When you work for yourself, your business is in your complete control. When it is time to expand, that usually means hiring another employee to help you achieve your goals. However, the minute you hire anyone to work for you, you subject your business to the potential risk of an employment-related lawsuit. But don’t let that stop you from growing and expanding – just make sure you are fully prepared with your hiring and employment practices. Before you hire your first, your tenth or your one hundredth employee, following these guidelines will help to keep your business protected from legal action.
Create an employee handbook
There’s no legal requirement that says you must have an employee handbook. However, it is actually a very important document that every employee should receive on their first day. Every company is different, so an employee handbook can convey your specific business policies, company culture and employee expectations. This can go a long way in avoiding any confusion or potential conflicts down the line.
Establish a diversity management plan
Every business should strive to establish diversity in their workplace. When hiring new employees, business owners should always adhere to federal Equal Employment Opportunity guidelines and establish hiring procedures that are free from biases based on an applicant’s age, race, gender, religion or sexual orientation. Additionally, to promote a greater sense of diversity, you can try targeting your applicant search by sourcing specific schools or cultural organizations or by asking for referrals from current employees. It’s important to have a plan in place for expanding your diverse workforce, as well as strategies to encourage a cohesive working environment.
Develop a comprehensive employment contract
Also known as an employment agreement, an employment contract lays out the full agreement between your company and the employee. Important items to be listed in the contract would include the employee’s legal name and address, job title and description, the agreed-upon salary and benefits, and the hours they are expected to work. Additionally, the contract can include a non-disclosure agreement to protect company information, a non-compete agreement that prevents the employee from going to work for a competitor, as well as reasons for termination.
Obtain proper insurance
Having the right insurance policies in place is a smart way to protect your business from a lawsuit. If you have any employees, it is wise to have a worker’s compensation policy to cover an employee’s costs (such as medical bills and lost wages) if they are injured on the job. General liability insurance is also a must, as it will protect your business in the event that one of your employees causes injury or property damage to a third party. If you have any employees that drive to conduct company business, you’ll also want to confirm that you have the correct auto policy in place with adequate coverage. Your attorney or insurance agent can suggest the right policies for you, based on your specific working environment.
Establish a partnership with an experienced business attorney
One of the most valuable partners you can have for your small business is an experienced business attorney. The information listed above is just a small sample of the many documents and policies you should understand and implement from the time you hire your first employee – and a good business attorney can help you establish the best policies and procedures to help you avoid potential lawsuits.
The legal team at Churchill, Quinn, Richtman & Hamilton, Ltd has decades of experience helping our business clients establish a solid structure and navigate the legal challenges they face when it comes to their employees. From advising on and preparing important documents, to keeping them informed of new employment laws, to representing them in and out of the courtroom, we work to put our clients in the best position to attain a successful outcome in the event of legal action against the business. Contact our office at 847-223-1500 to learn more about how we can help protect your small business.