10 Things Businesses Should Do to Prevent Employee Lawsuits

Every business owner dreams of a stress-free, lawsuit-free world. Imagine it: Coffee that never gets too cold, office chairs that do not squeak, and, most importantly, not a hint of a case in sight. Not the kind of case with a briefcase, but the kind with a judge and a gavel. Sounds like paradise, doesn’t it? Well, buckle up, ‘cause we’re gonna’ turn this dream into your reality. At least the part of the dream involving no court cases. Here are 10 things businesses should do to prevent employee lawsuits.

1. Understanding Legal Obligations

First, get your head around your legal obligations. Case in point: Many jurisdictions have minimum wage requirements pegged to the consumer price index. (CPI). If you don’t keep your pay rate at or above the increasing pay requirements, your organization could face significant financial penalties. The way to prevent this? Make sure your business is up to date with the local, state, and federal employment laws.

Steps to Follow:

Consult with a labor law expert in your industry
Stay up to date with any changes in the laws by following blogs or other professional sources of information like us
Make sure employees are aware of their rights

2. Documentation is Key

Number two is all about the paperwork. It’s terrible, but true. Paperwork is your friend. Imagine if Cindy from the service department was always late to work. A few gentle verbal warnings did not solve the problem. After losing a contract due to Cindy clocking in late you have finally had enough. It’s time to help Cindy move onto another position with another company. But, you have no paper trail documenting her history of tardiness. When she’s finally fired, she claims wrongful termination. It’s your word against hers. She will most likely win. Now what? If you had documented every late arrival and each warning, you’d be in the clear. Always keep a record.

Steps to Follow:

Implement a system to track employee performance
Document any incidents or warnings
Keep records of any disciplinary actions
Eliminate the term “verbal warning” from your vocabulary. Put it in writing.

3. Enforce Unambiguous Policies

The third pillar of our strategy focuses on the creation and implementation of unambiguous policies. Consider, for instance, a situation from the human resources division. Jorge, an employee, has been facing persistent harassment at work. This issue escalated because the company did not have a well-defined and explicitly stated policy regarding sexual harassment, allowing the inappropriate behavior to continue unaddressed.

The presence of a robust policy can not only help in preventing such incidents but also serve as a crucial factor if legal issues arise. Even though a policy might not completely avert a lawsuit, a well-documented and stringent policy reflects the company’s proactive stance and commitment towards ensuring a safe and respectful working environment. This demonstration can be instrumental in establishing that any incident was not a result of negligence or complacency on the business’s part.

Here are the necessary steps:

Formulate an extensive set of company policies, inclusive of all aspects of the workplace, with specific emphasis on preventing sexual harassment.
Ensure these policies are unambiguously communicated, understood, and accessible to all employees.
Review and update these policies regularly to keep pace with the evolving dynamics of the workplace and the legal landscape.
Engage a business attorney to review your policies. This step can not only help in establishing legal compliance but also limit the possibility of punitive damages in the event of a lawsuit.
By implementing these strategies, you can fortify your business’s legal standing and contribute to fostering a safer, more inclusive work environment.

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4. Incorporate Rigorous Training Modules

The fourth crucial strategy involves training. The training modules should be designed with the explicit purpose of educating employees about the company’s policies such as the sexual harassment or personal conduct policies. It is critical to move beyond a passive distribution of the employee handbook, assuming that employees will engage with it independently.

Implement a structured approach: Engage employees in informed discussions about the personal conduct policy, transforming it from a static document into an interactive educational experience.

Here are the recommended steps:

Establish comprehensive training programs that provide details on the personal conduct policy.
Make participation in these training modules mandatory for all employees to ensure a uniform understanding of company guidelines.
Maintain the relevance and effectiveness of the training modules by periodically updating them and hosting refresher sessions.

This methodology fosters clarity and prevents potential misunderstandings that can arise from the mere perusal of policy documents. Such a rigorous approach upholds the professional integrity of the company and promotes an environment of mutual respect and decorum.

5. Maintain Open Communication

Halfway to the finish line, number five is open communication. Now, envision a situation with Misha, one of your top engineers. Misha is well-respected in the team for his technical prowess, problem-solving skills, and innovative ideas. However, he feels overlooked for leadership roles that he believes his experience and skills justify.

Misha notices that these opportunities are often given to employees who are more vocal, despite them having less experience or fewer contributions to significant projects. Over time, this perceived favoritism begins to affect Misha’s motivation and productivity. He starts to feel resentment, suspecting age discrimination because he is one of the older members in the team.

But here is the hitch: Misha does not feel comfortable discussing his concerns with his manager. Perhaps he fears it may be perceived as a sign of discontent or unprofessionalism, potentially affecting his standing in the company. This lack of open communication may push Misha towards seeking legal redress for age discrimination or even national origin discrimination.

If there were open channels of communication, Misha could have aired his grievances. A frank discussion about his perception of discrimination in the assignment of leadership roles might have resolved the issue internally, preventing legal complications.

Steps to Follow:

Foster a culture that encourages open communication at every level in the organization
Set up effective channels for employees to express their concerns without fear of backlash
Engage employees regularly to discuss their concerns and any perceived injustices in the workplace

6. Set Up a Grievance Procedure

The sixth strategy for keeping those pesky lawsuits at bay is establishing a robust and effective grievance procedure. A grievance procedure is a formal, standardized process by which employees can report complaints or concerns, ranging from workplace harassment to concerns about health and safety regulations. It is essentially an in-house court for settling disputes.

Let us play out a situation with Camila from the Customer Support team. Camila feels that she has been subjected to unfair treatment by her manager. This has been ongoing for a while, and Camila feels distressed and demoralized, seriously impacting her productivity and work satisfaction.

In the absence of a structured grievance procedure, Camila’s concerns might remain unaddressed, and she might resort to filing a lawsuit for workplace harassment.

On the other hand, a well-outlined grievance procedure would have given Jane a clear pathway to voice her concerns. Her grievance would be officially logged, investigated, and acted upon, ensuring her concerns are addressed in a fair and transparent manner. This system gives her confidence in the company’s commitment to resolving issues without having to resort to legal action.

Additionally, with an effective complaint procedure, Camila’s failure to use that procedure gives the company a defense to her claim. After all, the purpose of the anti-discrimination laws are to prevent discrimination in the work-place and the company can’t stop misconduct if it’s not made aware of it. So, the employee has an obligation to try to bring the misconduct to the attention of the company most of the time. So, it’s especially important your policy is effective that means it has a work around when the person who is alleged to be the harasser is in upper management, HR or the owner of the company. Sometimes that means using an outside third-party as the reporting agency so that they employees feel that they are safe from retaliation if they report an incident and their concerns will be taken seriously.

Finally, every policy MUST ensure that employees reporting any form of discrimination or harassment will be free from retaliation when they do so. Your business must also monitor the work place to make sure this actually is true.

Steps to Follow:

Develop a formal, written grievance procedure outlining how employees can report complaints
Clearly communicate the grievance process to all employees
Train management and HR on handling grievances fairly and promptly
Make sure each grievance is thoroughly investigated and addressed
Keep communication open and transparent with the employee throughout the process
Ensure there is no retaliation for reporting discrimination or harassment or participating in an investigation about the same

7. Provide Regular Feedback

You might be wondering, what does “regular feedback” really mean? In short, it is a continuous process where managers or supervisors provide constructive critique, praise, and advice on an employee’s performance on an ongoing basis. This might include formal quarterly or annual reviews, but it should also include more frequent, informal conversations.

Now, let us take Damian from the design team who is abruptly fired due to poor performance. Damian was under the impression his work was top-notch. Regular feedback could have motivated him to improve before the situation reached boiling point. An employee whose employment is terminated should never be surprised by that decision. Disappointed, sure. But never surprised, especially when that decision has been made on performance grounds. Any shortfalls should have been discussed with them and documented long before their final notice is given.

Steps to Follow:

Have job descriptions for all positions so employees know what is expected of them
Set regular performance goals for each employee
Implement regular performance reviews across all levels in your organization.
Provide clear, constructive feedback based on performance
Allow employees an opportunity to improve after receiving feedback
Document performance shortfalls as they happen and discuss ways to help the employee get back on course, if possible, and what will happen if they don’t
Include training and retraining session if applicable

8. Equal Opportunities and Fair Treatment

Coming in at number eight is equality. Unfortunately, discrimination remains a problem in our society. One of the main ways we combat it is to ensure that the criteria we use in our employment decisions are based on the needs of the position rather than other factors. Promoting equal opportunities and ensuring fair treatment helps avoid discrimination in all its forms (whether conscious or subconscious).

When making an employment decision, consider the role that position fills in the company and the greater mission. What skills does the person filing that role need? What programs do they

need to be proficient in? Create the job description around these factors. Hiring and promotion should be based on the needs of the position and the qualifications of the candidates.

Steps to Follow:

Develop a policy promoting opportunities based on performance
Have Job Descriptions to document the essential functions and qualifications for positions
Keep track of Key Performance Indicators (KPIs) or other indicators of each member of your team
Train management in fair and non-discriminatory practices
Regularly review promotion and hiring decisions for fairness

9. Correctly Classify Employees

Number nine on our list focuses on the importance of correctly classifying employees. This means ensuring that each worker is designated as either an employee or an independent contractor based on their actual role and the nature of their relationship with your company.

To paint a clear picture, let us talk about Andy. Andy was hired as a freelancer to help with some overflow work on a big project. Over time, Andy’s role has morphed into something resembling a full-time employee’s position. He works regular hours, uses company equipment, and is an integral part of the project team. Yet, he is still classified as a freelancer and paid as an independent contractor on an IRS form 1099 basis.

By maintaining Andy’s freelancer status while treating him more like a traditional employee, your company may be violating labor laws. This misclassification could result in significant financial penalties for your company and damage to your reputation.

The proper classification of employees is vital not only for the legal protection of your company but also for the fair and ethical treatment of your workforce. We have a blog post and a video on this subject. Click here to learn more.

Steps to Follow:

Understand the legal differences between independent contractors and employees.
Review the status of each worker in your company regularly, especially if their role or relationship with your company changes.
If a worker’s status changes, promptly update their classification and ensure that their benefits and obligations align with their new status.
Seek legal advice if you are uncertain about how to classify a worker. The laws surrounding worker classification can be complex and can vary by location and industry.

10. Respect All Complaints

The last entry on the list is a simple yet crucial principle: respecting all complaints. Let us consider an example with Chandra from the finance department. Chandra has been complaining about an uncomfortable chair that has been causing her back pain. It might seem minor, but a chair that is a literal pain can have serious consequences on her productivity and health.

If Chandra’s complaint is dismissed as trivial, it could lead to chronic back pain. This could result in a lawsuit for failing to provide a safe and comfortable working environment.

However, if Chandra’s complaint is taken seriously and addressed promptly by replacing the chair or offering an ergonomic alternative, not only does it mitigate the risk of a lawsuit, but it also reassures Chandra that her well-being is a priority for the company.

Steps to Follow:

Treat every complaint, regardless of its apparent gravity, with respect and urgency.
Investigate each reported issue promptly.
Communicate with the complainant throughout the investigation and resolution process.
Try to find a solution as quickly and efficiently as possible.
After resolving the issue, follow up with the employee to ensure they are satisfied and comfortable.

If you found this article helpful, we invite you to explore more insightful content on our blog. From leadership tips to contract law concepts explainer videos, NDG Law got you covered. Stay proactive, stay informed, and stay lawsuit-free!

Note: This blog post is intended for informational purposes only and does not constitute legal advice. Please consult with a qualified employment attorney for personalized guidance.

Interested in our services?

If you would like assistance with this or any other compliance matter, please contact Nancy at N D Greene PC by clicking on schedule an appointment.