In a program presented by California State University Northridge's Family Business Center, employment law consultant/lawyer/mediator, Todd A. Smith, spoke about how family businesses can safely navigate employment law land mines.
In his presentation on September 15, Smith stressed the importance of creating an employee handbook and explained the reasons why employers should avoid having good-cause provisions with their employees.
Smith began his speech by illuminating the common misconceptions that many employers have about hiring and firing employees.
"Many companies feel that the employment rules of California and the United States make it impossible to run their business any way they want to. This isn't true," Smith said. "You can hire, fire, and promote who you want. However, you cannot make promises about future employment. You cannot say that as long as you do a good job, you'll have a job."
Smith explained that this is a common mistake among many family businesses, whose owners are eager to create a familial environment in the work setting. However, he cautioned that by making such a seemingly innocuous statement, employers set themselves up for potential lawsuits. Such statements create an oral contract between employer and employee and can be used in a court of law against employers.
According to Smith, another necessity for family businesses is a yearly performance review, where the company can evaluate its employees and provide them with fair warning of a possible termination.
"On going counseling means that there are no surprises. Be upfront. It allows you to have simple documentation of an employee's record with the company," Smith said. "Having an employee handbook is also essential. Every company big or small needs written disciplinary policies, clearly outlining company stances on a variety of issues."
During his hour and twenty minute talk, Smith also stressed the importance of hiring a neutral outside investigator to check into any possible sexual harassment or discrimination claims. While such an action may cost a company more money, it allows companies to be immunized against an employee later claiming that his or her complaint wasn't taken seriously.
Yet the employee law expert cautioned that it's not enough to register a complaint. Employers must be cautious about the way in which they do so.
"There is nothing more important than the complaint procedure. You need more than one person for employees to complain to and the way in which they complain must be kept confidential," Smith said. "And when someone complains you can't be cold to them. You don't need to say that they're right, but you need to at least acknowledge their feelings and show that you care."
Many of the members of the approximately 30-person audience were family business owners, including Barry Gump, the president of Santa Clarita-based portable sanitation business Andy Gump Inc.
"There are so many critical issues as your business grows that you need to know. I came to the meeting to expose myself to all the information that I could," Gump said.
David Russell, the director of the Family Business Center, felt that Smith's comments were useful to the audience.
"(Smith) did a great job of educating small and family businesses about a very sensitive area: employment practices and treating employees fairly," Russell said. "If they follow this advice, family businesses can minimize their exposure to something that can stop their business in its tracks."