Research has shown that business lawsuits cost businesses over $100 billion per year. This just shows that as a business owner, you are more vulnerable to lawsuits than you perhaps imagine. Your employee, client, vendor, or even a competitor might sue you for one reason or another. As a rule of thumb, you need to beware of business lawsuits. Let us give you a few tips on how to protect yourself and your business from costly lawsuits.
Incorporate your business
One way to ensure that you are safe from expensive lawsuits is to avoid mixing your personal and business matters. You can do so by incorporating your business as a separate legal entity. This one of the best ways to protect your personal assets in case you get sued. Incorporating your business will also help you avoid issues with the taxman.
Get insurance protection
The right kind of protection will also guard your business against the types of lawsuits you are likely to encounter. There are many types of insurance you can use to protect yourself. Some of the examples are:
Professional liability insurance: it is also known as Error & Omissions insurance. It is liability insurance that will protect your business if it involves providing services. In case one of your employees was negligent in offering services, and it caused financial loss to the client, you may get sued for negligence. The errors and omission insurance will come in handy to cover the cost of legal fees.
Commercial auto insurance: If your employees are using the company vehicles in executing their duties, it would be necessary to insure them to avoid liability should anything happen. According to a top car accident lawyer, it is your responsibility as a business owner to keep your employees safe as they use company vehicles for work duties. You can take a Commercial auto insurance policy that will cover the costs of repairs, medical bills, and legal fees in the event of an accident. As such, you will have protected your business from personal injury lawsuits.
Employment practices liability insurance (EPLI): your business can be exposed to your employees’ employment-related lawsuits. For example, a former or current employee may file a lawsuit against your business on such claims as sexual harassment, discrimination, invasion of privacy, or even wrongful termination. The EPLI will help cover for any claims.
Workers’ Compensation: You should also protect your employees from other workplace accidents. These may be a result of a workplace fire, sickness, slip and fall, electric shock, etc. A worker’s comp is one of the best policies to protect your business from these types of accidents that can lead to expensive lawsuits.
The Voss Law Firm has a free ebook which discusses commercial insurance in more detail.
Watch what you post online!
It is crucial that you monitor and moderate things that your employees post on the internet. More importantly, check what they upload on your business website and social media pages. This is because any form of libel or slander can be scandalous to your business. There are many ways to avoid unprofessional engagement on the internet that might lead you into hot soup. For example, you should craft policies that clearly outline what is acceptable and what is not in the digital space. You will protect your reputation and possible lawsuits that are growing quite common.
Be professional with employees
You also need to do your part in keeping your employees happy. Take the necessary steps to create a work environment that doesn’t discriminate against any employees in the business. It would help if you lay down regulations that support fair treatment of all your staff, irrespective of their age, gender, or financial status.
In addition, it is advisable for you to follow the right procedures before reprimanding or firing your employees. This ensures that the actions you take are within the bounds of the law. In case an employee sues later on the grounds of unfair disciplinary action or unfair dismissal, you will be on the right side of Labor laws.
You should also provide the employees with a detailed complaint procedure that they should follow when filing a complaint. Act quickly on complaints before they escalate into legal issues.
As an entrepreneur, running a business can be quite exciting. That said, there are many sides of business you need to keep an eye on if you are to meet success. One of the biggest threats to your growth are lawsuits that can cripple your business. You need to understand the legal issues that affect you and work to prevent costly lawsuits.