Topic Risk Management,

6 Ways HR Reduces the Risks of Employee Litigation

6 Ways HR Reduces the Risks of Employee Litigation

The deck is stacked against employers in employee-related lawsuits. These verdicts, often awarded because of misconceptions, drain capital. Any action to prevent these lawsuits can be considered an HR cost-saving initiative. 

Ultimately, there is no way to eliminate the risk of an employee lawsuit.  

 But there are proactive steps you can take to minimize your risk. Much of this comes down to the effectiveness of your human resources department. 


How HR Minimizes Lawsuit Risks 

Employees are more aware of their rights today than in any previous generation. They are one Google search away from knowing if HR is not aligned with current law. Businesses must take proper and quick action to avoid employee lawsuits.  

That means applying some evergreen legal defenses. 

1. Document Due Process 

In HR, documentation is everything. When you document an incident or a reprimand, you create evidence to defend yourself against an employee lawsuit. 

The documentation you keep in your employee’s personnel file shows that you allowed employees to correct any poor performance or bad behavior. Doing so will help you defend against employee lawsuits, including those for wrongful termination. 

Clear documentation will also protect your business from compliance fines; the process should follow every employee from hire to retirement. Human resources should also have a detailed history of all critical workplace events.  

HR documentation should include performance management, time and attendance, and legal compliance. 

2.  Monitor the Legal Landscape 

Your Human Resources department must stay on top of ever-changing federal, state, and local employment laws. These varying labor laws impact how you can hire, what you must pay employees, workers’ compensation coverage, how to calculate overtime, required benefits, and so much more. 

Human Resources should thoroughly understand these employment laws and corresponding regulations.  

The department must ensure workplace safety to protect employees against harassment and discriminatory practices. Rules should act as a guide in case of workplace complaints or conflicts. 

HR must continually review and update the business’s internal policies to meet workplace compliance. 

3. Managerial Training

Anyone that oversees another employee is representing your company. If they mishandle an HR incident or treat someone in a discriminatory manner, they put your company at risk even without intent. 

Managers must have consistent training to help them avoid doing or saying anything which could open your company up to lawsuits. Annual training and updates are the bare minimum necessary. 

Managerial training will ensure your managers are compliant and consistent in the event of a lawsuit to minimize risk to the business.

4. Employee Training

Managers are not the only employees who require training. The rest of your team should also have training within their first few days on the job and later training sessions. 

These sessions remind employees to stay safe at work and treat colleagues respectfully. Regular training can reduce the likelihood of discrimination or other illegal activities at work. 

Employers should invest time, effort, and resources to ensure that the employees are trained regularly on harassment, Civil Rights law, and other issues.  

5. Consistent Policies 

Your employee handbook should clearly outline your company’s policies and procedures. Employees must know that when they come to HR for an issue, HR understands how to handle it with confidentiality.  

But having policies is only half the battle. Your HR team and managers must also implement and follow the guidelines consistently. If HR treats one employee differently from another or only follows a policy some of the time, your company risks employee lawsuits.  

The employee handbook should be well-detailed, business-specific, and comply with employment law regulations. HR should ensure the guidelines comply with the Equal Employment Opportunity Commission’s (EEOC’s) requirements. 

6. Proactive Problem-Solving

Your HR team should be proactive and addresses employee issues immediately. Letting things fester will only make them boil over and potentially end up in court.  

HR needs to address problems so that employees feel heard and respected. When employees feel valued and listened to, they are less likely to take their internal complaint to a lawyer and make a lawsuit out of the issue. 

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The ROI of Preventing Employee Litigation 

It only takes a few employee lawsuits to drive many companies to the brink of bankruptcy. 

One of the most common reasons for employee lawsuits is incorrect pay. If employees sue a company for not getting paid correctly for their regular income or overtime, a company can be on the hook for vast sums of money. 

This can include the back pay owed to every employee and the employee’s share of taxes.  

 All that’s required to minimize the risk of employee lawsuits is for HR to have the spare time necessary to focus on preventing the issues that give rise to employee lawsuits. 

Employers should consider outsourcing HR administrative burdens like payroll and benefits administration if HR is stretched too thin. Letting go of these mundane tasks can help to reduce the likelihood of your company facing costly and embarrassing employee lawsuits. 

 HR outsourcing also gives you access to employment law specialists and HR experts who can help guide you through the litigation process. 

The HR department is the center of everything a business does, internally and externally. The department’s responsibility is to promote positive work culture and prevent employee lawsuits from arising. A competent HR team knows how to avoid employment lawsuits and reduce litigation risk to protect your business.  

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