While running a small or mid-sized business, you constantly face legal hurdles and regulations. For instance, misclassification of an employee under the Fair Labor Standards Act (FLSA) can cost businesses hundreds of thousands of dollars in fines, taxes, and back pay.
Employees may also file lawsuits against their employer if they think they have been wronged in some way, most often from a violation of Equal Employment Opportunity Commission (EEOC) regulations. Employees may also file lawsuits against their employer for poor treatment, illegal interview questions, docking pay, and other forms of discrimination.
Measures can be taken to minimize the risk of fines and employee lawsuits. All of them can be implemented and managed by a Professional Employer Organization (PEO). The right PEO can help keep your business compliant and minimize the chances of a lawsuit.
Minimize the Risk of Lawsuits Being Filed
There are several areas of risk where companies can take proactive steps to reduce the likelihood of employee lawsuits. Each area requires expert-level advice about best practices and how to handle legal situations, if and when they arise.
To help ensure your business takes the right steps to avoid lawsuits, a PEO can provide you with certain services. Through your PEO partnership, you gain access to experts in many facets of HR, including small business experts to help your company stay compliant and avoid lawsuits.
Businesses must remain compliant with federal, state, and local laws. Some laws only affect a company when they reach a certain size, like the Family Medical Leave Act (FMLA). The FMLA only requires that companies larger than 50 employees adhere to the law. Even so, it is a best practice to remain compliant so that your business does not have to change suddenly when you hit 50 employees.
Other laws your business needs to remain compliant with include:
- Americans with Disabilities Act (ADA)
- Affordable Care Act (ACA)
- Title VII of the Civil Rights Act of 1964
- Age Discrimination in Employment Act (ADEA)
- Uniformed Services Employment and Reemployment Rights Act (USERRA)
Laws related to Equal Employment Opportunity (EEO), such as Title VII of the Civil Rights Act prohibit specific types of workplace discrimination. The United States Department of Labor enforces these laws through two sub-agencies dealing with monitoring and enforcement. The monitoring arm receives and investigates complaints. The enforcement arm fines and penalizes businesses for violations.
EEO prohibits discrimination of employees based on:
- National origin
- Age (40 or older)
Making a single mistake, even unintentionally, may have dire consequences for your business. A single violation can lead to a costly, time-consuming, and embarrassing lawsuit for your company. Having an expert you can rely on to give you proper guidance is vital to the success of your company.
Supervisors and managers are held to different standards than a regular employee. Because these employees over see other employees, they need special training in sexual harassment, workplace violence, discrimination, termination, among many other facets of business. If they make a mistake in one of these areas, it could cause a lawsuit against your company. Ensuring proper training of supervisors is vital to keeping your business out of court, a service that your PEO can provide.
Minimize Potential Costs of a Lawsuit
Employment practices liability insurance (EPLI) is insurance protection for businesses. It protects against claims filed by workers who allege the company has violated their rights. Knowing how to respond to complaints, let alone getting appropriate EPLI coverage for your company, creates intense confusion and frustration.
It can even be difficult for certain companies to get EPLI coverage. Working with a best-in-class PEO, you can get a great deal on EPLI premiums, helping to save your business money while getting you the protection and coverage yu need.
Reduce and Eliminate Lawsuits with a PEO
Understanding what could cause your company legal trouble is the first step to taking action that can keep your company out of trouble. If an employee was asked illegal interview questions that resulted in a lawsuit, your company may have been able to avoid that problem by properly training your supervisors to know what questions they can and cannot ask. This and other liabilities can be mitigated by working with a Professional Employer Organization.
Not all companies are equally vulnerable to lawsuits. To find out how vulnerable you are, download our checklist "How Vulnerable Is Your Business to Lawsuits?"