to go through the training program and materials to make sure they are relevant, effective, and updated to capture new issues. New hire orientation is another place for legal to reach employees and discuss important policies and issues.
• Employee classification. The process of properly classifying workers as exempt or non-exempt under the Fair Labor Standards Act is very important. Misclassification of employees can set the company up for severe legal problems and potential big damages with respect to back wages, overtime, and benefits. Work with HR to create easy-to-understand guidelines and processes regarding when an employee is exempt or not and work together to train all supervisors in this area.
• Employee agreements. Typically, the legal team drafts employee agreements — such as confidentiality, non-compete, non-solicitation, IP ownership, or arbitration clauses — and HR administers them. Unfortunately, over time, agreements get modified in a non-uniform manner or out-of-date versions are used when newer versions exist. When it comes time to enforce these agreements, it may be hard to locate the signed copy. HR and legal should meet regularly to communicate the preparation and administration of such agreements, including a process to maintain version control and whether changes may be needed given new circumstances or changes in the law.
• Employee handbook. Most companies have an employee handbook containing key policies such as “Code of Ethics and Business Conduct,” “Anti-Corruption,” “Anti-Trust,” “Insider Trading,” “Health and Safety,” etc. Set up a yearly process with HR to go through the handbook and policies together and update as needed.
• Independent contractor review. Another area of cooperation is reviewing all independent contractors each year to ensure they are not being treated like employees — like receiving annual employee reviews — and therefore entitled to employee benefits. Train anyone with the ability to engage contractors about the proper process to hire and manage them. Set up a procedure to flag and review contractors who have been working with the company for a set period of time — for example, six months — and ensure there is a process to decide whether to reengage or terminate the relationship. If an independent contractor stays on for years and years, you may have trouble claiming they are not, in fact, an employee.
• Layoffs planning. A proactive legal department will work with HR to be prepared for the possibility of layoffs in any year, including creating a process to reduce the legal risks that can arise when layoffs happen. Create a simple checklist of all the steps the company will need to take in the event there is a layoff. For example, one key issue is the need for a disparate impact analysis of the potential layoffs to ensure there is no bias against a protected class. Additionally, the legal and HR teams should be familiar with the requirements of WARN — or state-specific “mini-WARN” statutes — in the United States. Statutory worker protections can trip the company up and delay layoffs or impose additional costs if not followed. Developing severance agreement templates with releases is good planning and can be helpful when things start to pile up.
• Internal investigations policy. At most companies, internal investigations typically involve the legal department, internal audit, and the HR team. Over time, the lines can become blurred and information gets siloed, leading to inconsistent results and duplicative efforts. Consider creating a matrix that clearly sets out the roles and responsibilities of each group depending on the type of issue presented. Set out how information will be shared, what follow-ups are required, who is copied on what, etc.
• Background checks. Given the potential legal exposure for making a “bad” hire, many companies now perform criminal background checks on all potential employees and promotion candidates. Use care here, as the federal government and various cities and states have enacted — or are in the process of enacting — laws that change the ground rules on background checks. If you are using a third party to conduct the background checks, work together to do the appropriate due diligence to ensure the company complies with the many laws covering this area, including compliance with the Fair Credit Reporting Act.
• “Everything else.” Legal and HR should also meet regularly to communicate about cutting-edge issues in employment law. For example, the COVID-19 pandemic brought a whole host of legal issues to the forefront. More mundane issues include work-from-home policies, BYOD policies, social media policies, Americans with Disability Act compliance, dress codes/religious accommodation guidance, service animals, unionization efforts, firearms, wellness programs, and a host of other issues. Meeting regularly, sharing ideas, and issue spotting can make life easier for both groups and better protect the company and its employees which, in the end, is the goal.

There is an endless supply of issues and concerns that the legal department and HR share. The checklist above is a good start but the real takeaway is the importance of setting up regular meetings between the two groups. The company will benefit from the legal team taking a proactive and strategic role in identifying areas of employee risk and working as a partner to minimize problems down the road.  

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