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Top 10 Things Employers Do To Get Sued – Part 1

Small business owners spend an enormous amount of time structuring their businesses so they are efficient, profitable and trouble free but are they missing one important area? Being an employer carries with it a minefield of labor law complications that aren’t always obvious or even make sense. There are several big, audacious traps that are great bait for attorneys and can result in unwarranted legal action against the business.

Below is Part 1 of our of the Top 10 Things Employers Do to Get Sued and how to tighten up your business so you don’t become shark bait.

Cut Expenses – Establish a “Use-it-or-lose-it” Vacation Policy
Vacation is an earned benefit and cannot be taken away for any reason including by policy, at termination or if the employee has not yet become eligible to take the vacation, but has accrued hours on the records.

Acceptable alternatives include reasonable annual caps or cash-out clauses. Either, to avoid lawsuits for vacation issues, draft a solid vacation policy that includes eligibility, accrual rates and any caps or other requirements. Apply it consistently to all employees and pay out all earned vacation at termination.

Stand Your Ground – Hold Final Paychecks Until Employees Bring Back Company Property
Although it seems reasonable to hold a paycheck until an employee returns company property or finalizes certain paperwork, but legally you must distribute final pay according to specific timelines.

Employees who quit with less than 72 hours-notice must be paid within 72 hours. With more than 72 hours, they must be paid their last day of work. If an employee is terminated involuntarily, they must be paid on last day of work. Do not withhold any amount of pay or you could face steep fines for each day the employee is not paid. Handle any disputes outside the final paycheck realm to avoid legal troubles.

Pay-As You Go HR- Don’t Train Front Line Managers in Labor Law, That’s What Attorneys Are For
HR problems happen usually because managers are not aware of how to handle employee issues or because they are indifferent to the situation and not thinking “like an owner”

Managers should be well trained in the basic aspects of hiring, performance management, disciplinary actions, adverse situation handling and terminations. Managers need to know how to communicate appropriately with employees and respond to challenging without fanning the flames. If your managers hire employees, they should understand interview techniques, discrimination and proper new hire documentation.

Think Way Ahead – Sign Employment Contracts Without an “At-Will” Clause
Although employment contracts are generally not a good idea for most positions, when it is necessary due to a sales or management position, you must avoid any appearance of “guaranteed employment”.

The At-Will Cause in California Employment Law is there to be sure everyone knows that employment with any company is “at-will” both on the employee and employer side of the fence. Creating a contract that dilutes this law could cause an employee to sue for damages if they are let go. Don’t dilute the legal protections you have and make sure you communicate those policies clearly.

Save Money – Pay Everyone a Salary, Overtime is Way Too Expensive
Salaried “Exempt” employees are just that, exempt from overtime and minimum wage laws but the title is not the only factor in determining whether or not an employee is eligible to receive a salary.

The law is clear, only those employees that either manage 2 or more employees, hold a professional license, are a commissioned salesperson, or otherwise control a significant portion of the business are deemed to be eligible to be Salaried Exempt. Additionally, these employees need to make twice minimum wage (or receive more than 50% of their wages from commission, in order to be eligible.

Please contact Champion if we can assist you in any way. Please stay tuned for Part 2 next week.

  • 20 Aug, 2014
  • Tom Elias

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