Work Is A Battlefield When Small Business Owners Romance An Employee

Work Is A Battlefield When Small Business Owners Romance An Employee


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Valentine’s Day always brings up the question of whether office romances should be banned. While a flat-out ban is not a necessity, employers need to worry when a supervisor gets involved with a direct report. If the employee feels mistreated, a sexual harassment complaint and lawsuit are just waiting to happen. The possibility of legal trouble is even more likely in a small business, when an owner gets involved with an employee.

In Johnson v. Roma II, a Wisconsin restaurant owner found out the hard way why this line should not be crossed. The owner had an almost two-year relationship with his restaurant manager. The end of the relationship brought a theft charge against the employee, claims of rape and sexual harassment against the owner, and a roller coaster of a lawsuit that has been compared to a messy divorce.

Courting trouble

The troubles between the two started when the owner looked at the finances and noticed $18,000 in debt owed to vendors. The employee was also ordering supplies that were inconsistent with the level of sales. When confronted with questions, the employee could not offer any explanation. She quit and allegedly took restaurant supplies with her, which led to the owner filing criminal charges. On the other hand, the employee claimed the owner had raped her and had sexually harassed her. She also filed a claim for $9,500 in unpaid wages.

The Department of Workforce Development awarded the employee about $8,100 as unpaid wages. It appears the owner failed to appeal the award and instead chose to ignore it. This made the problem even worse. What should have been an $8,100 cost led to a lawsuit that so far has involved a default judgment against the employer, an appeal and reversal, a jury trial, a retrial in favor of the employee, an appeal to contest attorney fees, and now further proceedings before the trial court that may produce yet another appeal. In addition to his own legal costs, the owner may owe over $100,000 in legal costs to the employee’s attorney.

Takeaways

The rape and sexual harassment charges serve as sufficient reasons why owners should not get involved with employees. Any souring of the relationship will put the owner in a bind when supervising, disciplining, or terminating that employee. The person could easily claim the relationship was actually sexual harassment or there was retaliation for ending the relationship. In addition, an owner may not supervise an employee’s work properly during a relationship.

This case is instructive in other ways:

1.  Employers that discipline or terminate an employee should be ready for claims over even relatively minor and unrelated issues. For example, the employee here successfully pursued a minimum wage violation. Expect an upset employee to look for legal violations in any workplace practice.

2.  If an agency awards damages to an employee, do not ignore the order. Pay the award or appeal the decision in a timely manner. Otherwise, risk more costly litigation and penalties.

3.  Look into settlement options early on. Understandably, employers do not want to appear weak or encourage employee lawsuits. However, that should not mean ignoring the financial benefits of an early settlement, especially a settlement that includes a waiver and release of any other employee claims. Financially, it makes no sense here for a $9,500 claim to generate over $100,000 in legal fees for one side.

4.  Employers who violate wage laws will face substantial penalties. Federal wage laws require double damages for unpaid minimum wages and unpaid overtime, unless there is a good faith reason for the nonpayment. Wisconsin wage laws allow a court to decide if an employer should pay up to double the amount for unpaid minimum wages or unpaid overtime.

5.  Both federal and Wisconsin wage laws allow an employee to receive reasonable attorney fees when a wage claim is successful. However, a court may reduce attorney fees when a lawsuit is over-litigated. Over-litigation can occur if the employee uses an emotional approach to pursue the wage claim. It can also occur if the employee’s attorney engages in excessive, redundant, or otherwise unnecessary work. To reduce attorney fees, a trial court must use a logical rationale, supported by the facts in the case, and spell out the reasons supporting the reduction of fees. A trial court cannot simply look at a fee request and reduce it by an arbitrary amount, just because the requested amount appears excessive.

Conclusion

Romantic relationships between owners and employees should be avoided. They carry too much potential for problems in the workplace and in court. In addition, small business owners should also avoid ignoring orders from administrative agencies. Lastly, consider whether it makes better financial sense to fight a lawsuit or to make it go away with an early settlement.

Author: Attorney Nilesh P. Patel