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Lawsuits are never fun for anyone…individuals or businesses. They happen. But often times they can be avoided when you take some steps to avoid them and with some proper planning. My goal is to never have a business go through a lawsuit…it’s a huge cost and can consume large amounts of time. And this doesn’t even begin to compensate for the mental stress and anguish they can cause.

So in an effort to help you avoid all of this, let me share with your 5 ways that can help you avoid being involved in a lawsuit from your employees.

  1. Avoid any type of discrimination…This may be one of the easiest and simplest ways to stay out of court…be fair and equal to everyone as just a way you do business. This is such a “charged” topic today and can easily be avoided by setting the proper values inside your organization and then having every employee live them. Discrimination is just an ugly part of our everyday lives…it has no place in business. This should be established as soon as possible into your company values and you, as the leader, should never allow any exceptions, regardless of significance. And to be specific, I am talking about discrimination based on sex, religion, sexual preferences, race, origin, disabilities, pregnancies, and a variety of other ways people discriminate today.
  2. Indiscriminate deductions from paychecks…this seems like a petty issue in some cases but can end you up in court and on the other end of a law suit. While this generally applies more to “exempt employees” it can have broader inferences as well. Essentially what it means is that you can’t indiscriminately take things away from an exempt employees pay. If you do this, they would, by default, become a non-exempt employee and all the rules just became different. When this happens, often times the company still treats them like an exempt employee in other ways which ultimately entitles them to additional benefits, bonuses, and other items that you didn’t intend to offer. It can get quite complicated when this happens and usually results in a lawsuit.
  3. Similarly, don’t deviate from someone’s nonexempt status…being consistent is one of the easiest ways to avoid a lawsuit. It’s when you start to deviate from the standards and rules that you can get yourself in trouble. For example, overtime is often one of the key issues. If someone works more than 40 hours they are due overtime pay unless you have specifically created some legal language around why they wouldn’t get overtime. Otherwise, they are entitled to it by law. And knowing these choices are yours and not the employees is important. In other words, an employee can’t “waive” or “opt out” of their right to overtime pay, it’s still the law they should be paid.
  4. Decide on your Values and Rules and stick with them all the time…every business owner wants to have certain rules and values that the employees follow. But the employees can only do this if they know what they are and they are crystal clear. Where I see many businesses get into trouble with this is when they are vague or where they can be interpreted differently by employees. When there isn’t clarity there is a likelihood of a lawsuit. Spend the time to put down your values and the rules you want to have followed as “who you are” as a business and then review them with some employees to ensure you get the same interpretation. If you don’t, you have ambiguity and the foundation for a lawsuit.
  5. Don’t allow (or ask) employees to work “off the clock”…this has been in the press many times about how companies “don’t ask” but “expect” employees to “go the extra mile” for their job and yet they aren’t compensated for the additional time. This has caused numerous lawsuits over the years and is a practice that has happened in many industries, such as retail. When this happens, it is prime ground for an employee lawsuit. This is an area you should make very clear to your employees and put in writing that it isn’t either “expected” or “required.”

While there are certainly other areas to avoid to keep you out of a lawsuit, these are at least 5 you should make sure don’t exist at your company. If you would like to learn more about these areas I would be happy to set up a meeting and discuss it with you so you have a solid understanding and can set you and your company up for success. And if you ever just have a question about what you are doing or thinking of doing, just ask and I can get back to you with some additional insights and guidance.

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