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If there is one thing that we have learned over the last few years, it is that events and problems can pop up out of seemingly nowhere. We know that isn’t true, but it can happen so fast that it feels like it. But there is one lesson that is a good reminder for all of us right now; being proactive and taking simple preventative steps can go a long way in avoiding a disaster. The same principle applies to small business owners who may not see where they are opening themselves up to a potential lawsuit. Ask yourself what preventative measures should you take to avoid an employment lawsuit that will cost you money and disrupt your business? 

Why do employees file lawsuits?

The current workforce is made up of five very different generations working side by side. With such a diverse background of life experiences and expectations, it is not hard to understand why lawsuits are becoming more frequent. People file a lawsuit when they feel wronged, that is the way of the world. Whether co-workers or bosses intentionally or subconsciously offend another co-worker, their actions may lead to litigation which can be devastating for a small business owner. 

What does an employment lawsuit mean for a small business owner?

The bottom line is money. A lawsuit will drain your cash flow quickly, take time away from growing your business, and add stress between co-workers, which decreases productivity. As Susan M. Heathfield, an HR consultant said, “In employment discrimination lawsuits, the business always loses, even if that loss is a diminished public reputation. Consequently, creating a work culture and environment for employees that encourages diversity and discourages employment discrimination in any form is critical for your success.”

How can your prevent a lawsuit?

So how can you keep your business safe while still running it the way you want? Some companies are willing to risk more than others. However, it is completely up to you just how far you are willing to go in preventative measures. Even so, there are many different ways to protect yourself today to whatever extent you deem necessary.

Make Reporting Complaints Easier

One of the most important things to do is to make reporting complaints easier. You need to have an employee handbook that outlines policies and procedures for reporting. Make sure there are other avenues to report complaints if an employee is not comfortable talking to their immediate supervisor.

Another crucial element in preventing a lawsuit is to document everything, especially performance deficiencies. Document everything to support the reasons for your actions whether it’s positive or negative. If you end up in a lawsuit, the documents will be the evidence to support your version of the story and prove your legal compliance.

Other preventative measures we recommend include:

  • Don’t make exceptions. Rules need to be applied consistently for all applicants and employees, no matter the position. Having systems and policies in place force everyone to be treated the same, given the situation.
  • Supervisors are your front line and need training the most. They handle daily complaints and if those are not handled in a timely and proper way, those complaints become lawsuits. Training does not cost money, it saves money.
  • Consider creating specialists for the complex employment laws regulating your business. By sharing the load among several employees you will reduce the amount of stress on one employee.
  • Make your handbook a tool rather than a stumbling block. Simplify the handbook and train employees on the rules and procedures. Have employees acknowledge that training in writing.
  • Always seek to terminate an employee slowly. Why? A rush to termination can be expensive and provoke a lawsuit. Get legal advice if you are uncertain. 

How will these preventative measures benefit your small business?

If a lawsuit is filed then these basic preventative measures will reduce the chances of that lawsuit making it very far and less likely to be litigated. But you must be proactive and timing is crucial. Once you learn of a problem, respond immediately because, with a lawsuit, the timing will be scrutinized. If you fail to take prompt action you will put your business in jeopardy.

Trouble can come at any time. But you can lessen the impact and even prevent troublesome employee lawsuits by being proactive and making sure your company’s policies and procedures are solid. And don’t hesitate to lean on the experience of a small business attorney, like Dana Ball, who knows how to protect your business and provide peace of mind.


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