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3 ways employers can limit the risk of worker litigation

On Behalf of | Jan 24, 2025 | Employment Law

Employees are one of the most important assets at an organization. They are also one of the leading sources of organizational liability. Workers can perform their jobs poorly, leading to claims of defective products.

They mistreat one another, resulting in allegations of harassment. They may also come into the job with unreasonable expectations and may then become resentful toward their employers for failing to meet those expectations.

Employers onboarding new workers often need to be proactive about mitigating the possibility of employees eventually taking legal action against the company. How can businesses limit the likelihood of an employment lawsuit?

1. With clear expectations and promises

Few things sour an employment relationship faster than unmet expectations. Companies need to ensure that every new hire understands the job responsibilities that come with their new position.

Organizations also have to be very thorough when explaining compensation and benefits to workers. Especially in scenarios where workers may be eligible for bonuses or commissions, companies need to be careful to communicate when they are eligible for that extra pay.

2. With thorough employment contracts

In addition to outlining job expectations, disciplinary practices and compensation policies, companies can include various terms in their contracts that protect them from litigation. For example, they can include clauses requiring arbitration in the event of an employment dispute.

Workers may have to agree to resolve the matter outside of the court system instead of attempting to sue. Confidentiality agreements and restrictive covenants prohibiting unfair competition can also go a long way toward minimizing the risk of worker litigation and giving the company leverage in the event of a dispute.

3. With appropriate training

Worker lawsuits sometimes arise because employees claim they experienced discrimination or a hostile work environment. Providing adequate training to every worker about what constitutes harassment and how to treat coworkers can reduce the likelihood of workers alleging that the company ignored inappropriate conduct and allowed a hostile work environment to develop.

Different organizations may require different solutions for different forms of employment-related liability. Reviewing company practices and existing contracts may be a good starting point for employers hoping to mitigate the risk of their workers suing their business.