Any business with employees can get sued by their employees for multiple reasons. For example, issues such as workplace discrimination or irresponsible leadership can lead to a lawsuit. However, you can shield your business assets from being affected by employee-related liability claims by carrying the right business insurance.

Steps to Protect Your Business

  1. Create a list of company guidelines

    Make all your employees aware of your company policies, particularly discrimination and harassment. In addition, be aware the employer has the right to terminate employment at any time except for illegal reasons such as discrimination.

  2. Establish a transparent hiring process

    Interviewing several applicants who end up not getting hired opens the door for a lawsuit if one of the job candidates feels they were rejected due to discrimination.

  3. Clearly define the tasks involved

    Each employee must understand their job role, which means you must provide them with a clear job description as a basis for employment. When you provide the worker with such clarity, it reduces the chances of misunderstanding what is expected.

  4. Keep a good record of all employee-related documents

    Keeping thorough records of your employees and documenting work performance can help your case if the employee tries to sue you over wrongful termination. Many employers think of workers as individuals they control through a paycheck. However, keep in mind that workers still have rights protected in court. So always be conscious of workers' rights.

  5. Train your employees

    The best way to get all your employees on the same page to follow company policies is to provide training sessions. Your training programs should encompass the various aspects of employee conduct and employer responsibilities.

What to Do If an Employee Files a Lawsuit?

  1. Carry out an investigation - You have the right to investigate employee complaints about your company as an employer. The HR department may conduct this investigation or hire a third-party firm to handle the report.

  2. Identify the employment status of employees - In cases involving not paying overtime to an employee, check the worker's employment classification to see if they are non-exempt, in which case they are entitled to overtime pay. The problem can be worsened if you misclassify employees.

  3. Seek professional assistance - You may need to hire an independent auditing firm to audit how your company treats employees. The best advice you can get is to facilitate a worker-friendly environment that respects each worker's rights. The old days of mistreating employees are long gone, as businesses must conform to modern laws that protect the physical and mental wellbeing of employees.

Employment Practices Liability Insurance (EPLI)

EPLI is insurance that covers the legal fees when an employee accuses a company of sexual harassment or wrongful termination. Not only will it cover attorney fees, but it will also pay for settlements. While general liability insurance and commercial property insurance provide sufficient coverage for many small businesses, they still have limits. EPLI offers additional coverage that mitigates against company mistakes that can turn into lawsuits. In addition, it covers many gaps in legal protection not found in basic business insurance.

Protect Your Business with Us!

Every employer should be aware of laws on treating employees fairly. Nevertheless, no matter how deeply entrenched you become with understanding laws in your state, there's always the possibility of an employee filing a lawsuit. The key is to be prepared with the right business insurance. Contact us at United Direct Insurance Services for more information on protecting your business at an affordable cost.