You are the owner of a small to medium size business. You’ve cultivated relationships, worked hard, and served your clients/customers well. Then one day, you get notice that you are being sued by a former employee, alleging unlawful discriminatory conduct on the part of the company. Suddenly, everything you have worked hard for is in jeopardy. The business, your livelihood, your employees’ livelihoods.

In today’s litigious society, no business can be entirely protected against claims of unlawful employment practices. However, by taking the proactive steps set forth below, a company will be able to substantially limit its exposure to future litigation, thus protecting itself against such claims.

1. The Interview Process: Know what you can and cannot ask

Make sure you do not ask inappropriate/unlawful questions during the interview process. Questions regarding an applicant’s health and disability(ies), his or her marital status, arrest record, age and religion should be avoided, except in certain limited circumstances. You should have an attorney who specializes in labor and employment law, or a human resources specialist, review your company’s application, as well as an outline of potential interview questions for each open position within your company.

2. Establish Written Employment Policies

The United States Supreme Court has held that having an anti-discrimination/anti-harassment policy is a complete defense to many claims of unlawful employment actions. Simply put, if you have a policy, disseminate it, and follow it, in many instances an employee or former employee will not be able to successfully sue your company under many of the federal, state and local employment laws.

This policy should define what discrimination/harassment is, should set forth a procedure or mechanism for employees to complain about discrimination/harassment, should appoint a “lead person” to receive and handle such complaints, and should set forth the company’s procedure(s) in handling such complaints. This policy must be distributed to the employees upon their hiring, and you should have your employees sign written receipts acknowledging that they received said policy.

3. Train Management Employees

A company acts through its agents and representatives, including supervisory personnel. So you must train your management personnel in such areas as interviewing, hiring, disciplining, evaluating, and terminating employees.
Also, train your supervisory personnel in your companies anti-discrimination/harassment policy, i.e. what it is, and how it is implemented. This may help you in future litigation, to show that your company is serious in combating discrimination/harassment in the workplace. Such training, as well as training of non-management employees (see Number 4, below), may also be helpful in reducing the amount of damages levied if your company is ever found liable of unlawful employment practices.

4. Train Non-Management Employees

It is also important to train non-management employees, both on what unlawful discrimination/harassment is, as well as on the company’s policy for handling claims of unlawful discrimination/harassment. If your employees know the company’s anti-discrimination/anti-harassment policy, and they know the company is serious about enforcing it, the are more apt not to violate it. Also, if they do experience or witness harassment, they will be able to identify it and report it.

5. Appoint Competent Human Resources Staff

Every small-to-medium size employer should appoint one central employee to deal with all human resources matters and issues. In addition, you should find a competent attorney who focuses primarily on employment and labor law issues.

This will help insure that problems and issues are addressed as they arise, and will also help insure uniformity across different but similar situations involving different employees. Many small employers appoint a person on the management team, or the office manager, to deal with these issues as they arise. Just make sure that there is one person responsible for these types of issues, and that they have ready access to outside human resources personnel, or better yet, outside legal counsel.

6. Standardize Employment Forms

Applications, job advertisements, offer letters, performance evaluation forms, exit interview forms and termination letters should all be uniform. They can be, and usually are, used in litigation.

You, in conjunction with legal counsel, should draft uniform forms for discrimination/harassment complaints, as well as for requests for reasonable accommodations for employees with disabilities, and these forms should be accessible to all employees.

In addition, employment contracts, noncompete agreements, confidentiality agreements, and consulting agreements should always be drafted by your legal counsel.



7. Terminate People the Right Way

When terminating an employee, always articulate the reasons to the terminated employee, but never do so in writing. Don’t discuss the termination or the events leading up to it with other employees, unless those employees have a legitimate, business-related “need-to-know”. Treat people with dignity and respect, and you will be less likely to be facing a lawsuit for unlawful termination at a later date.

8. Pay Severance and Obtain a General Release

When appropriate, offer the terminated employee severance pay, in return for a general release of all potential claims. Paying a nominal severance amount in exchange for a general release will allow you to “move on” to more important matters, such as increasing revenue and growing your business. It will also, in the long run, save you money. The bottom line: “An ounce of prevention is worth a pound of cure”.

9. Have a “No-Tolerance” Policy toward Discrimination/Harassment
It is important to have a “no-tolerance” policy toward discrimination and harassment in the workplace. Discrimination/Harassment based upon protected classifications such as race, age, gender, religion, national origin and disability is a serious offense, and can cost your company time, money, and resources. In addition, such claims, and the resultant investigations and litigation, can detrimentally affect employee morale, may result in the loss of key personnel, and can be extremely expensive in legal costs and lost productivity.

10. Adhere to Pertinent Wage Laws, and Obtain all Necessary Insurance

Know the federal, state and local wage laws which affect your business. This includes minimum wage, overtime pay, and prevailing wage for public jobs. Do not try to “cut” corners. If you are sued by an employee or former employee, or audited by the appropriate government agency, the litigation costs, penalties, fines and overall headaches are not worth it!

The same is true for workers’ compensation insurance. If you have employees, you should have this type of insurance.