Ways to Avoid or Minimize Employee Lawsuits

Ways to Avoid or Minimize Employee Lawsuits

No matter how careful you are, your small business may be faced with an employee lawsuit.

Common employee suits involve discrimination, harassment, wrongful termination or failure to comply with wage and hour laws.

Lawsuits can be expensive and they can drain time and energy from both you and your other employees. However, there are actions you can take now that will help minimize the chance that you’ll be involved in an employee dispute. If a dispute does arise, the way you handle it could be the difference between an easy solution and a lengthy lawsuit.

If you are sued, you will be in a much stronger position if you can document that you did everything by the book.

Here are some steps you can take.

  • Know the employment laws. Know which laws apply to your business, and review your legal obligations periodically to make sure they have not changed because of new laws or changes in your workforce.
  • Review your hiring practices. Eliminate considerations that have nothing to do with an employee’s ability to do the job. Make sure your managers are aware of what can and can’t be asked of a job candidate in an interview.
  • Review your dismissal practices. The reasons for a dismissal and the way the dismissal is handled can set the stage for litigation. Eliminate dismissal considerations that have nothing to do with competence. Keep good records and remember that anything you say during the dismissal process may be used against you.
  • Educate your employees. Start a program to educate everyone in your company on acceptable and impermissible behavior. Initiate anti-harassment training for your managers. Repeat trainings every year.
  • Provide easy and non-threatening ways for employees to make a complaint. Be approachable. Encourage your employees to speak up if they feel discriminated against or harassed. And take action to address the problem.
  • Set clear expectations. Employees should know what they need to do to succeed on the job.
  • Keep good records. For each employee, document employment issues, verbal warnings and disciplinary actions and make this a part of the employee’s file.
  • Perform annual employee evaluations. These should be written down and signed by the employee, and the employee should have an opportunity to make notes in response.
  • Educate and Update.  Be aware of changes in employment laws, and update your policies as needed.
  • Comply with overtime laws. Create a system to accurately track employees’ time. Only classify employees as “exempt” if they meet the Fair Labor Standards Act criteria. Pay overtime if it is due. Don’t suggest that employees take their overtime as “comp” time at some future date.
  • Base employees’ pay on job requirements and performance. Don’t try to base it on their previous salaries or on your relationship with them. Document your reasons for paying one employee more for doing the same work. Differences in pay can look like discrimination even if that wasn’t your intent.

What to do if an Employee Complains

Always take employee complaints of discrimination or harassment seriously, even if you think nothing improper happened or that the employee is blowing things out of proportion. A complaint that’s ignored or dismissed can easily lead to a costly and time-consuming lawsuit.

Respond promptly to the employee’s concern by initiating an investigation. Document the actions you took and the results of the investigation. Discuss the results with the employee and follow up later to make sure the offending conduct has stopped and the employee does not feel retaliated against.

An employment lawyer can advise you on how to handle employee complaints. If you sense that an employee might file a lawsuit, contact a lawyer immediately. A lawyer can help you evaluate your position and decide if you should defend the case or try to settle the claim quickly.