What Common Employer Mistakes May Result in a Lawsuit?
Does your company have employees, or do you plan on hiring employees for your business? If so, it is extremely important to avoid the common employer legal mistakes that may lead to an employment-related lawsuit.
Our Florida business law attorney discusses seven common mistakes made by many employers.
Seven Costly Legal Mistakes Employers make with their Employees
Mistake Number 1: Incorrectly Classifying Employees and Independent Contractors
It is tempting to classify employees as independent contractors to avoid tax liability and requirements for benefits, breaks, and overtime pay under the Fair Labor Standards Act (FLSA).
However, classifying actual employees as independent contracts could result in thousands of dollars in back taxes and other penalties.
Employers need to carefully review the IRS guidelinesfor rules regarding independent contractor status to avoid this costly employer mistake.
Mistake Number 2: Terminating Employees Who Are Out of Work on Sick Leave or Medical Leave
Even if an employer is in an at-will work state (like Florida), the employer must be very careful when terminating an employee who is out on medical leave or is out of work because of an illness. Several state and federal laws protect employees in these situations.
For instance, the Family Medical Leave Act(FMLA) allows for up to 12 weeks of job-protected leave for certain employees. The Americans with Disabilities Act(ADA) may also contain several provisions that protect some employees who are out of work because of a related condition or illness.
Before terminating an employee who is out sick, check with a Florida business law attorney to avoid any problems.
Mistake Number 3: Failing to Obtain Workers’ Compensation Insurance or Breaking Workers’ Comp Laws
Most employers in Florida are required to carry workers’ compensation insurance. If your company is required to carry workers’ comp insurance, and you fail to do so, you can be heavily fined.
Furthermore, make sure that you and all managers and supervisors understand the process of filing workers’ comp claims. You must be very careful not to violate a worker’s rights under the Florida Workers’ Compensation Statutes if the employee is injured on the job or develops an occupational illness.
If you have questions, contact your insurance provider or business attorney.
Mistake Number 4: Failing to Document Performance and Disciplinary Actions
Again, operating in an at-will work state does not always make it easier to terminate an employee. Having clear procedures regarding performance and disciplinary actions can reduce the chance that your company may be sued for some types of wrongful termination claims.
However, when you have a written policy in place, you must always document both good and poor performance, conduct annual reviews, and follow the policy in every case. Failing to follow the written policy could result in a wrongful termination lawsuit.
Mistake Number 5: Failing to Obtain Signed Agreements to Protect Trade Secrets and Other Information
Failing to use or using inadequate employment agreements could cost your company thousands of dollars in leaked trade secrets, exposure of confidential information, and your competition.
Employee agreements should include strong confidentiality clauses, non-compete clauses, and non-disclosure clauses. Using a DIY template you find online, or borrowing an employee agreement from someone else can also lead to costly legal troubles.
An experienced Florida business law attorney can draft your employment or other agreements so that they comply with all federal and state laws and are tailored to your company’s needs.
Mistake Number 6: Failing to Establish Clearly Defined Procedures for Determined Pay Rate
Some employers approach employee compensation intending to pay the lowest pay an employee will accept. However, failing to have a clearly defined procedure and pay scale may result in pay discrimination.
Employers should have a system that establishes minimum and maximum pay ranges for each position based on specific criteria, including education and experience. The process should also include a process for offering positions to new hires, pay reviews, and promotions.
Mistake Number 7: Failing to Consult a Florida Business Law Attorney
Employment law is a complex area of business law. A small mistake or error, even if unintentional, could result in fines, penalties, and lawsuits. Research, preparation, and legal guidance are three of the most effective ways to prevent mistakes related to employees and employment law.
Developing an ongoing relationship with a Florida business law attorney can help your company avoid many of the mistakes and errors that impede other companies and employers.
If you have questions about employment law, contact our Florida business law attorney to schedule a consultation by calling 954-324-3651or by contacting us online.