Business Liability: Tips to Avoid Legal Action

Large companies and businesses like McDonald’s or Sony are experts at business liability because they sue and get sued all the time. It is expected. The reasons vary wildly, but it’s almost always copyright, trademark, or other complex litigation issues at those levels. Large entities such as those can handle court hearings and lawsuits since they employ cutting-edge legal personnel. 

But what of the small to the medium enterprise? Could you afford to be dragged through the legal system, and if you were, would you win? If there are any doubts about this, you should take every measure you can to avoid legal action against your business.

Health & Safety Must be Top Notch

Injuries at work such as slips, trips, and falls are widespread in most countries. As such, they account for approximately 84% of work-related incidents. Such a claim entitles an employee to paid time off work, financial compensation, and possible legal action against your company. It is therefore imperative that you stay on top of health and safety issues. This reduces your liability and the impact that any legal action will have against you. 

One of the most valuable things is to ensure your establishment is clean, tidy, and fit for purpose. Professional janitorial services are excellent for this. However, more than cleaners, much custodial personnel are trained in the correct procedure for equipment types, medical and restaurant cleaning, and Covid-19 disinfection. You must also ensure that all required protective equipment is issued and that employees know specific H&S issues.

Increase Your Insurance Policies

Depending on your business type, size and sector, you will be subject to specific insurance policies. Some are mandatory by law, and others are optional. For example, all companies with employees must pay an employer’s liability insurance, yet business interruption insurance can be overlooked. In addition, there are many insurance policies, such as:

  • Worker’s compensation.
  • Loss of income cover.
  • Commercial general liability.
  • Business interruption insurance.
  • Product liability insurance.
  • Professional liability insurance.
  • Equipment breakdown insurance.
  • Commercial property insurance.
  • Commercial auto insurance.

It would help if you always tried to attain as much relevant insurance as possible. Yet insurance for unforeseen events is always an excellent option since you never know when a riot will erupt or a global pandemic like Covid-19 will shutter your business. While nobody likes to pay insurance companies, it’s always better to have coverage and not need it than to need it and not have it.

It’s In Your Interest to Address Current Issues

While this is entirely optional, and currently, you aren’t legally obliged to address current issues at work, it is definitely in your best interest to do so. Problems such as sexual harassment, bullying, racial abuse, and toxic work environment are just some prime examples of common workplace issues today. As a company or business, you should strongly and publicly acknowledge these problems and take steps to rectify them.

A simple method is to engage with employees and educate everyone on not safe for work policies. All employees have the right to opinions and views, but the workplace is not the best place. In short, all personal beliefs are to be checked at the door. Anyone engaging in unsavory behavior should be subject to disciplinary action outlined in an updated employee handbook, company-wide policy, or contract.

Your company Must Meet Contractual Obligations

Speaking of contracts, all employees are required to carry out their duties as agreed. However, this also applies to you as an employer. For example, an employment contract will state a minimum number of hours to work and pay rate. You must honor this agreement, or you will violate the labor laws of the nation or state. In addition, should an employee quit or be fired, you are legally bound to pay them for work they have done.

Contractual obligations also extend to any agreements, not just employees. Business-related contracts such as property leases, purchase orders, indemnity agreements, and NDAs are typical. Failure to honor these contracts without an exceptional reason will land you in legal hot water with clients, service providers, and business partners. If you intend on breaching a contract because you feel it is warranted, consult legal counsel before making a decision. 

Ensure Accurate Records are Kept

One of the oldest yet probably most effective methods of insulating yourself from legal trouble or false claims is keeping accurate records. And this should cover everything, from a minor transaction to the most significant purchase. Employee records and contracts, purchase orders, patents, copyrights, and insurance documents should be kept. Hiring or outsourcing professional HR staff is a great way to keep on top of record keeping.

Additionally, to further protect yourself, you should adopt a somewhat paranoid yet instrumental approach to record-keeping: 

  1. You should store hard copies in filing cabinets. 
  2. Digital versions of records are to be kept locally. 
  3. You could upload digital records to a cloud storage server 
  4. Copies of physical documents should be stored off-site in a safe location. 

This might appear to be much work, but documents and records go missing. Therefore, it is prudent to safeguard them as much as you can.

Of course, to defend or insulate yourself and your company against business liability, it is always a good idea to hire or retain a legal team. Every decision that could have potential legal implications should be checked with legal first. On a retainer, they are always on hand to review anything at short notice. Additionally, a retained legal team will get to know your company and business intimately, therefore providing the best counsel possible.

For whatever purposes, the cost of retaining a legal team for a relatively small monthly fee will far outweigh costly legal expenses further down the line, especially if you lose a case. Common cases against businesses include wrongful termination, breach of contract, personal injury, and harassment. Not surprisingly, these are the issues covered in this article. The long and short of it is that not taking steps to protect yourself via legal means will have drastic consequences.

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Todd Smekens

Journalist, consultant, publisher, and servant-leader with a passion for truth-seeking. Enjoy motorcycling, meditation, and spending quality time with my daughter and rescue hound. Spiritually-centered first and foremost. Lived in multiple states within the USA and frequent traveler to the mountains.

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