7 Ways to Stay Out of Court (continued)
Insure yourself. Make sure your business insurance covers you in all situations. If your insurance does not cover a claim, the injured party may go after your personal or unincorporated assets. Coverage may be available through an umbrella policy and Employment Practices Liability Insurance (EPLI).
Manage fairly and wisely. Try to make good hiring decisions from the start. Interview thoroughly but fairly. All applicants should be treated equally and asked the same questions. Set clear expectations with new hires by providing a written job description and the company's code of conduct. Provide written policies stating that discrimination and harassment will not be tolerated. Tackle problems early and enforce policies consistently with each employee.
Classify employees correctly. Many recent lawsuits have alleged misclassification of consultants and salaried "exempt" employees under the Fair Labor Standards Act (FLSA). This can cause disputes involving overtime pay and tax withholding. Be particularly cautious not to incorrectly classify an employee as an independent contractor. The cost of a mistake here can be huge in taxes, penalties and legal fees.
Watch out for Workers' Comp claims. Stop workplace accidents before they happen. Implement proactive training procedures and a written safety plan. Report claims immediately - waiting even a week causes settlement costs to soar
Document, document, document. Writing and keeping documents is vital. Create a document retention policy that everyone must follow. A good policy will promote efficiency and help protect your company in case of a lawsuit.
These resources can help in your quest to stay out of court:
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