WASHINGTON — When drycleaning business owners find themselves facing an employee lawsuit or struggling with a workplace dispute, it can often be traced back to fundamental human resources mistakes — errors that could have been avoided with the proper planning and policies.
During a recent National Federation of Independent Business webinar, Beth Milito, vice president of the NFIB’s Small Business Legal Center, outlined the five most frequent HR mistakes business owners make. Her tips offer a road map for dry cleaners wanting to protect their operations from employment disputes.
The High Cost of Getting It Wrong
The financial stakes can be severe for the owners of drycleaning businesses. Employment law claims carry an average settlement of $40,000, Milito says. If a case reaches a jury, the median judgment jumps to $250,000, with bench trials averaging more than $100,000.
Perhaps worst for small-business owners, she says, is that a recent study found at least 68% of jurors will try to return a verdict for an employee they perceive as unfairly treated, even when no law has been broken.
“Employment law cases and claims are very expensive to defend,” Milito says. Unlike larger corporations, most drycleaning operations don’t carry employment practices liability insurance — these costs come directly out of pocket.
The Prevention Strategy
Rather than react to problems after they arise, Milito has found that successful business owners focus on three core prevention strategies. First, they treat similarly situated employees consistently. This simple principle dramatically reduces legal risk, she says, by eliminating claims of discriminatory treatment.
Second, they maintain written policies, especially regarding harassment prevention. These policies serve dual purposes: They create clear expectations for workplace behavior and provide legal protection when properly implemented and followed.
Third, they establish an open-door policy for employee complaints and respond positively.
“When I say, ‘respond positively,’” Milito says, “I don’t mean you are agreeing with the employees. It’s more of a ‘Thanks for coming to me’ attitude. You are at least welcoming complaints.” This approach ensures employees feel heard while giving management early warning of potential issues.
Mistake No. 1: Not Being Fair and Consistent
The first and perhaps most fundamental mistake many small-business owners make involves the inconsistent treatment of employees.
“Establishing a pattern in the workplace is crucial,” Milito says. “Haphazard discipline can lead to lower productivity, poor morale and the potential for lawsuits.”
Employees who believe they’ve been treated unfairly are the ones most likely to file discrimination claims, Milito says. The solution? Creating clear written policies that apply equally to all staff members.
The Employee Handbook Foundation
The most effective tool for ensuring fairness and consistency is a comprehensive employee handbook, Milito says.
“It doesn’t need to be printed,” she says. “It can be an online policy.” The key is having written documentation that formalizes policies for everyone in the workplace — employees, managers and business owners alike.
For drycleaning companies, Milito believes an effective handbook should include several essential sections:
The introduction sets the tone by sharing the company’s history, vision and values. This section might mention some community involvement projects the company has completed or is performing, along with other traditions that help to build the business culture.
The code of conduct section establishes the foundation for healthy, safe and respectful workplaces. It should address honesty, conflicts of interest, compliance with laws and responsible use of technology and social media.
Employment policies form the handbook’s core, though Milito cautions against overcomplicating this section.
“Less might be more,” she says. “You don’t want to get too into the weeds, because then the policies might not be followed, especially if you are a smaller business that doesn’t have a human resources department.”
However, two policies are absolutely non-negotiable, Milito says: Anti-harassment and anti-discrimination policies must be included in writing. These policies, she says, provide legal protection and are increasingly required by state and local laws.
Other important employment policies might include at-will employment statements, employment classifications, timekeeping procedures, work hours/punctuality expectations, workplace safety requirements and drug-free workplace policies.
Finally, the compensation and benefits section should outline non-monetary perks and PTO/leave policies without locking the business into commitments that might need to be adjusted later, Milito says.
Making It Official
The most critical element of any employee handbook, Milito says, is the signed acknowledgment.
“Each employee should be required to sign and date an acknowledgment stating they’ve read, they understand and they are going to comply with the handbook,” she says. “This can be virtual, as well. It doesn’t have to be a hard copy.”
This acknowledgment, Milito says:
- Ensures employees can’t claim ignorance of policies
- Demonstrates the company’s commitment to fair treatment
- Provides legal documentation that proper procedures were followed
The investment in creating and maintaining this document, Milito believes, far outweighs the potential costs of employment disputes down the road.
Come back Thursday for Part 2 of this series, where we’ll explore two more common HR mistakes cleaners can make: lack of awareness, and lack of necessary feedback.
Have a question or comment? E-mail our editor Dave Davis at [email protected].
