Given the vast swath of laws and regulations, not to mention just dealing with employees, the area of human resources poses significant issues for business owners to be wary of. Typically, the critical times that the law intersects with business is during hiring, discipline, and firing. Another area of the law is wage and labor regulation, which I will touch on in Regulatory Compliance.
In hiring employees, it is a good rule of thumb to be very careful about how the expectations are set. In many states an employee handbook can be deemed an employment contract. Generally, from an employer’s perspective it is preferable for employees to be deemed “at will.” Any employee handbook should be carefully written to preserve as much leeway as possible for the employer.
This ties directly to employee discipline. When an employee’s conduct warrants discipline and not termination it is very sound policy to get it in writing and to also be progressive in it. Keeping written records can protect the company from discrimination, wrongful termination, and unemployment claims. Without the documentation defending these sorts of claims often boils down to a word against word dispute. This is not where a company wants to be, especially given that just keeping documentation is incredibly easy. A similar procedure with performance reviews is also warranted.
Should an employee need to be separated this too should be done in writing. Many employees would prefer to resign rather than be fired. This is because it preserves some goodwill, and perhaps a decent recommendation. Often, they know they deserve to be terminated or even want to leave the company and are relieved that they have been ushered out. It is less common that an employee does not know that their performance is not acceptable. In having them leave, get it in writing or you are opening the company up to costly and annoying suits for discrimination and wrongful termination. Similarly, a written resignation is a solid defense to an unemployment claim.
When an employee does leave your company, you can take some solace in the fact that you included non-compete and non-solicitation clauses in their employment contract. The former is problematic to enforce in most states. The reason for this is that the law favors free commerce and discourages contractual limitation on people plying their trades. However, non-solicitation provisions are widely enforceable. Here the law protects a company’s customer base from separated employees that want to poach this valuable asset. The protections are not absolute, but frequently that prove very valuable.
Also, when separating an employee who has filed a workers’ compensation claim is a particularly hazardous maneuver. The law tends to offer significant protections and presumptions in their favor. If an employer is not careful in how such a separation occurs a workers’ compensation discrimination suit is likely and in these the deck is stacked clearly against the employer.