How to Reduce the Risk of Employee Lawsuits

There are several proactive steps small business owners can take to help reduce risk.

Employee-related litigation is a growing concern among many small-business owners. Lawsuits can result in increased insurance premiums, higher workers’ compensation costs, lost productivity and even ancillary damages from other parties. Fortunately, there are several proactive steps small-business owners can take to help reduce risk:

  • Screen new applicants to ensure compliance with sensitive needs. It’s not always possible to find perfect employees, but that doesn’t mean small-business owners can’t be selective when evaluating applicants for specific areas of concern. Create a clear job description that outlines essential skills and pre-requisite hiring criteria, then stick with it.
  • Implement redundant safety and security measures. Safety and security should always be a priority. Make sure everyone has a copy of the corporate response to safety and security concerns, provide training to all new hires, and refresh learning at least annually. Most of all, ensure that redundant security measures are in place to prevent a lapse of safety or security. For example, require that two people be in attendance when employees are working in high-risk areas or dangerous situations.
  • Encourage health and wellness. Alcohol and substance abuse, obesity, tobacco use, and other common health concerns not only drive up the cost of employee health care, but research has shown that healthy employees tend to have higher levels of productivity, have fewer accidents and miss work less. Invest in your employees or encourage other health and wellness activities by sponsoring prevention-related messages and healthy conduct.
  • Establish a protocol and procedure. Make it simple for employees to report unsafe or unsound practices they encounter in the workplace. Not only does it empower workers to contribute to the overall function of the business, but it reduces the fear and anxiety associated with pointing out areas in need of change. Remember, employees are often the first to spot a problem. By encouraging them to report a problem early, it is often possible to avoid a much more serious issue later.
  • Immediately investigate all accidents, injuries and other claims. This is one area where time is of the essence. Not only does it demonstrate a good-faith effort to immediately rectify a problem situation, but a timely investigation is also important to protect your business. For example, rather than waiting to send an injured employee to the hospital, which could result in complications or additional injury, make sure proper care is received immediately and verify that the employee was not under the influence of alcohol, prescription drugs or other substances. Take photographs and interview others as soon as possible while gathering information. Always include a written statement and follow the same process for every employee, even for seemingly minor situations, since many claims later turn out to be more serious than originally anticipated.