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How to avoid hiring a legal nightmare

In talking with friends and clients who own or manage businesses, I've come to realize just how many are worried about hiring repeat litigators-people who do not function well in the workplace but who repeatedly sue their employers, alleging discrimination, retaliation or some other violation.

Oftentimes, only after you've spent tens-if not hundreds-of thousands of dollars defending such claims do you learn the employee has brought similar lawsuits against previous employers. In frustration you ask, "Can't we find out about these folks before we hire them?" The answer is more complicated than a simple yes or no.

Finding an applicant's civil litigation history is easy and can be fruitful. The records are publicly available and can yield information regarding claims in tort, employment discrimination, personal injury, wage-hour, employee benefits, workers compensation and workplace safety, just to name a few. That information can help you to determine if applicants have filed personal injury claims regarding injuries that may make them unable to perform the job for which you are interviewing.

If they have filed numerous workers compensation claims, you may be able to infer increased risk that they will file one against you as well. If they have a history of discrimination claims, they may very well be the type of person who abuses civil rights and worker protection statutes to justify their inability to function in the workplace. Perhaps most importantly, pleadings from prior litigation may often tell employers important details about how a person performed in previous positions.

What is not so easy is navigating the potential pitfalls associated with making hiring decisions based on a person's litigation history. For example, refusing to hire an applicant because they filed a claim against a former employer may leave you open to retaliation claims, which are authorized by Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Equal Pay Act, the Occupational Safety and Health Act, numerous other federal laws, and most state workers compensation or discrimination laws.

Employees have a right to sue under these statutes, and employers are not entitled to retaliate against them for doing so. Also, screening applicants based on litigation history may lead to a disparate impact claim under Title VII. Employers, even those without the intent to discriminate, can be liable under the statute if their hiring practices result in a negative disparate impact on a protected class of people. Indeed, the Equal Employment Opportunity Commission recently sued Kaplan Higher Education Corporation for using credit histories in its hiring process, alleging the use had a disparate impact on black applicants.

What does this mean for employers? If you have the legitimate desire to avoid hiring people who cannot function in the workplace but who will almost definitely strain your bottom line with meritless law suits, seek counsel before engaging in screening based on prior litigation. The key is to make your decisions based on a person's qualifications for the job, not on other illegal criteria.

Reviewing an applicant's civil litigation history may well inform that decision and could save you thousands of dollars in the long run, but setting up a protocol that is both effective and legal will take careful planning and an understanding of the potential pitfalls.
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Steven Collis

Steven Collis is an associate with Holland & Hart LLP and has a practice focusing on commercial litigation, ERISA litigation, labor and employment disputes, and appellate matters. He has appeared in federal and state court on behalf of clients in commercial contract disputes and ERISA matters and has represented clients in ERISA litigation, labor-union arbitration, contract negotiations, collective bargaining agreement disputes, Title VII employment disputes, settlement negotiations, and appellate matters in both Colorado state courts and the federal courts. Steven can be reached at 303-295-8512 or stcollis@hollandhart.com.

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