Hiring Issues in the Asset Recovery Industry
by Scott J. Seiler, Esq.

Employers face an array of federal, state and local laws conferring rights upon their employees.  Whether through unemployment, workers compensation, ERISA, wage overtime, discrimination, whistleblower, or other laws, the state is involved in almost every aspect of the employer-employee relationship.  The situation is even more daunting for companies in the asset recovery business, who struggle with compliance matters unique to their industry.  The FDCPA, FCRA, GLB Act and related state regulations add a plethora of concerns to the employer’s plate.

Not long ago, I attended a conference that included a training session concerning employee relations.  The speakers were united in their advice:  “Zero Tolerance”; the termination of an employee who has violated a collection law should be part of every agency’s standard operating procedure.  The theory is simple and makes sense; judges, juries and government investigators will consider the termination an act of good faith, demonstrating the agency’s commitment to compliance.  While a unilateral, zero tolerance termination policy may serve as an industry salve, the damage for violation of employment laws could be much more devastating, resulting in costly Department of Labor (state and federal) investigations and damages that include attorneys fees and punitive damages.  While the industry regulators will focus on “collection practices”, the DOL and EEOC will look at the company’s compliance with a number of statutes.  It is not unusual for a discrimination complaint to turn into a wage, hour and overtime investigation or lawsuit.

Employment claims of a collector pursuant to a zero tolerance policy can stem from a variety of factors.  Failure to execute policies in a consistent manner may give rise to costly claims for discrimination, breach of contract, and, in some instances, whistleblowing and retaliation.  It is not unusual for a company to impose a zero tolerance policy that is inconsistently implemented; favorite employees (friendly, long term, productive) are excused or those that have been employed prior to adoption are exempted from the policy.  In either case, employees are being treated differently, which can lead to trouble for the employer.  Further, many regulatory agencies have the ability to conduct investigations and institute litigation, sometimes even if the employee is not directly involved in the suit.

Another claim (a form of contract breach) can occur when the terminated employee can show that he was, in fact, complying with a superior’s direction or company policy (be it in writing or practice).  A company with actual collection practices that differ from its public, stated or written compliance policies, can be subject to liability for claims from both disgruntled consumers and employees.

With complaints, investigations, fines and damages on the rise, I am teaching employers to “hire to fire”, meaning that the objective of their hiring and disciplinary procedures should include the reduction of risks inherent in future terminations.  Hiring, coupled with future discipline, should be a means to (a) obtain the highest performance and production from employees and (b) ensure that the company is in position to terminate an employee who is unable to maintain company standards, while reducing the risks associated with ill-advised terminations.

In order to meet these objectives, employers should conduct an HR audit (either internally or through an outsourced consultant) and prepare and employ policies and procedures, including the following:
Job Descriptions: 

Although time consuming and admittedly frustrating to draft, the use of job descriptions are one of the best means of protecting your company from an employment suit.  These descriptions should provide detailed descriptions of (a) the skills necessary for the job and (b) the tasks that will be employed by the employee holding the position; coupled, depending upon the company, with a differentiation between essential and non-essential skills and tasks.

By relating the essential tasks to the employee prior to hire and having the employee acknowledge his ability to complete the tasks (by “signing off” on the job description), post-hire adverse employment action (from warnings, to discipline, to termination) become simplified.  The base standard for performance is identified in the description and the employer only needs to produce the document to show the under-performing employee that he is unable to execute the tasks that he advised he would be able to so perform.  Thus, the job description, coupled with documentation of the performance failures or conduct infractions, provide employers with sound basis for discipline and termination, while significantly reducing their associated liability.

Background Checks:

The use of criminal and credit background checks, as well as education and employment histories, provide employers with useful data to (a) weed out ineligible or otherwise unwanted applicants and (b) corroborate information provided by the applicants.  Depending upon the scope of the search, an employer could conceivably use its background check process in the defense of an FDCPA claim alleging employee misconduct toward a consumer, by arguing that the employer conducts such checks, in part, to protect consumers from unlawful collection activity, including screening potential collectors prior to hire.  The checks may also provide employers with protection against claims for ancillary torts, such as negligent hiring.

Offer Letters:

If the key to real estate investment is “location, location, location”, the key to sound employee investment is “document, document, document.”  Everything from the employer’s expectations, to employee’s promises and guarantees, to all disciplinary action should be documented, starting with an offer letter.  The letter should spell out the terms of employment, including pay and benefits (bonuses, insurance, pension, profit sharing, disability, vacation, sick leave, PTO, etc) and should identify those skills and experiences required by the position, a statement that the employee has advised the employer that he is able to perform the skills, and a place for the employee to sign.  The letter should also include all federal and state disclaimers (including “at will”, EEO and, where required, “Reasonable Accommodation” statements).  Finally, the employer should provide a list of conditions imposed upon the employee, that often include:  submission of and compliance with all company policies and procedures, completion of a background check, and submission of the requisite I-9 Form with accompanying documentation.
Handbooks

All employers should draft and implement an employee handbook (sometimes referred to as a personnel policies manual), if for no other reason than to document the employer’s implementation and dissemination of certain important policies, such as a protected class (anti) harassment policy.  These handbooks should be supplemented by regulatory compliance policies (FDCA, FCRA, GLB Act, etc…) and employers should require all employees to provide written acknowledgement of receipt (and understanding) of the policies.

Documentation, Documentation, Documentation

It’s worth saying twice (six times).  Once an employee is hired, all discipline, from verbal warnings to terminations, should be documented and formal warnings and actions (including verbal warnings) and employees should sign off, acknowledging that they received the warning (not necessarily that they agree with the action……although, note, some states require that employees be provided with an opportunity to provide a written response that must remain in their personnel file).  It is this documentation, coupled with the documentation of the hiring process, that will create the record necessary to support any adverse action taken against an employee.

The employer’s goal is to hire an employee who will be productive and stay for the remainder of her career or, more realistically, until a better opportunity comes along.  Unfortunately, the myriad of employment and industry regulations requires diligence in both compliance and preparation for worst case scenarios.  By implementing proper procedures and documenting actions, the employer should be in position to operate its business while limiting the risk associated with maintaining a staff.  This article addresses only a few of the means available for employers to protect themselves.  Please contact an attorney or HR professional for more information.

About the author:

Scott J. Seiler represents businesses in a variety of industries, with a focus on risk management and compliance in the fields of employment law and creditors’ (debt buyers’) rights.

Scott J. Seiler 
Seiler & Associates, PLLC
7900 Highway 7
Suite 350
Minneapolis, Minnesota 55426
Telephone 952.358.7400
Facsimile 952.358.7404
sseiler@seilerlaw.com