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How Can Companies Avoid Costly Employee Lawsuits?

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Companies Can Avoid Costly Employee Lawsuits 

There are few things that are less welcome to business owners than having to deal with a lawsuit from a current or former employee. Regardless of the validity of the claim, these lawsuits need to be taken seriously, as they can greatly detriment you company if you lose the case. Here are some tips for how companies can avoid costly employee lawsuits.

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Learn the Major Laws Against of Discrimination and Harassment

There are certain laws and protections in place to protect employees from discrimination or harassment from coworkers or employers. It’s likely that you’ll find yourself in court even if you don’t knowingly violate these rights. These are a few of the major points that are protected under federal law:

  • No discrimination based on race, color, religion, sex or national origin.
  • No discrimination based on pregnancy or childbirth.
  • No discrimination in pay based on gender.
  • No discrimination against people with serious health problems.
  • No discrimination against people older than 40.
  • No discrimination against people with disabilities.
  • No discrimination based on genetics.

You should also familiarize yourself with the laws within your state, as they may provide additional rules against discrimination. Knowing what can be considered discriminatory will allow you to avoid potentially disastrous lawsuits.


Get Good Business Insurance

There are various types of business insurance for different industries and specializations. It’s important that you take the time to find a plan that provides your company with comprehensive coverage. If you neglect your business insurance, you can be held liable for any damages awarded to an employee in court. These damages can be in the millions of dollars, which is completely unaffordable for most organizations. Do yourself a favor and do your research when looking through types of business insurance.

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Document Employee Issues

Sometimes you have to fire an employee for doing a poor job. This is never enjoyable, but necessary for any business trying to succeed. If you don’t make it clear to employees what you expect from them, it’s possible they might try to take you to court if they end up losing their job. This doesn’t have to be some kind of massive manifesto. Just document all work expectations; and keep a log of all times that an employee has breached them. By doing this, you can prove that there was a reasonable cause for your firing of an employee.

Build Relationships with Your Employees


One of the best ways to avoid a lawsuit altogether is to build strong, trusting relationships with your employees. This can be difficult in larger companies, which often lose out on the close-knit culture of smaller outfits. That, however, isn’t an excuse to not try to build relationships. Your employees come in and work for you every day. It’s important that you work to understand their position and needs. If you don’t do this, two things are much more likely to happen. Your employees will begin to resent you if they feel that that don’t matter. It’s not enough to just smile and pat people on the back, but have to guess three times before you remember their name. If you can’t do it yourself, hire managers who can give your company a personal feel. This isn’t going to protect you from all lawsuits—as there are always going to be people looking for a quick settlement. But it will go a long way.

Tracking the pulse of your workforce is also smart because you will be more aware of potential issues, or employees who may try to cause trouble down the line. If you identify an individual who you think might just be waiting to take you to court, start taking proactive steps.

Lawsuits are an unfortunate part of running a business. Luckily, with a bit of research and care, it’s possible to greatly lower the likelihood of finding yourself on the receiving end of one.

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