Small businesses are just as much at risk as larger companies for potential lawsuits from unhappy employees, although the cost can sometimes be much higher for companies with fewer resources to absorb large monetary losses.  The good news, however, is that many of the policies adopted by larger businesses can be used effectively by their smaller counterparts as well.  Here are five crucial policies companies of all sizes should implement if they have not already.

1. Provide Employee Handbooks to all employees.  No matter whether you employ 10 workers or 1,000, implementing and distributing an employee handbook to each worker is critical.  This can prevent employees from later claiming they were never informed of a specific policy in effect at your company.  The handbook should, at bare minimum, contain:  1) policies governing the “at will” nature of employment, equal opportunity, harassment, and discrimination; 2) grievance procedures or “open door” policies; and 3) rules regarding attendance, clocking in and out, breaks, and meals.  You may want to consult with legal counsel before finalizing the handbook.

2. Have zero tolerance for any forms of harassment or discrimination.  Harassment and discrimination are strictly forbidden by U.S. law.  Despite that fact, harassment and discrimination lawsuits abound, often resulting in costly EEOC settlements or lawsuits—not to mention bringing about embarrassing and unwanted media scrutiny. An employer’s best defense against this type of lawsuit is to develop and enforce a zero tolerance policy against all forms of harassment and discrimination.  All accusations of discrimination and harassment should be taken seriously and immediately investigated, and violators should be swiftly disciplined according to the policies set out in the employee handbook.

3. Follow all wage and hour laws like clockwork.  For smaller businesses, who often rely on the use of hourly employees, lawsuits relating to wage and hour infractions can be a danger made worse by high turnover rates.  Make sure you and all managers/supervisors know the laws governing overtime pay, rest and meal breaks, and final paychecks.  Most importantly, make sure to follow them strictly.  Make sure both employees and managers are conforming with legal requirements by performing periodic audits of timesheets and pay-stubs.

4. Train your managers and supervisors–all of them! Improperly-trained management staff can bring about unending headaches for companies.  It is imperative to properly train each and every member of the management and supervisory staff.  Many employment lawsuits depend in large part on the prompt action–or lack thereof–on the part of management.  All managers should know the laws and company policies regarding, at the very least:  appropriate interviewing; new hire paperwork; recognizing and handling inappropriate workplace conduct (including discrimination and harassment); how to report injuries or incidents (slip and falls, assaults, theft, etc.); and wage and hour laws.

5. Consistency and prompt action are key.  The moment any potential violations of federal, state, or local employment laws are brought to management attention, they should be promptly and thoroughly investigated and attempts should be made to resolve the issues with employees in as amicable and professional a manner as possible.  Companies who truly want to head possible lawsuits off at the pass should go above and beyond that and become proactive about detecting possible harassment or discrimination  Swift and appropriate investigation of all complaints followed by whatever corrective actions are appropriate are critical, and all employees must be treated in a fair and consistent manner.