Top Tips for Avoiding Legal Trouble With Employees

Follow these strategies to avoid liability when dealing with employee problems.

You can't afford to ignore or mishandle employment problems. A botched employment situation can cost you millions of dollars if it turns into a lawsuit. Protect yourself from legal trouble by following these commonsense tips.

1. Treat your workers with respect.
Workers who are deprived of dignity, humiliated or just treated poorly are more likely to look for some revenge through the legal system. And, once mistreated employees get to court, juries are more likely to feel sympathy for them. If you add insult to injury by marching fired workers off the premises under armed guard, publicizing an employee's personal problems, or shaming a worker in public for poor performance, you can expect trouble.

2. Communicate with your workers.
Adopt an open door policy and put it into practice. This will help you find out about workplace problems early on, when you can nip them in the bud. And it will show your employees that you value their opinions, an important component of positive employee relations.

3. Be consistent.
Apply the same standards of performance and conduct to all of your employees, and your managers too. Workers quickly sour on a boss who plays favorites or punishes scapegoats. Successful discrimination lawsuits start when you treat workers in the same situation differently. And employee morale plummets when workers can see that everyone isn't being held to the same rules.

4. Give regular evaluations.

Performance evaluations are your early warning system regarding employment problems. In the best situations, they can turn a poor performer into a valued worker. In the worst cases, evaluations can be valuable proof in a lawsuit, illustrating that you put a poor performer on notice and gave him or her a chance to improve. You can find detailed information about giving performance evaluations in The Performance Appraisal Handbook, by Amy DelPo (Nolo).

5. Make job-related decisions.
Every workplace decision made should be guided by job-related criteria, not by a worker's race or gender and not by a worker's personal life or your personal biases. Making business-related personnel decisions makes economic sense and will keep you out of lawsuits for discrimination, violation of privacy, and wrongful termination.

6. Don't punish the messenger.
Employers get in trouble when they discipline whistleblowers or workers who complain of harassment, discrimination or unsafe working conditions. Take action to deal with the underlying problem itself, not with the employee who brought the problem to your attention.

7. Adopt sound policies and follow them.
An employee handbook is an indispensable workplace tool that can help you communicate with your employees, manage your workforce and protect your business from lawsuits. But once you adopt policies, you have to follow them. If you bend the rules, your workers won't take them seriously. Some courts have found that employers who don't follow the policies set out in their employee handbook or personnel manual are legally liable for breach of contract. You can find detailed information about employment policies and handbooks, including sample policies, in Create Your Own Employee Handbook: A Legal & Practical Guide, by Lisa Guerin and Amy DelPo (Nolo).

8. Keep good records.
If a worker sues you, you'll have to not only remember and explain what happened, but also prove that your version of the story is accurate. To make your best case, keep careful records of every major employment decision or event for each worker, including evaluations, disciplinary warnings, and reasons for firing. Be sure to make contemporaneous records (that is, document important incidents as close to when they happened as possible). Creating records after the fact -- once an employee files an internal complaint or a lawsuit, for example -- will do your credibility much more harm than good.

9. Take action when necessary.
Once an employment problem comes to your attention, resist the temptation to hide your head in the sand. Take action quickly, before it turns into a real mess.

10. Be discreet.
Gossiping or spreading rumors about employee problems are a surefire way to bring the law down upon your head. An employee could sue you for defamation or haul you into court for causing emotional distress, creating a work environment that is hostile, or poisoning the well with prospective employers. The stakes are high, so protect yourself by giving information on a need-to-know basis only. You can find more information on employee privacy rights and other workplace issues in The Manager's Legal Handbook, by Amy DelPo and Lisa Guerin (Nolo).

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