Get All Access for $5/mo

5 Ways to Protect Yourself During Layoffs Implementing structured hiring, training and review processes can prevent a lawsuit.

With unemployment at a quarter-century high and uncertainty one of the few constants in today's economy, companies across the country face the possibility--or the reality--of layoffs.

Terminating employees either for cause or financial reasons is a difficult task often exacerbated by the specter of legal liability. There are, however, a number of preventive measures employers can take well before it becomes necessary to dismiss an employee--and before deciding to hire a job applicant--that both enhance employee performance and better enable the organization to make rational business decisions when problems arise.

The following are proactive practices for avoiding the employment law courthouse:

  1. "There is No Such Thing as a Wrongful Discharge, Only a Wrongful Hire." Employers who thoroughly review job applicants and take care in making hiring decisions are better able to select qualified individuals who believe in the company's cultural values and will work hard and stay for the long haul. This involves not only a thoughtful review and analysis of the potential employee's prior work history and educational background, but also to ascertain whether an applicant has the ability to make the commitment the company is looking for. Spending time on the "intake" reduces time spent on the "outtake" while minimizing liability and maximizing productivity.
  2. Double Check Your Documents. Much of the paperwork setting forth both the employer's and employee's responsibilities is completed early on in the hiring process. The employment contract, for example, describes whether the relationship is "at-will" or for a definite period of time. These documents are more than just boilerplate and will almost always come into play if there is an employment dispute. If applicable, the parties should negotiate and sign a legally compliant trade-secret, non-compete, and/or non-solicitation agreement. Companies may also consider asking employees to sign a legally enforceable pre-employment arbitration agreement. Employee handbooks should be reviewed periodically to ensure they are up-to-date and accurately reflect the company's policies and expectations.
  3. Provide an Orientation . Employees who understand their role in an organization and have an open chain of communication with management are more likely to succeed. Regardless of how much communication takes place during the interview process, the company's expectations for a particular employee should be reiterated and clarified during orientation. During an initial orientation program, companies should also make sure employees understand the employer's Equal Employment Opportunity policy and are aware of internal complaint resolution procedures. Employees are less likely to talk to lawyers or go to the EEOC if an issue arises when they know there is an internal procedure for reporting complaints and expressing concerns.
  4. Train Your Management. Managers and supervisors are often hired based on their ability to do a particular job rather than their ability to motivate others to do that job. Anyone in an organization cloaked with managerial authority, however, needs to understand the company's fundamental principles and learn to manage effectively. Companies should remind managers that offering positive reinforcement, respecting employees' opinions, and treating everyone with respect goes a long way in motivating workers to be productive and committed to the company.
  5. Be Honest, Be Consistent . Documents are crucial in litigation. If an employer terminates an employee who never received a negative evaluation for poor performance, it is going to have a lot of explaining to do when faced with a discrimination lawsuit. Though it is often difficult to be critical, evaluations that do not accurately reflect employee performance can doom a company later on. It is also important for companies to consistently follow progressive discipline policies for all employees.

Many business owners and corporate executives--particularly in small companies without complex human resource systems--often delay implementing structured hiring, training and review processes, thinking, "I won't get sued if I treat my employees right. It won't happen to me." It is only after the company gets hit with a lawsuit that it begins to proactively protect itself for the future. Planning, however, can save a great deal of time and money and prevent unwanted business distractions.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick


Earn $680K a Year with This Wedding Industry Franchise

Wed Society stands out as a unique player in the world of home-based franchises, catering specifically to the recession-resistant wedding industry with franchisees generating an average annual revenue of over $680,000.

Business News

Jake Paul Says He's 'Scared' to Fight Mike Tyson, But This Mindset Hack Helps Him 'Embrace' Fear and Make Millions: 'Let It Fuel You'

The social media star and "W" founder spoke to Entrepreneur about his latest ventures in boxing and business.

Science & Technology

No More ChatGPT? Here's Why Small Language Models Are Stealing the AI Spotlight

Entrepreneurs can leverage this growing tech to create innovative, efficient and targeted AI solutions.


10 Effective Growth Marketing Hacks and Strategies for Your Startup

Working at a startup can feel like building a plane while you're trying to take off. Use these ten marketing tips to effectively grow and sustain your startup.