Any company or organization has only a finite amount of resources with which to manage and grow their company.
In today’s hyper-competitive economy, a company can ill afford unnecessary risk management exposures. Employee lawsuits are not only expensive, they are time consuming, emotionally draining and can beget even more employee lawsuits. Defending against even a frivolous claim can cost tens of thousands of dollars. Defending against a legitimate claim can cost hundreds of thousands of dollars in legal fees alone. When you add to this fact, the “average” employment law verdict exceeds two hundred thousand dollars and punitive damage awards are commonplace, you quickly have the formula for a risk management nightmare!
Preventing employee lawsuits is also important because it evidences good employee relations. More often than not, an employee lawsuit is the result of a poor hiring or promotional decision. You may hire without using a powerful hiring system and find yourself with someone who lacks the skills or character necessary to be trustworthy. Then, when you call them on their performance, they will be quick to blame someone else for their circumstances. Not surprisingly, when you let them go, they are equally quick to file a lawsuit. Similarly, you may promote excellent rank and file workers into management positions without any managerial training. This too is a formula for employee lawsuits and non-productivity.
Much of what makes you “an employer of choice” has to do with your image in the community. Employee lawsuits can tarnish that image, even when lacking merit. While your case may not garner the publicity afforded a Coke, Texaco or Mitsubishi, you can rest assure that any such publicity is damaging. The last thing you need is workplace dramas spilling out into the courtroom.
Nobody publishes more content than lawyers and bureaucrats. As a result, there is an over abundance of compliance information. This makes it difficult for the entrepreneurial or mid-sized employer to discern which exposures they should focus on and what strategies and tools they should employ. Statistics reveal the strategies and tools offered companies today have done little to prevent the filing of disastrous employee lawsuits. The fact is, traditional thinking in this area simply won’t do.