How to Avoid Employee Lawsuits

Employment lawsuits are one of the most serious and costly problems that a business owner can encounter.  Unfortunately, it has become all too easy for an employee to initiate a lawsuit against their employer.  However, with proper documentation in place the employer can effectively reduce their exposure to employee lawsuits.

Keep Detailed Records

One of the most important things you can do to protect yourself is to keep detailed business records.  Document any actions taken with regard to your employees such as verbal warnings, raises, hours kept, raises, time off, etc. If your employee comes to you with a problem or complaint, make sure they put it in writing and you keep it in their employment file. Keep in mind the documents you place in their employee file could be “Exhibit A” down the road.  Whatever an employee sues you for, you will have to prove what actions you took.  Your word will not be enough; you need to produce documentation to prove your case.

Take Steps to Ensure “At-Will” Employment

California is an “at-will” employment state. This means that either party in the employment relationship can terminate employment at any time, without liability. The key here is to make sure there are no employment contracts or documents that say otherwise. ”At-will” employment can be tricky, and will not prevent a disgruntled employee from suing you to get their job back. You, as the employer, should make it abundantly clear the relationship you have with your employee is “at-will.” This should be stated in your California employee handbook and in the employment files. It is also a good idea to have the employee sign an acknowledgment form that confirms they are an “at-will” employee.

Give Accurate Performance Reviews

Giving accurate performance assessments can prevent problems down the road with your employees.  If an employee is not performing to your standards, sugar coating the problem can do a lot of harm.  If the employee continually does not perform to your standards, be honest with them.  If they do not receive accurate feedback from you and are later fired, they are far more likely to sue.

Create a Solid Discrimination and Harassment Policy

Developing clear employment policies are important, but especially so in the areas of discrimination and harassment.  It is often recommended to train your employees on harassment and discrimination issues once a year, and have them sign documentation at the end of the training session verifying the training.

Adopt a Well Written Employee Handbook

A California employee handbook is a useful tool to help prevent employee lawsuits.  In this day of rampant employee litigation no company should be without one, especially in California.  Besides establishing consistency and uniformity with company rules, it is a great way to notify your employees of necessary laws and confirm “at-will” employment.  By having each employee sign an acknowledgment, you are further protecting yourself from problems in the future.