Ward Off The Threat Of A Lawsuit.: Steps Business Owners Can Take To Stay Out Of Court
* Rule No. 1: Incorporate. Milito said going alone often provides poor asset protection and poor tax benefits, and she recommends having an attorney or accountant review corporate records once a year.
* Rule No. 2: Know the law. “Ignorance is no defense, and in fact it’s a good way to get sued,” Milito said. Small-business owners should particularly focus on employment and tax laws. Good record-keeping and proactive tax planning are key.
* Rule No. 3: Maintain adequate insurance. Milito recommends an “insurance physical” every few years and said business owners should be aware that it’s possible to be over-insured. Employment-practices liability insurance can help businesses respond to claims of employment discrimination.
* Rule No. 4: Manage fairly and wisely. Business owners should beware of falsified résumés, have detailed job descriptions, tackle poor performance early and consistently enforce policies, according to Milito.
* Rule No. 5: Prohibit harassment. A 2007 Texas case indicates “some male supervisors are still truly clueless, no offense to any males in the room,” Milito said. She went on to summarize the case:
A male director of nursing was accused of quizzing female employees about their sex lives two to three times a week in front of other employees, including asking them if they took men home the previous night. When the women asked him to stop, he threatened to fire them.
“At trial, he admitted he was questioning the women this way because he thought that if they had a lot of sexual activity the night before, it would affect their work performance because they would be tired - that’s what he said. I can’t believe this case even went to trial,” Milito said. The jury awarded each woman $7,500.
* Rule No. 6: Catch and correct wage and hour violations. Milito called failure to pay overtime “the new food for plaintiffs’ attorneys.” Since 2003, federal court filings involving wage actions have surpassed employment discrimination cases, and settlements have reached into the tens of millions of dollars, she said.
* Rule No. 7: Be careful with independent contractors. Milito urges regular reviews of independent contractor classifications and careful consideration of how much control business owners have over contractors.
* Rule No. 8: Watch out for workers’ compensation claims. Adequate training and maintaining a drug-free workplace can prevent accidents. If they do occur, Milito said immediately reporting claims and having a return to work commitment helps. Signs of possible fraud include claims by a disgruntled or new employee, an employee on leave who is difficult to contact, or accidents to which there are no witnesses.
* Rule No. 9: Hire an attorney. Milito recommends interviewing several before making a selection, holding regular meetings to compare case progress with budget constraints and requiring authorization for expenses exceeding $200.
* Rule No. 10: Document, document, document. Keep tax-related records for at least eight years, employee records for the term of employment, plus five years, and shred papers before disposal, Milito said.
Via Beaufort Gazette.
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