No one wants to be involved in a lawsuit—they can be timely and expensive and can negatively impact an organization’s reputation. Despite employers’ making efforts to avoid litigation, employment lawsuits are on the rise. According to Human Resource Executive Online, federal wage-and-hour lawsuits jumped to a record high between April 2012 and April 2013. During this 12-month period, 7,764 Fair Labor Standards Act lawsuits were filed, with no clear explanation for the spike.
With such large increases in employment lawsuits, it is important for employers to take precautions to protect a company against litigation. Keep reading to find five tips on how to avoid an employment lawsuit:
1. Mind the FLSA
In order to avoid employment lawsuits, it’s important to keep an eye on any changes to the Fair Labor Standards Act. According to the Society for Human Resource Management, misclassifying employees as exempt or nonexempt from overtime payments, as well as violations for off-the-clock work, are common mistakes that put employers at risk.
Placing an employee in the wrong category can result in missed overtime hours, incorrect salary payments, and other FLSA violations. The fallout from these violations can greatly cost a company.
2. Hire and Let Go With Care
Firing someone is one of the easiest ways to bring about a lawsuit. Experts agree that if a company wants to fire an employee, it must be done with care. If an incident has taken place, rather than firing someone on the spot, managers should send the individual home first or place him or her on administrative leave until an investigation has been carried out. Companies should also be sure to document the decision every step of the way to reduce the chance of legal action.
3. Be Smart With Severance Policies
Severance packages can be thought of as insurance against lawsuits. In exchange for the extension of a severance payment, employees should consent to signing a release waiving any claims against the organization. Employers may not be excited to offer severance to a departing employee, but being generous with these packages can encourage employees to walk away with payment rather than raising a lawsuit against a company.
Some companies are wary of severance packages and worry that doling out severance implies some level of guilt or wrongdoing on their part. On the contrary, courts understand that severance packages are part of a responsible employee management scheme that can help a company steer clear of wrongful litigation.
4. Train and Monitor Staff
Many workers have trouble recognizing what qualifies as inappropriate workplace behavior, which is why it’s crucial to draft airtight company policies regarding harassment and discrimination. In addition to creating solid policy, training is also essential in order to avoid harassment lawsuits. Many states require harassment training—if a company does not comply with these laws and a harassment suit is lodged against the organization, the outcome can be costly.
Even in states where antiharassment training is not required, companies would still be wise to educate staff on harassment policies. This will reduce the likelihood of a suit, which will save a company money and its reputation. Training sessions should focus on all forms of harassment, including sexual harassment, bullying, age discrimination, disability, and racial harassment.
Company management should be careful with staff, even after training. Supervisors should be present at the workplace and look for any warning signs of inappropriate behavior. If a manager witnesses harassment or other workplace transgressions, he or she should correct it immediately by addressing the situation directly with the employees.
5. Open the Lines of Communication
If a company wants to get ahead of a legal problem before it begins, supervisors should invite employees to be open and honest with them about company concerns. Workers should feel comfortable going to a supervisor when they have questions about their wages or encounter harassment or discrimination at the office.
When employees feel comfortable voicing their concerns, managers will be informed of problems before they get out of control and result in litigation.
Litigation is no joke, but employers don’t have to be in constant fear of a lawsuit either. By following these tips, a company can stay out of trouble and create a work environment where staff feels safe and comfortable.