By Anthony M. Hohn

Companies of all sizes eventually find themselves in the unenviable position of dealing with problem employees. The ever-changing legal climate makes lawsuits by disgruntled employees an unfortunate reality for many employers.

While it is impossible to eliminate the risk of an employee lawsuit, employers can safeguard themselves by taking the following precautions before a problem employee becomes a true threat:

Define expectations clearly. Surprised employees might become angry employees, and angry employees might sue. At the commencement of the employment relationship, it is essential to set forth exactly what the employee must do to succeed with your company. What are the performance expectations? What are the essential functions of the job?

These questions are among those that must be addressed with employees to ensure they understand the company’s expectations. Employees who are not taken by surprise by the company’s performance expectations are less likely to sue in the event of termination.

Put rules and policies in writing. One of the most effective and often underutilized ways to communicate the company’s expectations and policies is through an employee handbook, which is essentially a written set of rules, policies and procedures.

The handbook should be provided to each employee at the beginning of the employment relationship. The handbook should be updated to reflect the actual practices of the company and to ensure consistency with applicable state and federal laws.

While there is no one-size-fits-all handbook for every employer, at the very least the handbook should include the company’s rules and outline policies addressing harassment and discrimination.

From a litigation perspective, an employer lacking written policies might find itself trying to convince a jury that a former employee was terminated for a legitimate, nondiscriminatory violation of company policy, even though there is no such written policy in existence.

A well-drafted employee handbook that accurately reflects the company’s rules, practices and expectations undoubtedly will put your company in a better position to defend itself.

Document employee issues. Possibly the biggest and most costly mistake an employer can make is failing to consistently document employee issues. According to one alarming statistic, 90 percent of potential jurors believe a company is negligent if it does not properly document an employee’s performance problems.

While it might seem burdensome to document every performance issue or complaint involving an employee, doing so might save your company from having to defend an expensive lawsuit. Being able to show a jury detailed documentation outlining an employee’s misconduct or performance deficiencies can serve as a powerful defense.

There is no foolproof method of avoiding employee lawsuits, but following the steps discussed here will not only decrease the chance of becoming entangled in a time-consuming, stressful and expensive encounter with the court system, it also will put your company in a better position to defend itself if an employee pursues a lawsuit.

Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the state’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit