How to Limit Business Liability by Measuring Employee Productivity

Litigation is costly. Win or lose, it’s a massive drain on a company’s time, resources, and budget. 

While every case is different, the average cost of defending an employment lawsuit is $75,000 - and that’s if the parties settle. If it goes further, the average cost of defending at trial climbs to over $125,000.

Companies can’t afford a $125,000 mistake. Organizations have to get proactive, avoiding lawsuits by dealing with issues before they make it to the courts. Getting familiar with your legal obligations is a good place to start. Once you’re fully up to date on where you stand legally, you can prepare a strategy for employment-related negotiations and/or disputes.

At-Will Employment

If an employee is under contract, termination can usually only occur for cause i.e., if they’ve performed badly, failed in their duties, acted dishonestly, or their position has become redundant.  

If they’re not under contract, the situation is a little murkier. In most states, except Montana, these workers are considered employed “at-will”. At-will employees can be fired at any time for any reason, provided that reason isn’t illegal.  

Just because an employee is at-will doesn’t mean employers are entirely free to fire, however. As with any law, there are several exceptions, including implied contract - where verbal agreements and behavior have established a kind of de facto contract, although it’s not in writing. An employee terminated without cause may have grounds to sue if they’ve been working under an implied contract.

Protecting Your Business From Wrongful Termination Litigation

Creating a Performance Improvement Plan (PIP) can help companies set productivity benchmarks so employers and employees know where they stand regarding their responsibilities. Clearly articulating expectations helps problematic employees do better, but also strengthens a company’s position if there is a dispute over a termination.

A PIP is typically used when an employee is underperforming or engaging in undesirable behavior. It looks at what’s gone wrong, what can be improved, how it can be improved, and sets goals for that to happen. This kind of written performance appraisal is designed to hold poorly performing employees accountable and provide them with an opportunity to succeed.

Progressive Disciplinary Action

If you find that the employee cannot or is unwilling to better his or her performance, you may want to begin progressive disciplinary action. Documentation is essential here, so make sure you create detailed reports at every stage. Workers should also receive these reports to keep the process transparent and give them a chance to respond or provide feedback. 

Without this documentation, employers put themselves at risk. It’s all too easy for fired employees to play the victim, claiming that they weren’t given a chance, or that their termination was a result of a grudge. Presenting written, time-stamped evidence of an employee’s consistently poor performance will prevent your case from becoming a battle of your word against theirs.

Creating a Paper Trail

Documentation may be necessary, but it’s also time-consuming and labor intensive if you don’t have the right tech tools.

Employee Productivity Monitoring (EPM) software can help. Cloud-based programs provide visibility into how employees and teams engage with various cloud tools including things like email, project management software, CRM activity, conferencing applications, and more without being invasive. 

These data-driven insights can be used to identify poorly-performing employees, helping managers address issues quickly. Team leaders can create a PIP that effectively targets an employee’s weak spots and addresses their needs. 

If the problems persist and employers need to move to disciplinary action, the platform provides a record of an employee’s activity at work - offering evidence of their performance that can be used to prepare any needed documentation.

To find out more about how employee productivity solutions can help protect your business against costly litigation, contact Prodoscore’s platform experts or schedule a demonstration.