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5 Tips for Avoiding an HR Lawsuit

Human Resources

It's important for small business owners everywhere to avoid employment litigation. Even if a business is otherwise successful, it can face significant financial risk if it is faced with defending itself against employee-initiated litigation.

With stakes this high, it's imperative that business owners and CEOs fully understand the types of situations and policies that may expose their companies to employment litigation. Armed with this knowledge, they can better direct their HR and management staff to take appropriate measures including consistency in the implementation of policies, thorough documentation and proper training to help prevent or mitigate the cost of litigation.

We've shared tips on avoiding employment litigation before. Here are some additional suggestions on how to help protect your business:

1. Stay aware of changes to local, state and federal laws and regulations. It's not easy, but every business should assign one or more individuals the responsibility to keep on top of and understand any changes in employment-related laws and regulations at both the state and federal level and even the local level where applicable. Below please find a non-inclusive list of federal employment-related laws you may be required to comply with. 

  • Title VII of the Civil Rights Act of 1964. It is illegal for covered employers to discriminate in employment on the basis of race, color, religion, sex, and national origin. The Pregnancy Discrimination Act also prohibits discrimination related to pregnancy, childbirth, or related health conditions.
  • Fair Labor Standards Act. Most businesses must comply with the provisions of this federal wage and hour law including but not limited to paying at least minimum wage and applicable overtime pay to covered non-exempt employees.
  • Americans with Disabilities Act. Covered employers are prohibited from discriminating in employment based on disability and are required to provide a reasonable accommodation to otherwise qualified individuals with a disability except where it would create an undue hardship to do so.
  • Equal Pay Act. Under this law, all men and women are entitled to equal pay for equal work.  The jobs need not be identical but substantially equal.
  • Family and Medical Leave Act. Covered employers must provide eligible employees with job-protected leave for qualified family and medical reasons.
  • Age Discrimination in Employment Act. Covered employers are prohibited from discriminating in employment on the basis of age (individuals 40 years or older are protected under this law).

It's critical for employers to comply with all applicable federal, state and local laws. The more that you ensure that your business complies with these laws, the less you may be vulnerable to any employment-related legal actions.

2. Be scrupulous about documentation. When it comes to an employee's workplace conduct, there's no such thing as too much documentation, says certified HR senior professional Jilliene Allgauer. She says, "The documentation compiled by an employer should be strong enough to clearly tell the story of what happened pertaining to a given employment situation, even if the employer is not there to fill in the gaps." Such documentation should include all paperwork related to a workplace investigation, as well as the outcome of that investigation.

3. Foster a workplace environment free of harassment and discrimination. Your trusted employees shouldn't have to worry about harassment, bullying, inappropriate physical conduct, ethnic slurs, or other types of grossly inappropriate workplace behavior. It's up to the employer to craft and rigorously enforce a non-harassment policy and code of conduct that all employees respect and comply with (including, of course, managers and senior-level staff). In this environment, employees must understand that it is their responsibility to report infractions and to expect their complaints to be addressed.

Just as importantly, actions resulting in a negative employment action such as an employee’s termination because he or she filed a claim of discrimination or participated in a workplace investigation can result claims of retaliation, a form of illegal discrimination. Employers may wish to consult legal counsel prior to taking such actions to mitigate exposure to litigation.

4. Be proactive in addressing conflicts in the workplace. Wherever human beings congregate for a shared purpose, some interpersonal conflict is bound to occur. Some businesses do everything possible not to acknowledge such situations, but usually this is something that they regret. If an employee complains about a confrontation with a coworker, don't ignore the complaint or simply hope it will go away. Ensure you have a policy which encourages employees to report inappropriate behavior that includes reporting procedures. Follow up with an active investigation and appropriate disciplinary action where applicable to mitigate potential harassment claims. This also sends the message that resolving employee disputes is a top company priority.

5. Train employees in on-the-job safety. Workplace-related injuries or illness can be expensive in terms of loss of productivity and increased workers’ compensation insurance costs.   You can help to decrease the likelihood of on-the-job accidents by conducting safety training for the entire workforce. The Occupational Safety and Health Administration (OSHA) sponsors a variety of onsite and online safety training programs. It may take time and effort to provide this type of training, but, says safety consultant Greg Murano, "it will work in the long run." Your employees "will come to work in a safe environment, people will be happy to work there, and in the long run you will save money."

Enforcing policies that protect you and your business from lawsuits and accidents can also result in a workplace environment where employees thrive. It can also boost both morale and a collaborative atmosphere that fosters productivity and effective employee retention.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.