6 Easy Ways To Avoid Legal Issues with Employees

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Written By Paisley Hansen

Running a business is hard work and at some point, you’ll have to rely on employees to get things done.

No matter in what capacity your employees work, there are numerous legal aspects to being someone’s place of work. You are responsible for timely and accurate pay and keeping records of that payroll, as well as any and all human resource documents, benefit offerings and elections, special circumstances, and hiring and firing details.

Nearly every interaction you have with an employee can have a legal component and can lead to legal action. So it is prudent to ensure your bases are covered and policies are clearly communicated to avoid a situation where someone might be inclined to sue.

1. Offer Benefits

When one of your employees gets injured on the job, they may plan to call a workers’ compensation lawyer. Especially in jobs that are traditionally more dangerous, such as construction or working outdoors, on the job injuries can be common.

The downside is that often these professions aren’t the ones making six-figures a year, and the employees need their paycheck. They might go so far as to stage an injury at work so they can claim workers’ compensation, but this can hurt your business because the payments will come from your pocket. 

So what do you do to avoid a legal battle and a legal action? Offer benefits.

Benefits are a great way for businesses to attract top talent and retain the employees they already have. Offering a medical plan can boost morale and help your employees to feel as if you have their best interests at heart.

A perfect option to include is a short-term disability, which can help you avoid legal action in the situation above. This type of insurance protects employees’ paychecks in the event they are injured off the job and cannot work. It takes care of their main worry—lost income—so they don’t have to look to you to pay their bills while they recover.

2. Hire Quality People to Reduce Legal Action

hiring quality peopleWhen you run a business, you want to head off problems right from the get-go.

To do this with employees means starting with an avoidance mindset during the hiring process. You want to make sure you hire quality candidates who can live your company culture and contribute positive outcomes to your team and office.

An easy way to initially get a feel for a person’s character and integrity is to simply fact check their resumé. There are plenty of online tools to verify past employment, or you can call their previous stores and simply ask.

An untruth on a resumé might be a sign the person is not trustworthy, and you should proceed with caution.

Also, make sure you are always checking references and running background checks on the people you intend to interview or hire. This is a quick and easy way to get a more comprehensive look at their work ethic, values, and integrity.

Not to say good people can’t make mistakes, but any major concerns that come up during this phase of research shouldn’t be ignored. Be sure to ask specific questions to their previous managers about any areas of concern you have so you can create a full picture of the candidate.

3. Documentation 

You can’t win a court case and a legal action if you can’t prove your argument, so you should be sure to document everything.

Any steps you take during the hiring process, document. Any performance notes or concerns during the first few months, document. Document every annual review, every pay raise, every corrective action, every official interaction you have with your employees.

Every time you create one of these documents, be sure to review it with the employee and include a place for their signature. This provides proof that they went over the information and were aware of the consequences of their actions, good or bad.

If you have the proper documentation, any claim brought against you can be easily dismissed because you’ll be able to easily prove what actually happened and show the employee consented.

4. Cultivate Your Culture to Reduce Legal Action

Cultivate company cultureEvery business has its own identity, and the employees contribute greatly to it! This is a great way to establish the mindset and attitude you want in your workforce from day one.

It is important to create a culture of openness, but also of authority and respect. This means people may feel free to come to you with any of their needs or concerns, but also understand the ultimate decision is up to you and you will do your best to choose the best option for the company as a whole.

If you make it clear that breaking rules, not following procedures, or ignoring policies are a zero-tolerance issue in your office, you can greatly reduce your risk of employees seeking legal action. This is because you can be proactive about any area of concern that could cause trouble down the line.

If you implement rules that make employees avoid dangerous behaviors, actions, or patterns, then you are greatly reducing your risk of exposure to a major legal battle.

5. Don’t Be Hasty

Employees make mistakes. It is the nature of being human. Your job as an employer is to decide which mistakes are fixable and which are egregious enough to legally warrant letting someone go.

Luckily for you, there are plenty of legal guidelines, both federally and for your state, that you can find online that can help you decide if it is legal to fire someone. The main rule to know is that you cannot fire someone without cause. You have to be able to produce a valid reason for why that person’s performance or behavior was compromising your business or not in line with your company culture.

For example, you cannot fire someone because you don’t like their attitude in their break room, but you could fire them for consistently being rude to customers and receiving multiple customer complaints about the person.

The key in this step is to take the time to understand the whole situation. Often, the problem presented to you isn’t the whole story, so be sure to find and listen to all sides.

If a complaint is lodged against one of your employees, call them into your office and let them know. Ask them if they remember the incident and have them tell you their side of the story. It might be the customer was having a particularly bad day and your employee didn’t do anything wrong. Or the offense wasn’t as severe as it initially sounded.

After listening to your employee, you can agree on a reasonable consequence and have them sign documentation attesting to their behavior and punishment.

6. Know-How To Legally Terminate Employees

6 Easy Ways To Avoid Legal Action with Former EmployeesSometimes, however, the circumstances are what they are and you might find yourself having a difficult talk with an employee.

In this instance, you should keep in mind any legal action an upset former employee might seek to take against you. The first is discrimination. Some people will think they did just fine in their position and the reason you chose to let them go is that you have some type of prejudice.

To arm yourself with knowledge, you should be generally aware of the terms set forth in the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination Act, and the Pregnancy Discrimination Act. All of these protect distinct groups from being discriminated against in the workplace and might be used as a defense in a court proceeding.

If you know what each of these acts stipulates, then you can ensure you have the proper documentation and motives when firing an employee.

Another tricky situation to watch out for is defamation claims. In some instances, terminated employees might claim their employer made harmful statements about them to their coworkers at the office.

This one can be trickier to defend because odds are you don’t record every conversation you have at the office. The easiest way to avoid this claim is with company culture. If you foster a friendly workplace with no tolerance for gossip or rude behavior, then it will show through.

By setting the example of never speaking about other coworkers, your current workforce will be able to confidently refute the former employee’s claims and confidently state there is no gossip allowed in your office.

Finally, consider the type of employment of your staff. Most people work with “at-will” employees, meaning either party can terminate the relationship at any time, for any reason, or sometimes without reason.

A smart way to avoid legal action in these circumstances is to plainly write out examples of fireable offenses. Add them into the contract your new employee will sign, and it will make the termination much smoother and less stressful in the event it comes to that point.

Worrying about possible legal action can take up a lot of your headspace, so avoid the problems by focusing on these few techniques.

Be sure you hire quality candidates, document everything you do, cultivate a positive company culture, listen to the whole problem before making decisions, and know the rules about legally terminating employees.

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