Eight Ways For Business Owners To Avoid Litigation- Establish Employment Policies

This article is the second in a series dedicated to showing business owners how to avoid litigation. Read part one here.

Business transactions are no longer done a handshake.  The business world is complex, and the more complex transactions become, the more potential exists for litigation to ensue.  The cost of litigation is so high that one small lawsuit can virtually bankrupt a business.  While business owners are afraid of litigation, they often know very little about how to prevent it.

Based on our decades of experience, we have developed a list of suggestions for avoiding litigation.  Last month, we talked about the proper use of contracts; this month, the importance of employment policies.

The area of employment litigation is the fastest growing area of litigation today.  Claims of employment discrimination, sexual harassment in the workplace, wage disputes, and the like are prevalent.  Colleges are offering degrees in Human Resources, which is the catch phrase for people who oversee employee and personnel issues.  The issues include wages, pay deductions, vacation accrual, fringe benefits, workplace behavior, productivity, hiring and firing, discipline, etc.  People are spending approximately 1/2 to 2/3 of their waking time working and thus the environment in which they work lends itself to conflict.

Does this mean that you need to hire a Human Resource Director to handle your three employees?  No.  But it does mean that you need to be aware of the issues and have employment policies in place.  The policies should be set forth in writing with a copy provided to each employee.  If policies change, the changes should be made in writing.

Some business owners are concerned about employees stealing trade secrets and using them to establish their own business or using them to help a competitor.  It is imperative that business owners put their employees on notice as to what is considered a trade secret, that the employee is expected to keep the information confidential and what will happen if the employee uses or discloses the information.

Our office can assist you in reviewing the applicable employment policies and in putting them together in written form.  If you need help, call our Menlo Park business law firm at (650) 422-3313 for a consultation.

Next time, more tips for avoiding litigation.