Business Owner's Toolbox to Prevent Liability
Employee Files Create an employee file for each employee. This file should contain their W-4 and I-9 along with a copy of their social security card and any agreements that they may have signed (i.e. Non-compete or Employment). Also, include in this file employee write-up forms in case of unsatisfactory performance.
Properly Pay Overtime According to an article in BusinessWeek Magazine, overtime litigation is a hot topic. The Fair Labor Standards Act dictates which employees can be exempt from overtime pay. It is important that you regularly audit your payroll and employee classifications. If an employer misclassifies an employee, the employer could be liable for twice the amount of unpaid overtime as well as the employee’s attorney’s fees.
Draft an Employee Policy Manual
* Include a disclaimer: THIS IS NOT AN EMPLOYMENT CONTRACT
* Make no promises in the manual
* Do not use the words: “Employer shall” or “Employer will,” always state “Employer may”
* Also Include: grievance procedures, prohibited activities and specific consequences.
** Employee must sign a form acknowledging receipt of Employee Policy Manual
Properly Cut Ties with Employees Former employees can remain a danger. Be sure that you don't fire someone for an improper reason. Always document reasons for termination and inform the employee of the reasons. If possible, have the employee sign a write-up slip for each violation of the employee manual or unsatisfactory performance. This slip should be kept in the employee's file.
Prevent the Ticking Time Bomb Personal assets are not automatically protected merely by incorporating your business or forming an LLC. As a shareholder of a corporation or a member of an LLC, your liability may be limited to your ownership interest. However, this benefit is only possible if you properly adhere to legal requirements including but not limited to having an annual meeting and recording meeting minutes, keeping personal assets and liabilities separate from the business’, and ensuring accurate corporate records are kept and that the business is properly capitalized.
