Roughly 20 percent of all small and medium-sized companies are exposed to the risk of being sued by one of their employees. The expense of defending your company against this type of litigation will cost your company an average of about $125,000. Sadly, the exorbitant cost is only part of the story when you are talking about the negative impacts of an employee-based lawsuit. The reputation that your company has worked so hard to build might also be dragged through the mud by way of negative publicity stemming from the lawsuit or subsequent trial.
Even if the results of the lawsuit represent a successful outcome for you and your business, your company could still experience blowback caused by the litigation. This is why it is crucial that you enact preventative measures that will lessen your risk of being exposed to employee litigation.
Listed below are a few effective measures you are able to take to help stop employee lawsuits that could ultimately damage your company.
Guarantee Equal Treatment of Your Employees
The value of treating all of your employees equally should never be underestimated. There can never be any favoritism shown within your company. In our modern business climate and the current economy, that probably just sounds like good old-fashioned common sense, but a business owner who is attempting to do something as basic as promote a diverse work environment might come across as showing favoritism to certain portions of their workforce.
Provide Proper Training to Your Employees and Management
Providing proper and effective training of both your employees and your management staff is an essential part of circumventing the prospect of any employee litigation. Having your employees and management re-trained at least once a year can go a long way towards keeping employee-based lawsuits at bay. This is especially prudent because employment laws in the state of California are dynamic and routinely have changes made to them.
Restructure as a Corporation to Protect Your Personal Assets
You might give some consideration to restructuring your business into a C or S Corporation or even a limited liability corporation in order to protect your private assets. Adopting a corporate structure will guarantee that your private assets are not jeopardized in the event of an employee lawsuit. A company that is structured as a partnership or a sole proprietorship, lacking in any corporate structure, will jeopardize your personal assets in the event of employee litigation.
Adhering to these basic guidelines could be the difference between losing your case and winning it. If you or your company are being sued or anticipate filing a suit of your own, Leiva Law Firm deals with a wide assortment of business litigation matters.
Our reputable, licensed corporate attorneys have represented clients in federal court, civil court, and binding arbitrations and will know which steps to take to ensure that any pending litigation ends in the most favorable way possible.
Schedule a free, no-obligation consultation today by contacting us at 818-519-4465 as soon as possible. Our attorneys speak both English and Spanish.