5 Ways to Protect Your Business From A California Employee Lawsuit

Hello, this is John Fagerholm and today I am going to give you information about the 5 best ways to protect your business from employee lawsuit; but first let me tell you a little bit about my self before I present you this important information.

I am a lifelong business owner and entrepreneur just like you, all my businesses have done pretty well, they thought me a lot, but I did have an employee issue in the past that cause me some problems so if you are having an employee issue I know just how you feel.

My website is Californiaemployer.com, my website and law firm is dedicated to help California employers with employees issues.  I have been a lawyer for 15 years and managing partner.  We have helped hundreds of California business owners protect their business.

Preparation is Key

A little bit of preparation before a complaint or a lawsuit can help you a lot.  It is important to have systems in place, so have written policies and procedures for everything, have a policy that all employees acknowledge your procedures.

This preparation may cost you a little bit of money but it is worth it.  If you are ever involved in a law suit, you want as much evidence as possible or even if you don’t get sued, you will have more peace of mind.


The number 5 of ways to best protect your business is time keeping.  One of the most common disputes between employers and employees is when employees says they weren’t paid for the time they should have been paid.  To avoid this issue, have official time-systems in place that keeps track or their time.

It is best to have them electronically so you can retrieve the records easier and accurately.  Also,  keep records of their pay checks as well.  Make sure the timekeeping and payroll data is kept secure.


It is imperative to have a procedure for terminations.  California is “At-will” employment state, what that means is that an employee or employer can part ways without reason; BUT some terminations don’t fall under “at-will”

In those cases wrongful termination cases are presented.  This involves discrimination, firing for taking protected time off, retaliation firings.  To avoid this big issue,  have documented set of procedures for terminations.


Have a grievance system in place.  It is important that you take your employees complains seriously and address them accordingly.  Your system should include official procedures for filing complaints,

The system should have an alternative so employees can have a way to report incidents to their supervisor. And also very important,  If the complaint is about their supervisor your employees should have an option to be able to report this issue.


One of the biggest lawsuits that happen is that they weren’t classified correctly, and that is because there are two types.  There is an independent contractor, in this case there are no payroll taxes, wage laws and the employer doesn’t have to recognize overtime.

The other type is the actual employee, in which case, falls under all strict labor laws including overtime, meal breaks, wages and taxes.


The best & least expensive way to protect your business and to reduce risk of an employee lawsuit is to have an employee handbook.  You definitely want to have your procedures in place, and to avoid your employees misunderstand your policies and think they have been mistreated, have an employee handbook that they can consult and you can avoid a lawsuit.

We have a great handbook available that you can get right now, so you don’t have to wait any longer.

Make sure you have a handbook and follow all the procedures we talked about so you can be protected.  My office is dedicated to protect employers from employees issues.  If you have any questions we do offer 15 minutes free consultations.