Every business should want to avoid employee lawsuits. They are expensive, time-consuming, unproductive and emotionally draining, even if the employer eventually wins. And after 35+ years of practicing employment law, if I could only give you one tip to keep a business from getting sued by an employee or more likely, a former employee, this is the tip: Call an employment lawyer BEFORE you take an adverse action against an employee.

I know that sounds like shameless self-promotion. But it is also denying myself the really big bucks. Litigation is a goldmine for lawyers. The average employment case that actually goes to a three- or four-day trial can cost the business $100,000 or more in attorney’s fees, even if the employer wins.

However, calling your employment lawyer before you fire an employee just to see if you could proactively protect your business from a lawsuit might cost you 100 times less. Even at my hourly rate of $400 per hour, for long-term clients whose businesses I know well, I can often spell out the next steps in an email in an hour or less.  

Will that approach make me rich? No. But it does give me the satisfaction of keeping my clients focused on their own productivity and profit rather than distracted by expensive claims of discrimination, wrongful termination, defamation, and any other kind of unfairness that a disgruntled former employee can dream up.

And those of you who call me often know that I will usually pinpoint some or all of the following to be corrected so that your business doesn’t get sued by an employee:

Missing or Out-of-Date Written Employment Policies

The days are long gone that your business can operate without written employment policies. As a business owner or manager, you handicap yourself in any unemployment claim if you cannot produce a written policy that the employee knew about and violated. Also, a sexual harassment lawsuit, which can be filed in Texas against even the smallest employer, always involves the question of whether your written anti-harassment policy was adequate. There has never been a time in my legal experience where well-written policies didn’t protect and help the business when an employee complaint or case was filed.

Untrained or Poorly Performing Managers

As a business owner or HR director, you usually are not the first line supervisor who deals day in and day out with the employees. Your assistant managers, working foremen and recently promoted managers are the ones whose language, actions and judgment you will have to defend if you get sued. Have you trained those people in the subtleties of discrimination prevention, accommodation and professionalism? Have you tolerated poor decisions from those managers? Have you given them authority to act for your business without the training to act in the best interests of your business?

Exposing Your Business and Your Employees to Substance Abuse, Violence, Theft

There are few issues in the workplace that will create chaos as quickly as substance abuse, acts of violence or embezzlement by an employee. These problems arise more frequently than they should. I encourage you to think about your response to these issues before they happen. Institute drug testing and don’t be shy about confronting impaired employees as soon as you reasonably suspect a problem. Be vigilant about checks and balances with your money—never hand all of the financial responsibility over to one person. Finally, while you are not expected to be a psychologist, watch for overt signs of impending violence, such as threats, extreme anxiety, hostility, stress or resentment, domestic violence that could spill over into the workplace, discussions of weapons, or other irrational, fearful or aggressive behavior from an employee.

Sloppy Pay Practices

There is no part of employment that the state and federal government takes more seriously than pay practices. The IRS, the U.S. Department of Labor, and the Texas Workforce Commission are all prompt to audit and penalize employers who do not pay exactly as the law requires. That means correctly tracking time worked to the minute, paying the regular rate of pay and overtime to the penny, paying on time every time, and applying the overtime exemptions only to those employees who clearly meet the exemption requirements. And for Pete’s sake, don’t classify any worker as “contract labor” or an “independent contractor” without checking with an employment lawyer first.

Failure to Promptly Coach and Correct Employee Behavior

Tolerating mediocre or poor performance for months without confronting the problem head on and requiring improvement from the employee inevitably leads to disbelief when the employee is fired. The termination meeting should never be the first time the employee has been disciplined. That always looks suspicious to the employee and ultimately, to a jury. Annual performance evaluations are one way to document some accountability, but I think regular feedback, coaching, disciplinary action and written warnings, if necessary, are also important.

Hiding Your Objective and Documented Reasons for Termination

Yes, Texas is an at will employment state, so you can fire an employee for good reason, bad reason, or no reason at all. But firing an employee without spelling out the reasons gives the employee the opportunity to make up their own fantasy about why they were fired. What is the advantage in obscuring your reasons for terminating an employee who is not performing up to your expectations?  Just be consistent and truthful, even if it is temporarily uncomfortable for you or the employee. Maybe the employee will do better for the next employer. Meanwhile, you won’t be defending a wrongful termination lawsuit if you have good reasons (something more concrete than “bad attitude” or “not a good fit”) and good documentation to support your decision.