If you own or operate a business, you are likely already aware of the reasons you want to avoid litigation. First, litigation is very expensive, and beyond that, it can sap a lot of time and resources away from the day-to-day business of making a profit and meeting your customer’s needs. One of the most common of all types of litigation cases businesses have to deal with is a lawsuit from an employee. Therefore, shrewd businessmen take precautions to avoid such lawsuits ever happening in the first place.
Here’s a list of few quick tips to help your business mitigate the risk of an employee lawsuit:
1. Ensure nonexempt employees are treated as such. Non-exempt employees are mostly always entitled to overtime pay if they work more than 40 hours a week as stipulated in the Fair Labor Standards Act. In most cases, the majority of a business’s employees are nonexempt. Ensuring they receive overtime pay when they do work over 40 hours can eliminate one of the major causes of employee litigation.
2. Ensure exempt employees are treated as such. Conversely, if an employee is an exempt employee (on salary), they do not earn overtime when working over 40 hours a week. However, they cannot be docked for showing up late or working less than 40 hours a week either. If an exempt employee has their pay docked, their status may legally become nonexempt. Avoiding such complexities is another way to steer clear of a common cause of employee lawsuits.
3. Prevent Discrimination. Another very common source of employee lawsuits is discrimination based upon something like disability, pregnancy, religion, nation of origin, race, age, gender, or, in some states, sexual orientation. Actively working to prevent any cases of such discrimination can be an essential proactive step in minimizing your business’s litigation risk.
4. Equal pay for equal work. This has continually been a hot-button issue over the past few decades, but to protect yourself as an employer, make sure that two employees doing roughly the same job make roughly the same wage. Keep in mind that it’s fair and appropriate to make allowances in cases where one employee performs better or has more experience. Additionally, wages should be set upon market standards instead of individual variables. Doing so shows your intent to provide fair wages to all employees which severely limits your exposure to litigation over such incidents.
5. Ensure all workplace rules are fair and reasonable. Focus workplace rules on things that directly affect workplace performance and standards. Having too many rules is just asking for a discrimination case, but having too few also puts the company at risk for not doing enough to prevent a hostile environment. Carefully consider all rules and possible litigations that could result from them to help minimize risk in this area.
6. Don’t let employees work when they are off the clock. Though this happens at many disreputable companies, it puts them at extreme risk of litigation. It’s important to note that even if you don’t ask an hourly employee to work off the clock, you still owe them for it if they do. So actively educating your staff to prevent such situations can greatly limit your liability.