Policies to Prevent Employee Lawsuits

December 28, 2017

Policies to prevent employee lawsuits

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Human resources leaders we’ve interviewed and surveyed about the current state of HR and human capital management identified finding and retaining employees as their top challenge. Running a close second on the list was maintaining HR compliance, specifically developing, communicating and enforcing policies and procedures across the organization.

Why do managing employee policies create such a challenge for HR? For starters, the vast number of rules HR must know and maintain is overwhelming, and they often lack the resources to keep up with constantly changing updates. Plus, without dedicated ownership, important details could fall off HR’s radar, resulting in the potential for employee lawsuits or costly fines. But the #1 reason people management compliance is so challenging for employers: an employee could sue you at any moment. You might be thinking, “our people love us, it won’t happen here,” but it only takes one disgruntled employee, justified or not, to file a lawsuit against your organization. And if you don’t have the proper policies and documentation in place to defend your actions, you’ll have little ground to stand on.

In this article, we’ll examine policies organizations should have in place to minimize the risk of damaging audits and costly employee lawsuits. Here’s where to start:

Employee Handbook

Your employee handbook is your organization’s bible. It’s the go-to resource where company policies and procedures are clearly and consistently communicated, and managers and employees alike depend on the handbook for education and guidance. And in the event of employee litigation, a comprehensive and updated handbook can greatly minimize your risk.

Ask these questions about your employee handbook:

  • Is each employee presented with a company handbook that outlines employment practices and policies?

  • Does your handbook clearly define conduct and nondiscrimination policies as well as terms and conditions of employment?

  • Does your handbook ensure compliance with federal and state laws?

  • Does it outline compensation and benefit information including medical offerings, time off, work from home policies and telecommuting policies?

  • Is each employee required to provide a written or electronic acknowledgement confirming he/she has reviewed the handbook?

Does an HR professional or legal counsel reviews your employee handbook annually?

Job Descriptions

Why are job descriptions important? They set specific expectations for employee performance and offer a guidepost to measure individual success. Job descriptions also are used throughout the recruiting process to identify a certain skill set candidates must possess to apply for a position.

Questions you should ask:

  • Is each job description is reviewed and updated, at minimum, annually?

  • Are job requirements and responsibilities properly communicated to employees, including how the employee’s performance will be measured?

Performance Management

Accurate performance records are essential in the event an employee is terminated due to poor performance. Affected employees should be placed on a performance plan that defines required areas for improvement and offers a time frame to achieve results.

Questions to consider:

  • Is employee performance measured against the individual’s job description and goals?

  • If performance issues are determined, do you clearly document problem areas and institute a performance improvement plan?

  • Does your performance improvement plan clearly state expectation and goals, identify the necessary steps to improve performance, provide training to employee on the plan and include a final warning if performance does not improve?

  • Is the employee’s performance record documented by a supervisor and maintained within the employee’s personal record?


Accurately documenting and tracking disciplinary violations is essential in the event an employee is terminated. Without proper documentation, a terminated employee can pursue legal action against the employer.

Ask these questions about your disciplinary program:

  • Are disciplinary policies and procedures clearly defined, written and communicated to employees via the company handbook?

  • Are measures of discipline, including notices, investigations and terminations documented by a supervisor and maintained within an employee’s personnel file?


Wrongful termination

Termination meetings are conducted by an HR representative and supervisor, notifying the employee of the termination, discussing the return of company property and facilitating the employee’s departure. A summary of the meeting and related documents are captured and stored in the employee’s personnel file.

Departing employees receive a written summary of accrued benefits and notices regarding post-termination benefits, including compensation for vacation and sick time, continuation of health coverage, severance pay and 401(k) plan information.

Procedures are defined for collecting company property from the terminated/departing employee.

If you’re feeling increasingly confident about your HR policies and procedures, take a few minutes to review complete Compliance Regulation Overview to learn how specific government regulations impact your business.

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