You are starting out. It is crazy hectic. You have no money because customers aren’t paying yet. You’ve got a couple friends, maybe a family member or two, working for you. Things are humming and everyone is learning their roles and what is expected of them.
STOP!
If you haven’t already done it, hire an employment attorney and have them draw up an employee handbook. Once it is in your hands, distribute a copy to every co-worker, even if employee number two is your best friend or brother, and have them read it in its entirety. Once they have read it, have them sign a document that states they have read and understand it and keep a record of the date they signed it in their employee file.
This is the cheapest insurance you will ever buy.
Anecdote:
Married co-worker has a consensual relationship with non-married co-worker using place of business for their romantic trysts. General Manager becomes aware of relationship, calls both into her office, shows them employee handbook’s precise paragraph forbidding consensual sexual relationships between co-workers. General Manager documents that this is a consensual relationship and that it, in fact, did occur at work in violation of said employee handbook. Request is made that both co-workers sign a document stating exactly that, then General Manager places the written document in each of their employee files. The matter goes no further than this. The firm is covered.
The point is very simple. The workplace is a fertile grounds for lawsuits of any nature and the employee handbook is the first step you will need to CYA.
The employee handbook should generally cost around $2,000. dollars, but that is a pittance when compared with a lawsuit, or the threat of a lawsuit, from an overzealous employment attorney. Employment law is a thriving, ney exploding, part of the law because there are so many gray areas in one’s scope of employment. Employment attorneys know that they have the deep pockets of the insurance companies on the other end of the line and that no one wants to go to court.
Not having an employee handbook in place is the exact type of carelessness that could cost you tens of thousands, or hundreds of thousands, of dollars depending on the severity of the indiscretion.
It is a very tricky balance in small businesses because the person in charge, usually the owner, does not take the time to write down a co-worker’s indiscretion and have them sign it. They simply say something like, “Look, can you not do that again? Mike feels like you have made some inappropriate comments about his sexuality and he doesn’t appreciate them. Knock it off.”
Well, maybe Mike took this harder than you are giving him credit for and maybe Mike doesn’t want to complain about every little comment his co-worker makes about his sexuality. But Mike has been keeping a scorecard of this behavior at home and he’s been recording each time he told you, the owner, on which date. The owner probably said the first few times, “I’ll talk to him.” And yet the behavior persisted.
The problem is, you do not know one’s tolerance for inappropriate behavior, of any sort, so you must employ a “zero tolerance” policy at work. However, depending on the state laws of the state in which you are doing business, you must afford the co-worker making such “inappropriate” comments the same latitude by giving them a proper warning of their indiscretion (that is of course documented in their personnel file).
The employee handbook will show a court of law that you at least took the time to put some rules in place to run your business.
While this is not a get out of jail free card for all potential lawsuits that may arise, it is a good and cheap starting point for all small businesses intent on growing.