Having a happy work environment where everyone works well together? 10/10. Getting sued by an employee for one reason or another? 0/10. But before those troubles arise, there are many steps an employer can take to avoid a lawsuit in the first place. Here are 6 practical steps to help you avoid litigation.
(Pss… as a reminder, this isn’t legal advice. Merely suggestions to consider when working with your team to implement best practices for your business)
1. Build a Positive Workplace Culture
A positive workplace environment is built on trust, clear communication, and growth opportunities. As the employer, it’s your responsibility to foster this between employees and management.
When creating your plan of action consider these two questions: 1) How can you implement fair and transparent HR policies? 2) How can you provide opportunities for employee development and growth?
2. Develop a Comprehensive Employee Handbook
Many workplace troubles stem from miscommunication. One way to ensure everyone is on the same page is an employee handbook. This is where you clearly outline company policies, procedures, and expectations.
Once it is created, routinely evaluate and revise it where necessary with updated employment laws and changes you feel are most aligned with the overall health of your business.
It’s also important to have the handbook easily accessible to all employees.
Looking for an example or a deep dive into employee handbooks? Check out Trinet’s article on all things employee handbook-related.
3. Handle Layoffs with Care
Layoffs. The dreaded L-word. According to the U.S. Bureau of Labor Statistics, there were more than 17 million layoffs and discharges in 2022. It’s an unfortunate reality in the business world; you want to be prepared.
If the need for layoffs arises, here are a few points to keep in mind when making difficult decisions:
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Conduct layoffs for legitimate business reasons only.
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Provide fair notice and severance packages.
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Offer outplacement services to help affected employees find new jobs.
Want a more in-depth guide? Check out Tech Republic’s free guide 10 Tips for Doing Layoffs the Rigth Way.
4. Review Training and Disciplinary Procedures
We’re circling back around to the employee handbook on this one. When reviewing (or creating) your policies and procedures, ensure your policies comply with relevant legal changes, such as the Americans with Disabilities Act.
It might elicit some eye-rolls, but it also helps if you provide ongoing training to managers and employees on topics such as workplace harassment, discrimination, and retaliation prevention.
Looking for a list of ways to stay up-to-date with Employment law? Check out Forbes.com’s 8 Strategies to Stay on Top of Changes in Employment Law.
5. Establish a Complaint Resolution Process
When an employee complaint or concern does arise, it is helpful to have a formal process in place. It will look different from company to company, but the general idea remains the same: Create a clear and accessible process for employees to report concerns or grievances.
It’s your job to investigate complaints promptly and fairly, leaving behind bias.
Indeed recommends this 5-step process:
1. Employee has an informal meeting with the supervisor
2. Employee writes a formal grievance
3. Manager or employer evaluates the grievance and possibly pulls in Human Resources
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A formal investigation is conducted
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A resolution is made
6. Consider Employment Practices Liability Insurance (EPLI)
To be extra prepared, consider Employment Practices Liability Insurance (EPLI). While this won’t help you avoid a lawsuit, it will help protect you from unexpected lawsuits and financial losses.
EPLI policies often cover the business itself, as well as individuals like company directors. Policies are usually written to help cover cases that come out of unintentional actions or failures to act rather than deliberate acts of discrimination or other wrongful practices.
One thing to consider when choosing an EPLI policy is knowing if the costs of defending a claim in court count towards the payout limit for any damages.
Also, look out for mention of a claims-made basis, which means you may only be covered if the policy is active both when the alleged incident took place and when the employee makes the claim.
If you run a business, chances are you’ll need employment practice liability insurance. Working with an insurance agent, such as Zach Schneider at Schneider Insurance in Mobile, AL, can give you the peace of mind that you are well protected. Zach will help assess your risks and determine the appropriate coverage for your business.
By following these steps, you can significantly reduce your risk of employment-related litigation and create a positive and productive workplace.
Call Zach at Schneider Insurance today to learn more about how we can help you prevent legal issues and protect your business.
