Employees can sue for actions their employers take — or fail to take — or may sue because they’re angry with the employer. Even the best employees (the ones employers say “will never sue”) can change their tune when they are under financial stress, laid off or passed over for promotion. And while you can’t always avoid claims and lawsuits, there are ways to minimize their impact on your business.
“Employers need to be pristine in their management practices unless they want to spend valuable time and dollars dealing with legal matters and administrative claims,” says Peggy Pargoff, senior vice president at ManagEase Inc.
Employees are well-educated in their rights and can even be recruited to join class-action lawsuits by outside parties including attorneys.
“Winning or losing is not the point. Defending, settling and even winning a case is very expensive, so why not prevent problems in the first place?” she says. “That doesn’t mean you won’t be sued, because you can be sued even if you’re doing everything correctly, but it certainly lowers the plaintiff’s chance of success.”
Smart Business spoke with Pargoff about how to decrease your risk of being sued by a disgruntled employee.
What are some reasons that employees sue?
One of the most common lawsuits relates to claims of harassment. The law requires the employer to take each complaint seriously and investigate it in a timely fashion using a qualified investigator. Employers often don’t manage these claims well and may not take action against an offender, even when harassing behavior is proved or repetitive. Some don’t treat the reporting employee respectfully, or worse, retaliate against claimants.
The worst thing you can do is to ignore a complaint, because when no action is taken, it can escalate into a lawsuit. When an attorney hears that the employee went to the boss and complained and no action was taken, that is music to their ears, because if proven, it can result in significant damages.
Training is critical in creating harassment-free environments. But if training doesn’t work and incidents happen, an employer’s policy should require employees to report the behavior. Often this behavior is not just affecting one employee, it is affecting other employees, vendors or customers, and that is terrible for your business’s reputation as well as a risk for legal action.