Employee claims present one of the most significant potential liabilities a business may face. Most employment laws impose personal liability on business owners and decisions makers, so business owners are not protected by the corporate form of their business entity. Many employment laws also provide for attorney fee shifting in favor of prevailing plaintiffs, which can significantly increase the potential liability of an employee lawsuit. Similarly, certain employment laws, for example most wage and hour laws, provide for liquidated damages of 100% to 200% of the compensatory damages awarded to a plaintiff.

As the brief description above highlights, employee claims can result in crippling financial liabilities to a small or medium sized business and its owners. Unfortunately, too many businesses ignore employment law compliance until after facing an employee lawsuit or claim. The better and much more cost-effective approach is for businesses to be proactive in minimizing the risk of employee claims. The good news is that most businesses can do that by taking a few relatively simple steps. Five such steps are noted below.

1. Implement an Employee Handbook

An employee handbook puts in place clear policies and procedures that help set an employer’s expectations about employee performance and conduct. This helps prevent misunderstandings and reduces the risk of employee claims. Moreover, the policies in an employee handbook are crucial to defending employee claims as the policies provide clear standards that can be used to justify employment decisions. A prior post we made about the importance of employee handbooks can be found here.

2. Provide Adequate Training to Supervisors and Staff

Virtually every business should be providing regular anti-harassment training to its employees. In fact, in some jurisdictions, such as New York, employers are required to provide annual anti-harassment training. Providing regular anti-harassment training helps to reduce the risk of employees engaging in inappropriate workplace behavior. Anti-harassment training is also important for supervisors so that they are clear on their obligations to report any potential unlawful harassment. Supervisors and managers should also be trained on how to handle potential disability issues or accommodation requests as they are usually the first individuals an employee will approach about such matters.

3. Maintain Accurate Records

Too often businesses are lax in creating and maintaining records regarding employee performance. This makes it difficult for a business to justify an adverse employment decision, such as a termination, if an employee claims the adverse decision was unlawful. It is not uncommon in employment lawsuits for employees to claim that they never received a negative performance review or any disciplinary action, while the employer claims, without documentation, that the employee was a subpar performer.

4. Conduct Regular Employee Reviews

In addition to maintaining accurate records, employers should conduct employee reviews at least yearly. As part of the review process, we recommend that employees be permitted to submit a self-review where they review their own performance. The review and self-review can help employers identify and address any potential issues before they become a problem. For example, the review process would highlight any disconnect with employee regarding whether the employee was satisfactorily performing his or her job.

5. Consult with Employment Law Counsel

Finally, business owners should consult with an experienced employment law attorney to ensure their business is compliant with all applicable laws. Experienced counsel can help a business owner identify areas of potential liability and provide legal advice on ways to minimize risks. As mentioned above, most employment laws impose personal liability, so employment law compliance is not something a business owner should ignore.

If you have questions about your business’s employment practices, please contact us at (201) 345-5412, or through our online scheduling system, to schedule a complimentary consultation.

Information contained in this blog is provided for informational purposes and does not constitute legal advice or opinion. You should consult with an attorney regarding the specifics of your matter or legal issue.