Ignorance always costly in employee lawsuits

score Question:
In this day of numerous discrimination law suits, what's the best policy?

Small to mid-size companies are at high risk for being sued for employment discrimination and incurring litigation costs in these cases.

Why? Small employers typically lack staffing policies that larger firms know to be indispensable. Smaller firms also rarely purchase insurance coverage to limit costs for defending against governmental agency complaints of discrimination and employee lawsuits.

Nonexistent or informal personnel policies coupled with a lack of insurance protection form a dangerous mix.

Organization with 15 or more employees are large enough to be regulated by most federal and state employment laws and are not immune to employment law issues.

Small employers can take the types of preventive actions that will ward off potential problems; persuade judges to dismiss lawsuits claiming that the organization failed to take reasonable action to discourage on-the-job harassment; and reduce the amount the amount of liability at trial.

Here's a partial checklist that can influence whether your small company goes out of business, merely survives or thrives in these complicated legal times:

  • Inquire about the cost of insurance coverage against employment law claims. Ask about deductible amounts and policy limits. See how setting various figures for deductibles and policy limits can make a policy more affordable. Learn whether the policy will pay for out-of-court settlements or court verdicts or if coverage is limited to legal services.
  • When assessing whether coverage is "too expensive", keep in mind that even those organizations that prevail frequently pay $50,000 or more to defend against job-bias lawsuits. Out-of-court settlements and verdicts will add further to the costs.
  • Issue an employee manual that's tailored for small businesses and meets your entity's specified requirements. Duplicating a manual issued by a large employer will create unnecessary legal obligations and costly administrative burdens, and frequently it will cite laws that do not apply to smaller employers.
  • Each employee and newly hired employee should acknowledge with a signature that the manual was received and read. Keep these signed forms on file to prove that the organizational rules and policies had been communicated.
  • Hold departmental or organizational meetings every quarter; have a sign-in sheet and a high-ranking staff member speak of the company's policy against discrimination and harassment. Keep the sign-in sheets together with a copy of the rules and policies presented.
  • Inform workers that discrimination, whether directed at them or someone else, should be promptly reported. Designate two to more people to receive complaints. The laws favor multiple channels for reporting complaints.

  • Train supervisory and management personnel to recognize discrimination early on, when proactive steps are called for and how to avoid illegal responses to complaints of bias.

    People running small to mid-size organizations, ever mindful of the bottom line, need to remember that prevention is less expensive and more constructive than crisis management.

    Bill Bryan is a counselor with the Service Corps of Retired Executives. SCORE offers counseling, workshops and seminars on small business operations. You can reach Bryan through SCORE, 515 N Court St. 815-962-0122, for information and appointments.

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