Employee lawsuits happen more often than you’d expect. Bad management style might cost your business as much as its entire annual revenue!
But that’s not everything. A lawsuit will also affect your reputation. Many people are hesitant to do business with a company that was involved in an employment lawsuit. Nobody wants to be associated with an organization that had to deal with a lawsuit that involved some discrimination charge.
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Lawsuits are expensive, and you could wind up spending tens of thousands of dollars in legal fees. And once everything is over, you might be forced to raise your pricing and put your business at a competitive disadvantage. In other words, the consequences of a lawsuit are vast and extend way beyond the initial conflict, seriously hurting your business in the process.
Here are 8 mistakes managers make that might lead to employee lawsuits and how to avoid them.
1. Carelessness in documentation
Most discrimination lawsuits are based on circumstantial evidence. That type of proof may be compelling, and employees can use it in court to win the case against a manager.
Employees who sue employers often use documents, in particular, email correspondence, to show the jury that manager was acting toward them with a discriminatory intent.
That’s why managers should be careful in daily communications, and when they’re going to write something to an employee, they should imagine what their words will look like when presented as evidence in court. If an employee is causing problems, keep calm and try to get to the bottom of the problem without communicating your frustration to them – they might use your words against you later on.
2. Lack of attention to employee complaints
Managers may hear complaints that involve bullying, harassment, or other types of workplace misconduct, and not do anything about them.
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Don’t brush off such complaints, no matter how insignificant they seem. If you do that, you are doing the groundwork for a lawsuit. Every employee complaint should be documented and investigated to check whether requires further action.
Every organization should have an appropriate complaint procedure to help managers manage that process.
3. Firing someone promptly
When an employee doesn’t do their job properly, shows signs of substance abuse, frequently misses work, or the affects your workflow, it’s only natural that you feel frustrated. But don’t get caught up in that emotion and fire them for not doing their job.
This is a discrimination lawsuit material. You never know what happened to employee – they could be ill, pregnant, or in another protected class. There could be some legitimate reason why your employee is performing the way they are.
That’s why you need to examine the case and documented everything together with the HR department before taking any action. Find out what’s going on and share your knowledge with the HR department before deciding what to do next.
4. Not following company procedures
Business rules are there for a reason. They not only hold the employees accountable but also the managers.
As a manager, you should be aware of the personnel policies of your company and make sure that everything happening in your team or department is organized according to these rules. In case of a lawsuit, courts will expect managers to know what is their organization’s procedure for a given case.
Make sure to review the policy on a regular basis and double check that you have it right before taking a disciplinary action against an employee for not following rules.
5. No anti-harassment policy
Smart employers have well-documented anti-harassment policies that in reality help to deal with harassment claims. Employers who don’t have these policies put themselves at risk – when it comes to defending a harassment claim, they will have a weak position against employees. They simply won’t be able to point out that the employee failed to observe the policy. Managers should ensure that such a policy exists at their organization and be aware of its content.
6. Compromising confidential information
Another mistake many managers make is unveiling confidential information, such as formulas, strategies, company IP, or customer lists to others.
Leaving the company IP vulnerable to outside parties is a serious risk, and when an employee steals the company’s intellectual property, the court may not enforce company confidentiality agreement if it turns out that managers have been violating it as well.
Make sure that you know how to handle sensitive information at your company and follow the procedure yourself before implementing it in your team or department.
7. Browsing employees’ social media
Another grave mistake is looking at employees’ social media accounts and interacting with them there.
If you spot an employee sharing negative comments about the company on social media, you might be tempted to react. But firing someone for complaining about working conditions in public is material for a lawsuit.
In fact, the National Labor Relations Act forbids companies from firing employees in retaliation for engaging in that type of protected activity. By looking at employees social media, managers are violating their privacy rights, and that could pose a danger to the entire organization.
8. No track of employee hours worked
Another serious problem is that many managers fail to keep proper track of the hours employees worked. If managers are sloppy, they’re just asking for wage and hour lawsuits where employees complain that they were not properly paid for the number of hours worked.
That’s why you need proper documentation procedures to account for the hours worked, including meal breaks, and a number of money employees are paid for – that’s the best way to prevent this common type of lawsuits.
Follow these 8 steps, and you’ll be on your way to ensuring that your business steers clear of employee lawsuits and develop a positive, transparent working environment everyone will appreciate.
Lucy Taylor is an avid blogger who enjoys sharing her tips and suggestions with her online readers. Working as a legal expert at LY Lawyers, Lucy often helps people dealing with legal problems.