Preventing Potential Lawsuits
Safeguards such as proper documentation and solid contracts will help cover your company
At Big Blue Bug Solutions, which operates in all six New England states, documentation is so critical that each technician has a template to follow.
“Documentation is your friend,” said Kevin Goldman, the company’s director of administration. The company identified six things that every report must-have, which cover things like what recommendations the technician made and which homeowner was spoken with. “If you’re not filling out all six fields, you missed something.”
The paperwork is reviewed in the office to ensure it is complete. Periodically, supervisors reinforce documentation requirements on ride-alongs.
If it seems like overkill, for Goldman it’s just standard operating procedure. “Some feel like it’s extra work and it slows them down. It may be in the short term, but it makes things better in the long run. It helps you to go back and check later. People can easily forget a phone call or what was said. But if you’ve written it down it’s easier to go back and look at it.”
It also makes it easier to help prevent a lawsuit or defend one.
So, what sort of documentation should a typical pest management company have? Goldman and attorneys Clifton E. Slaten and Phil Rinehart offer their suggestions on how to make sure the paperwork is in order.
Documenting the Details
It goes without saying that every client relationship should trigger a contract and companies should have a standard contract in place.
“Every state in which you operate has laws that require the services to be documented: when the service is done, the product, quantities, amounts is documented,” Rinehart said.
Agreements don’t have to lock in the customer for a set period of time, but should detail “what you’re going to do, what you’re not going to do and what the customer is going to do—such as make a payment. Companies have terms and conditions in their customer agreements,” Rinehart said. “Some of those would be limits on liability, class action waivers. Customer usually needs to sign the agreement. If they sign, they’re consenting to the agreement.”
With termite contracts in particular, Slaten recommends thorough documentation of the entire process, from inspection to treatment.
“If you record when you went out to inspect, what you saw, what you treated, what you treated with and where you treated, you’ve got a trail that people can follow,” Slaten said. “If you’re sloppy with your documentation, you’ve got problems.”
The contract for the termite work also should detail “whether you’ll repair damages or not and if there are things that are not going to be covered,” Slaten said. “Spray foam installation would make the contract voidable and the customer should be required to notify the pest management company that they’ve decided to put spray foam in there.”
Document the treatment and inspections and include whether there is existing damage, Slaten said.
Always have an operating agreement. If you’re in a partnership, you need to have a GOOD OPERATING AGREEMENT IN PLACE THAT GOVERNS HOW ANY BREAKUP WOULD BE HANDLED. It’s harder to get out of partnerships in most states than it is a marriage.
-Phil Rinehart, Attorney
An Inside Job
One growing area that Rinehart sees is class action lawsuits from current and former employees. “When you think about your organization and the threats, you don’t think about that,” said Rinehart, who not only has pest management companies as clients, but he’s also owned pest companies, too. “You think about the state or government agencies or customer issues and those certainly come up. The highest dollar ones that I’m seeing are class actions. It’s usually wage and labor related.”
The first step is to ensure that your company follows state labor laws, including giving proper meal breaks and paying overtime properly. But even compliance won’t always prevent a lawsuit, Rinehart said. “The second thing they can do is have a class action waiver provision in the employment agreements with their employees where the employees waive their right to participate in a class action lawsuit. That needs to be in every employment agreement.”
Non-compete and non-solicit clauses also can draw a lawsuit. Rinehart suggests ensuring that there are two separate provisions outlined in the employment agreement. “Non-competes can be questionable, but non-solicits are necessary. If that’s in the employment agreement, you would have grounds to pursue former employees who are going after your clients.”
It’s also important to follow paperwork requirements for posting OSHA notices. And Slaten said every company needs a sexual harassment policy and a well-defined method for reporting.
Partnerships also can lead to lawsuits, especially if the relationship goes awry. Again, Rinehart says, the key is to spell out everything on the front end, including what happens if you break up. “Always have an operating agreement. If you’re in a partnership, you need to have a good operating agreement in place that governs how any breakup would be handled. It’s harder to get out of partnerships in most states than it is a marriage. The court is not going to dissolve a partnership because one person wants to do it. It is tough.”
To Photo or Not
Any sort of contract focuses on words. Photos may tell a better story—but that can cut both ways. Cameras can help in a lawsuit related to a traffic accident, but also can document pre-existing termite damage, Rinehart said.
One of Rinehart’s former clients documented everything when he did an inspection. One photo showed ivy all over one side of the house, which prevented an accurate termite inspection. “Later on, the new owner comes in and finds evidence of termites that they missed. We’ve got the photograph that shows there was no way to see it. You don’t cut the ivy out off their house.”
Photos can be helpful in the event that the homeowner makes significant changes later on. A deck which blocks a thorough inspection can be removed later. “I’m not opposed to photographs. They can be helpful, especially if they document something that the other side may later change.”
If the technician documents everything properly, it’s up to the office to make sure those documents are easy to find if and when they are needed.
At Big Blue Bug, that means having just a few people responsible for each type of document. That way, “if I need something, I have one or two people I need to talk with to find it,” Goldman said.
Be sure to save the documents somewhere they are easily found and abide by state laws on how long records must be kept.
If there’s one area of pest management that is likely to cause a swarm of lawsuits, it is termite warranties. One legal tactic that often succeeds involves claiming that the homeowner was defrauded.
“I don’t think it’s a fraud issue, but a breach of contract situation,” said attorney Clifton E. Slaten, of Slaten Law, P.C. in Montgomery, Ala. “Contract issues aren’t as damaging.”
As with any type of contract, a termite warranty’s devil is in the details—and ensuring that the contract follows state law. Then it’s up to the pest management company to document every aspect of the contract.