From FLSA violations and harassment claims to wrongful terminations and on-the-job injuries due to employer negligence, there are numerous reasons your organization may face an employee lawsuit. Employers with more than 500 employees face about a 12% chance of employee litigation, while organizations with fewer than 500 employees face around a 20% chance of employee litigation.
Aside from the time that goes into the defense and the damage to an organization’s reputation, the average cost to defend against employee lawsuits runs into the six-figure range (including lawyer fees and settlement costs), and 25% of cases that go to trial result in a judgement for $500,000 or more.
The first line of defense in protecting your organization from litigation is an employee handbook.
Our webinar breaks down the details on the importance of the employee handbook.
Employee handbooks are intended to protect both employers and employees. These handbooks should be easy to read and understand, include policies, procedures and benefit programs, and outline general expectations of the organization as well as the organization’s compliance with state and federal employment laws.
If your organization has more than one employee, it is subject to federal employment laws, which means you need an employee handbook. It’s imperative for growing organizations to pay close attention to their headcount, as additional federal employment laws start to come into play at 11, 15, 20, 50, and 100 employees. You should review your employee handbook annually to make sure you are staying in compliance with changing state and federal laws, such as minimum wage, overtime rules and paid leave laws. A comprehensive review and update should be done every other year at a minimum.
The following eight sections should be included in your organization’s employee handbook.
Adopting illegal policies or practices, routinely deviating from policies, inconsistently applying policies and implementing vague policies can get you into hot water in an employee lawsuit.
Having an employee handbook is better than not having one at all, but it’s important to know that just having the employment handbook isn’t enough. As an employer it is your responsibility to ensure employees have received, reviewed and acknowledged your policies as provided in the handbook. Every employee handbook should have an Acknowledgement Form, and every employee should have a signed and dated Handbook Acknowledgement in their personnel file.
Even small organizations with just a few employees are subject to many federal employment laws and should have an employee handbook. As organizations continue to grow and are subject to more state and federal employment laws, employee handbooks get more complex. If tackling the employee handbook feels like too much to handle, we can help.
Eide Bailly’s HR Consulting Services Professionals can write your employee handbook or review your existing handbook. It all starts with a conversation.
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