Minimizing the Risk of Employee-Related Litigation
Commercial litigation encompasses a wide range of disputes, including those related to contracts, wages, discrimination, and wrongful termination. These disputes can arise when employees believe their rights have been violated by their employer or when employers feel that employees have not fulfilled their contractual obligations. Because such disputes can be costly and time consuming, especially for employers, seeking ways to minimize them is crucial.
Before hiring, employers should seek legal counsel to understand regulations such as hiring practices, workplace safety, and anti-discrimination laws to ensure compliance and avoid potential lawsuits. Utilizing legal recruitment sources, paperwork, and interviewing techniques may ensure that the recruitment and selection process is fair and that candidates are well matched to their jobs. Moreover, it may minimize the risk of discrimination or wrongful termination, which can lead to legal action.
Employers should document due process to defend themselves against an employee lawsuit. This could entail communicating clear and consistent expectations in writing, creating a fair and consistent disciplinary process, and documenting performance and disciplinary actions. Employers may also need to conduct face-to-face evaluations to address employee concerns to prevent potential lawsuits.
Treating employees well may also help minimize commercial litigation. When employees feel valued and respected, they become more loyal, productive, and committed, creating a positive work environment. Treating employees well also means paying them well to avoid violating state and federal wage and hour laws. Employers with good employee relationships are better equipped to mediate disputes without litigation.
Proper training of employees on safe work practices using resources and training programs is vital to minimizing work-related accidents that may lead to lawsuits. For each employee, such training should be documented to provide evidence that the company has taken steps to equip its staff with relevant knowledge and skills. Documenting the training also indicates compliance with applicable laws, regulations, and policies.
Businesses also need restrictive covenants to protect themselves from legal claims. These covenants can protect a business’s marketing strategies, proprietary systems, inventions, and customer lists from unauthorized use or disclosure. They can include non-compete clauses, non-disclosure agreements, non-solicitation clauses, non-disparagement clauses, and arbitration clauses. Non-disclosure agreements, for instance, forbid current and former workers from disclosing sensitive information, like the company’s trade secrets, during and after employment.
Employers should similarly establish clear and written independent contractor agreements separate from employee agreements. Such an agreement should outline the key terms of the relationship, including the scope of work, terms of payment, and termination. Having such an agreement minimizes the likelihood of disputes and associated lawsuits.
Establishing and implementing policies and procedures is another way employers can help reduce employee-related lawsuits and ensure compliance. For instance, they can develop a comprehensive policy outlining social media use, including what can be shared about the company and when it is appropriate. This can help prevent potential legal issues arising from employees’ misuse of social media.
Despite taking all necessary precautions, employers may still face employment-related lawsuits. To protect against the financial burden of such lawsuits, employers should have employment practices liability insurance (EPLI) coverage. EPLI can help safeguard against liabilities arising from negligence, wrongful acts, and other claims. Additionally, it can provide coverage for legal costs and compensate for lost wages, settlements, and judgments, giving employers peace of mind and financial protection in the event of a lawsuit.
