Looking at all the employer firms in America, over 98% have less than 100 employees. They are a significant and vital part of our country’s economy. However, there’s an inherent level of risk associated with being one. Although you cannot eliminate risk outright, you can mitigate the chances of facing litigation by taking appropriate action. Let’s look at some of the most common reasons business owners get sued and how you protect yourself from them.
Harassment In the Workplace
As a business owner, you are not expected to micromanage your employee’s behavior. That said, it is paramount that you create, foster, and maintain an environment where your employees have the opportunity to report issues regarding harassment. The people who work for you need to know the policies and procedures for doing so. Secondly, do your managers know how to handle a report appropriately when it comes in? As a business owner, you are more likely to face litigation for not having the correct procedures to identify and correct these issues.
Don’t underestimate the importance of an employee handbook. Whereas the handbook is the foundation, training and leading by example (living up to your own standards), keep it alive.
Contractual Disputes
Contracts are the backbone of your relationship with employees, other business partners, and third-party vendors. When there is a dispute between yourself and them, the answer should exist inside the contract. Understandably, a business owner would want to cut costs by purchasing boilerplate contracts, but you are taking on additional risk.
Business law attorneys know to tailor the language in the contract specifically to the situation—and they will do it in a way that protects your interests. The language in contracts is so nuanced, and to be covered by a contract, you should have an attorney draft it. They are also in the best position to ensure the names are correctly annotated, that each party’s rights, duties, and obligations are clearly defined, and that there are consequences for anyone who breaches it.
Employees Are Not Contractors
Due to the added costs of Social Security, Medicare, and unemployment, hiring and paying an employee is more expensive than hiring a contractor. There is nothing wrong with hiring contractors if they are genuinely contractors by the IRS’s standards. One of the most common legal mistakes that small business owners can make is misclassifying an employee as a contractor.
The consequences can be financially catastrophic. The differences between employees and contractors come down to how they are paid, the level of control over them, and the type of work relationship you have created. Because of how costly a misclassification can be, take the appropriate steps, speak with an attorney, and ensure you are paying your employees and contractors correctly.
Protect You & Your Business With The Right Attorney
If you are a business owner facing litigation—or are concerned about it—give us a call. Let’s have an initial consultation to see if we can help.