There are some very simple steps an employer can take in order to reduce the occurrence of employment-related litigation. Of course, the employee selection process is the first place to start. Employers should not make promises to prospective employees (or even current employees) without first giving thought to the consequences of doing so. Being honest and straightforward and not committing to any future promotions, salary increases and the like, even if done verbally and not in writing, is extremely important.
Having prospective employees sign an employment application which specifically states that employment is at-will and may be terminated for any reason is a good rule to follow. In fact, all employment-related documents, such as employee handbooks and personnel manuals, should reiterate this. Doing so will help the employer’s case when he or she decides to terminate an employee. Additionally, these “employment documents” should specify that oral statements will not be binding and that only the written word will prevail. The employee handbook or manual is also the perfect place to set forth company policies and procedures regarding holidays, vacation, sick-time, and health benefits.
Employers should establish general rules, policies and procedures for employees to follow, along with an indication of how infractions will be handled. It is imperative that the employer treat all employees equally when it comes to violations of the rules or unacceptable behavior. Disparate or inconsistent treatment is bound to cause difficulties.
Of course, great care should be taken when terminating an employee. A relatively safe way of reducing your workforce is to terminate employees strictly on a seniority basis. Unfortunately, such a workforce reduction does not usually serve the needs of the employer. Prior to terminating an employee because of poor work performance, it is essential that you document the failures of the employee and you provide the employee with written warnings, as well as opportunities to rectify the deficiencies, prior to termination.
Another effective way of reducing litigation is to offer a terminated employee severance pay in exchange for a release from all claims he or she might have against the employer. The payment must be greater than that which the employee would ordinarily be entitled. A properly drafted release, handled properly with the guidance of a knowledgeable attorney, can prove invaluable.