Ask any employer if they’ve ever faced employment law issues, and if they’ve been in business for a long time, the answer is probably yes. It’s very common for employers to face legal issues, and employment law cases can be complex.
Mistakes during these legal proceedings can have significant consequences, resulting in costly settlements, damaged reputation, and potential legal repercussions. That’s why employers must be aware of common pitfalls and how to avoid them.
Risks faced when employers mishandle employment law cases
Legal issues in the workplace aren’t uncommon. According to a report by Hiscox, up to 10% of small to mid-sized businesses deal with some kind of employee discrimination claims. The average cost of matters that lead to a defense and settlement payment is $160,000 and took 318 days to be resolved.
But financial costs aren’t the only risk of running up against employment law cases. In addition to financial penalties and losses, businesses also face reputational damage, decreased productivity, and loss of employee morale.
Top five employment law mistakes employers can make (and how to avoid them)
No business wants to face financial losses or damage their reputation—but when you take the right measures, you can avoid some of the most common mistakes and protect your business’ future.
Mistake #1: failing to sufficiently document
Accurate and detailed hiring records, performance evaluations, disciplinary actions, and any complaints or grievances are essential for your business, yet one of the most common mistakes employers make is failing to maintain comprehensive documentation and records related to their employees.
Not only does thorough documentation practices ensure a fair and transparent workplace, but they can help protect employers in potential legal matters, from wage and hour claims to charges of discrimination.
Without the right documentation strategy in place, employers may find it difficult to defend their actions or demonstrate compliance with employment laws. Moreover, insufficient records can weaken an employer’s position during negotiations, arbitration, or litigation, making it harder to disprove allegations or support their defense.
Avoid this mistake by: getting trained on best practices for workplace documentation
If your business doesn’t have clear documentation practices, consider seeking out an experienced employment attorney to help guide staff through best practices for creating documentation.
Having a solid foundation for how to appropriately create and maintain documentation for your business will make it easier to establish the right policies and procedures for documentation, ensure consistent record-keeping practices, and regularly train supervisors and managers.
Mistake #2: inadequate policies and employee handbooks
You wouldn’t expect your employees to know how to step into their role without guidance on their current daily tasks and responsibilities—but are you expecting them to know how to be an employee at your company without it?
Another significant mistake employers make is failing to develop, implement, and maintain comprehensive employment policies and employee handbooks.
Policies provide employees with a framework for expected behavior and serve as evidence of compliance with current employment laws. Without proper policies in place, employers may inadvertently violate laws, leading to potential legal claims.
Avoid this mistake by: regularly reviewing and updating policies
Laws, especially in regards to employment matters, are by no means static. Even if you have thoroughly documented policies and practices that align with relevant statutory requirements, they may change.
Employers should assess policies to reflect current laws and regulations. Consulting with an employment law firm can ensure policies are aligned with legal requirements.
Once policies have been updated, employers must communicate changes to employees, including distributing and obtaining signed acknowledgments of receipt. Regular training sessions on policies help prevent misunderstandings and ensure compliance.
Mistake #3: insufficient training programs
Failure to provide sufficient training to employees and management on employment laws and regulations is a significant mistake employers often make.
Inadequate training can lead to misunderstandings, inconsistent practices, and unintentional violations of laws, resulting in costly legal disputes. Training programs should cover anti-discrimination, harassment prevention, wage and hour laws, and workplace safety.
Avoid this mistake by: investing in a comprehensive training program
Regularly scheduled training sessions, whether conducted in person or online, should be mandatory for all employees, including supervisors and managers. Training programs should be documented, and employee attendance records should be maintained as evidence of compliance efforts.
Mistake #4: mishandling complaints and investigations
Employers often mishandle employee complaints, leading to legal disputes that can escalate quickly.
Failing to promptly and thoroughly investigate complaints of discrimination, harassment, or other misconduct can expose employers to significant legal liabilities. Employers must establish clear procedures for reporting complaints and ensure confidentiality and impartiality throughout the investigation process.
When an employee raises a concern or files a complaint, employers should take immediate action to investigate the matter. Employers should designate trained individuals or external resources to conduct objective and fair investigations. It’s crucial to document each step of the investigation, including interviews, evidence gathering, and conclusions reached.
Avoid this mistake by: addressing complaints before they escalate
Employers should make sure that it is safe and as comfortable as possible for employees to share grievances, but it’s just as important to provide timely feedback on any complaints and communicate the results of any investigations.
To ensure fairness and equal treatment, establish clear procedures for supervisors and HR staff members to follow in these situations. Finally, employers must guarantee that no employee faces retribution or retaliation for filing complaints.
Mistake #5: improper classification of employees
Misclassifying employees as independent contractors or exempt from overtime pay is a serious error that can result in substantial legal consequences.
Employment classification determines an employee’s entitlement to benefits, overtime pay, and legal protections. Misclassification can lead to wage and hour claims, unpaid overtime lawsuits, and tax implications.
Avoid this mistake by: consulting with employment law counsel to verify
Employers must accurately classify employees based on applicable laws and regulations. Understanding the criteria for independent contractor status and the exemptions from overtime pay under the Fair Labor Standards Act (FLSA) is crucial.
Consulting with a knowledgeable employment law firm can help employers ensure proper classification, minimizing the risk of misclassification claims.
The solution: seek out an experienced employment law firm
Employers face many challenges in navigating employment law cases. By recognizing and avoiding the top five mistakes discussed above, they can significantly reduce legal risks, protect their reputations, and maintain a positive work environment.
However, legal support is vital in complex employee legal matters—and the wrong decision can have lasting consequences. Working with an experienced employment law firm can help employers navigate sensitive concerns before they become a problem, establish policies and practices that support the needs of both employees and the business, and protect their future.