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How to Protect Your Company from Employee Lawsuits

Posted by Kit Dickinson on Aug 4, 2015 7:35:35 AM
Kit Dickinson
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Greek statue holding a shield in self defense | protect your company from employee lawsuits

Wage and hour lawsuits are steadily rising, but you don’t have to be caught in the cross hairs of an employee dispute. An ounce of prevention is worth a million dollars of cure, and if you follow some basic practices on the front end, you’ll be able to breathe easy and rest at night.

Here are the must-do measures you should start taking right now to protect your company from employee lawsuits and legal disputes.

Create a Culture of Respect

A positive workplace isn’t just a great way to retain your top employees, it can keep you out of litigation too. If your employees trust you and feel respected, they’ll be more likely to give you the benefit of the doubt if there’s a misunderstanding or a pay error. Being transparent (within reason) with company financials is a proven way to help foster trust.

Make company culture a top priority. Appoint a Culture Czar for your organization and get buy-in from executive leadership. The key to a great culture? Invest in the people of your company rather than programs. Find genuine ways to show your employees they’re important to you and you’ll cultivate trust from your people.

Communicate Your Policies—and Follow Them

This seems like an obvious practice, but it’s remarkably common for companies to fail at communicating their policies. Even worse, many businesses don’t know their own policies well enough to follow them.

Make sure your policies are clearly posted and easy to access. Everyone should know where they can find them. They should also be written in plain language so they’re easy to understand.

Make Sure Everyone Understands Their Paycheck

If your workers’ paychecks are affected by overtime, piece rate, incentives, bonuses, tips or other influencers, it can be pretty confusing for them to decipher if they’ve been paid correctly. Confusion begets suspicion, and a misunderstanding or simple error can lead to tense disputes and legal action.

Make it easy for your employees to interpret their paychecks. Here are a few ideas:

  • Provide a printed pay stub legend with each paycheck.
  • Host quarterly Q&A sessions for employees.
  • Incorporate a face-to-face explanation as part of new hire onboarding processes.
  • Link to an online calculator from your company wiki.

Know (and Follow) FLSA Requirements

FLSA regulations are confusing and ever-changing, and it’s easy to fall into noncompliance without realizing it if you’re not careful. Make sure you keep up to date on the regulations, and pay attention to state laws as well as Federal requirements.

Integrate Your Systems

If you’re using several systems to manage employee information, you’re probably relying on manual calculations and data entry when you process payroll. An integrated system can apply all of your unique pay policies and run calculations without the risk of human error. Talk to your payroll provider to see what solution makes the most sense for your company.

Learn how to eliminate manual data processes

Topics: HCM Industry Trends