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September 6, 2023

Employees and ex-employees who bring lawsuits against your company can divert time, attention, and resources from running your business. Even if you win or settle these lawsuits, your business can still suffer financial and reputational damage.

A strong, proactive offense is the best defense against these types of lawsuits. By taking preventive measures now, you can shorten the lifespan of these lawsuits to resolve them more quickly — and on more favorable terms.

5 Ways to Protect Your Business From Employee Lawsuits

As a human resources department, you cannot prevent a determined employee or ex-employee from filing a lawsuit against you or your business. But taking any or all of the following five steps can dramatically impact how far such cases will go. These steps include:

1. Retain an Employer Defense Attorney Now

It can be tempting to wait until a lawsuit gets filed before you look for an employer defense attorney to represent you. If your budget is tight, the prospect of paying an attorney’s hourly fee or retainer can seem like an unnecessary expense. However, delaying seeking legal representation can cost you in the long run.

Choosing your employer defense attorney carefully before you encounter a lawsuit is vital. There is little time to deliberate after a lawsuit has already been served. You are more prone to hire an inexperienced attorney or one who is not well-suited to your business and the lawsuit you are facing if you feel rushed into making a decision.

Not only does looking for an attorney now give you time to determine who best can represent you in the event of an employee lawsuit, but it can also help you avoid legal issues in the first place.

Giving an experienced employer defense attorney access to your business can allow them to analyze your operations and management and identify and correct potential liabilities.

2. Create and Distribute an Employee Handbook

If you have employees but do not have an employee handbook, it’s important to create one as soon as possible. An employer defense attorney can help you craft one that will pass legal muster and be enforceable. Once you have created it, make sure to distribute it to your employees and affirm that they have read it.

At a minimum, your handbook should contain a code of conduct that you expect your employees to follow, including timekeeping and disciplinary policies. It is helpful, too, if your handbook discusses the benefits you are offering, including frequency of pay, sick time, and vacation time.

3. Follow Your Employee Policies

In crafting your handbook, you and your attorney will decide on the policies you want to apply to your workers. It is crucial that you follow these policies at all times. It can be tempting to give long-time employees a pass or not enforce a policy to appear likable. You may be concerned about upsetting employees with your disciplinarian attitude.

However, following your employee policies sporadically or making exceptions here and there is a surefire way to face a lawsuit. A disgruntled ex-employee may see the preferential treatment you give to another employee and accuse you of discriminating against them.

As difficult as it may be, once you have created your employee policies, commit yourself to following them at all times.

4. Train Your Workers to Recognize Discriminatory Work Behaviors

You can be held liable for allowing a hostile work environment. While you may not be able to monitor everything your employees do and say around each other at all times, you can make it clear that you will not tolerate discrimination or harassment from your workers.

Since the definitions of age discrimination, disability discrimination, and sex discrimination are constantly evolving as new cases are decided, you want to keep abreast of changes in this area of the law. If you have retained an employer defense attorney, they can provide legal updates to your management and staff.

Being proactive will help you avoid allegations that you are unaware of what happens at your company. In addition, the seriousness with which you take these matters can help encourage your employees who have been discriminated against to report the matter and seek internal resolution instead of rushing to the courthouse.

5. Keep Meticulous Records

Records of employee emails, security footage, a job applicant’s resume, and notes from any performance reviews or disciplinary action taken should be kept.

Make these notes as contemporaneously as possible with the event you are recording. For example, if you are conducting a performance review, you should create your notes in the employee’s file simultaneously or shortly after the review.

Your present sense impressions of why you took certain actions, especially disciplinary actions, against an employee can help you when you are called upon to respond to an employee’s lawsuit.

Waiting until the lawsuit is filed to think back as to why you terminated an employee or what policies they violated can appear as if you are searching for any reason you can to explain away the allegations in the lawsuit.

What to Do When an Employee Files a Lawsuit

Even with these proactive steps, you cannot prevent all employee and ex-employee lawsuits. When you are served with a complaint alleging discrimination or some other violation of the law, it’s best not to put it aside or hope it will go away.

Make sure to reach out to your employer defense attorney immediately for help in handling a timely and proper response to the lawsuit.

Prevention Is a Worthwhile Investment

While you may not be able to prevent all lawsuits from employees and ex-employees, taking these five key steps can effectively protect your business against such lawsuits and increase your chances of resolving them in your favor. The time and effort your HR department puts into these protections can prove to be a valuable investment.

An experienced employer defense attorney can provide critical guidance in preventing employee lawsuits against your company and securing the best possible outcome in the event of a lawsuit. For more information, contact our firm and schedule a consultation today!


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