How to Avoid Getting Sued
As an attorney I will often have clients that want me to write a contract for them that will “keep them from being sued”. Every time this happens, I have to break the news to them that nothing I do can keep them from getting sued. Anyone can sue you at any time and for virtually any reason. That is the unfortunate truth in today’s society.
Despite this unfortunate revelation, there are many simple steps that can be taken to help you avoid lawsuits in the first place, or prove your case if you should ever end up in court. What follows is a list of the major issues legal issues I have seen faced by green industry companies. This is by no means the complete list of things that can go wrong, nor is it a 100% surefire way to avoid court.
- Have a written contract that you review each year. Make sure it addresses the project price, the work to be performed, the remedies available to the parties involved, has a proper pre-lien notice if you are doing residential work, and outlines the duties and responsibilities of the property owner and you, the contractor.
- Treat your employees right and make sure you are paying them correctly. Unless you have an alternative payment plan such as the Fluctuating Work Week in place, employees performing labor and working on a jobsite MUST be paid overtime at time and half after 40 hours (or 48 in some cases).
- Properly classify people performing work. If your company is audited by the Department of Labor, one of the things they look for is misclassification of workers to avoid workers compensation, overtime, taxes, etc. If you are paying workers on an hourly basis and they are using your tools on your jobsite, chances are that they should be classified as an employee, NOT a subcontractor. It doesn’t make an ounce of difference if you give them a 1099 and have them sign a “subcontractor agreement”. If they do not pass the Department of Labor’s series of tests, your business may be faced with fines, back taxes and back overtime pay.
- Do quality work & stand by your work. Performing shoddy work is just asking for a lawsuit. It goes without saying that a contractor should never “take the money and run” but good contractors and companies are willing to admit their mistakes and stand by the products and services they sell. This little bit of customer service goes a long way in preventing lawsuits from ever being started in the first place.
- Pay your taxes. It sounds so easy, but when you look into it, there are so many different taxes and so many different rules and exceptions that it can quickly become a mess. Sales taxes can be confusing, especially for green industry businesses. Hire an accountant for a few hours if you have questions. “An ounce of prevention is worth a pound of cure” or otherwise put: better to spend a few hundred dollars on accounting advice than pay thousands and thousands of dollars later to have the accountant try and help you out of the hole you have dug.
These are just 5 things to consider as you get ready for another great season of work. Don’t spend too much time worrying about getting sued, instead take as many reasonable measures to prevent lawsuits as you can. Keep in mind that nothing can 100% guarantee you will not be sued, but a little forethought can help immensely.