How to Prevent Employee Lawsuits

Avoiding employee lawsuits is one of the keys to running a profitable and successful business. There are a number of basic steps every business owner and manager should be aware of that will help you to avoid the most common employee lawsuits.

How to prevent employee lawsuits - protect business from employee lawsuits

Document the Rules in Your Workplace

Documentation of workplace policies and rules is critical for even small businesses. As soon as your company has one or more employees you should begin drafting what will become your employee handbook or manual.

You will ultimately want to consult with an attorney or human resource specialist to finalize your employee handbook. The following items, however, should be addressed in every handbook:

  • Recording of hours worked and payday schedules
  • Vacations and other time off
  • Benefits offered, if any
  • Policy against harassment, discrimination and retaliation
  • Safety in the workplace
  • How to report injuries, harassment or discrimination
  • Disciplinary practices
  • Activity or behavior that will lead to discipline or termination
  • Privacy

Once you have established and distributed your workplace policies to employees, it is critical that your managers and supervisors follow them. This point cannot be overemphasized — you must follow your own internal policies and procedures. Doing so will help you to avoid employee lawsuits and help you to defend against them if they do occur.

Train Your Managers and Supervisors

All employees who have managerial or supervisory responsibilities should receive training in professional management practices. This training can be done in-house or on-line, and there are many experts, including human resource professionals and employment lawyers, who specialize in management training.

Properly trained managers are more likely to avoid making the mistakes that can lead to employee lawsuits (e.g., favoritism or harassment based on membership in a protected class and violation of internal company rules and policies).

Treat All Employees Equally

You should endeavour to treat all of your employees equally. Equal treatment of all employees is the hallmark of a healthy, successful workplace.

Take All Complaints Seriously and Investigate Thoroughly

Your employee handbook should clearly establish a chain of command for reporting complaints of discrimination, harassment or other problems in the workplace. In the smallest companies, complaints may go straight to the owner. As your company grows, managers will typically handle employee complaints.

A larger company will have a human resource department or manager to address complaints. Regardless of the size of your company, however, you must take all employee complaints seriously and document the steps that you take to investigate and remedy them.

Following this one rule will prevent most employee lawsuits from ever being filed. If a case is filed, demonstrating that you have taken complaints seriously and conducted a fair, thorough and unbiased investigation will go a long way toward defending your company in an employment lawsuit.

Seek Legal Advice

Another important measure to avoid employee lawsuits is to seek legal advice in advance as you are developing your employee handbook and training your managers and supervisors. You may wish to hire counsel or human research specialists to perform investigations of employee complaints.

This option will only make economic sense for larger companies. Even small companies, however, will benefit from seeking legal advice in advance of employee terminations and during the course of serious disciplinary actions.

Advance planning in the form of promulgating uniform company policies, ensuring that they are applied to all employees equally, and seeking legal advice as needed will go a long way toward avoiding employee lawsuits.

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