Your employees generate revenue for your company, but they are also a big expense for the business. You need to pay their wages and employment taxes, along with benefit expenses.
Workers can cost way more than their salary if they bring a legal claim against your business. Employment lawsuits can cost companies hundreds of thousands of dollars and damage their reputation with potential future employees.
Thankfully, there are ways to reduce your company’s risk of a lawsuit by a current or former employee.
Have a thorough employee handbook
Offering adequate training so that workers know what to expect at your company is crucial. An employee handbook is also important because it gives workers a document that they can refer to about their obligations and rights at your company.
Your employee handbook can address everything from your policy on severance pay to your structure for annual bonuses. You can also address employee misconduct clearly by including rules about what you expect from your workers.
Be transparent about expectations and discipline
Having a progressive discipline policy is an excellent start for a company that wants to avoid employee claims of discrimination or wrongful termination. When you clarify behavioral issues and performance shortcomings with your workers in writing, they will have a harder time claiming you discriminated or retaliated against them.
The records from your progressive discipline efforts could help show that your termination or demotion of a worker was the result of their behavioral issues. Clearly tracking performance metrics for your employees and addressing any shortcomings will make it clear why you chose to promote certain workers above others.
Take employee complaints and reports seriously
Even if your company does not condone sexual harassment. It could face a lawsuit if it doesn’t react appropriately to allegations by an employee.
Have a clear policy on harassment and discrimination claims, including instructions for how employees can make a report that doesn’t involve their direct supervisor. Your company needs to investigate allegations carefully and engage in appropriate disciplinary actions, transfers or employee training to address these issues as they arise.
Take proactive steps to reduce the potential of an employment law claim against your company, help keep you in the black and attract the best talent.