Berks & Beyond Blog

Here’s an attention-grabber for you:

According to the National Federation of Independent Businesses, on average, every time a small-business owner gets taken to court – win, lose, or draw – the cost is more than $100,000.

Not interested in that hit to your bottom line?  You’re not alone.  In fact, entrepreneurs place fear of litigation near the top of their list of business worries.  And rightfully so – we live in a sue-happy society.

So what’s a responsible executive to do?  Well when it comes to employee litigation, an ounce of prevention can go a long way.  This list will help you head-off the managerial mistakes that commonly lead to employee lawsuits.

1. Make better hires.  Nip personnel problems in the bud by ensuring marginal employees and perpetual complainers are never hired.  Train hiring managers to interview aggressively, asking questions that will bring out potentially “toxic” traits (e.g., lack of respect for authority).  Consider including integrity and personality tests to ensure a good culture fit; or, hire a recruiting or staffing service to conduct behavioral hiring assessments for you.
2. Put it in writing.  From employment contracts to performance evaluations to disciplinary actions, documentation is invaluable.  Protect yourself by mandating a written record policy, requiring all documents to be signed by both employer and employee.
3. Take employee complaints seriously.  While it’s important to hit numbers and meet deadlines, it’s equally critical to hear out a complaining employee.  So encourage your employees to come forward with complaints without fear of retribution.  Address problems early to prevent them from festering.
4. Train managers.  Conflicts between employee and manager are among the most common causes of employee lawsuits.  To protect your company, make sure managers are formally trained on ways to avoid and investigate sexual harrassment, workplace discrimination, and other employment quagmires.
5. Take a walk in your employee’s shoes.  When a serious problem arises, it’s human nature to assume you’re in the right.  But to head-off trouble, take a step back and try to view the situation from the employee’s point of view.  What is he feeling?  What are his motivations?  You may gain a new perspective on the problem and find a way to resolve it – without going to court.
6. Keep employee feedback objective.  Relate praises and criticisms, rewards and disciplines to the job and not the person.  Praise an employee for hitting sales targets, not for being young and aggressive.  Criticize an employee for failing to meet a deadline, not for being lazy.  Feedback that characterizes the employee, rather than evaluating performance, may become fodder for a lawsuit.
7. Be prepared for the inevitable.  Despite your best efforts, a litigious employee may still find something to sue you about.  So be ready for him – and carry good insurance.  Meet with an attorney to review your company’s risks, identify coverage gaps, and recommend appropriate insurance.  While these measures may not keep an employee from suing you, they may save you thousands of dollars in legal costs and judgments against you.

Learn more.

Contact Berks & Beyond today to find out how our temporary, temp-to-hire, and direct hire services can further reduce your risk of employee litigation.