Published on March 18th, 2020 | by Sunit Nandi


How PEO Companies Help You Avoid Legal Issues

Many companies, especially small or medium-sized businesses that don’t have the capital for risk management and can end up in legal issues with customers or employees. If you ignore or mishandle any complaints or lawsuits, it can be a costly setback to your business. It’s essential to handle your business risks appropriately from the beginning to protect your finances and reputation.

Treat Your Employees Respectfully

Employees that feel disrespected by their employers might seek out legal action against your business. It goes without saying, in life and business, treat everyone respectfully and fairly.

Be Consistent

Employees can interrupt if their managers play favorites or punish people unfairly. This causes workforce morale to fall if managers are not holding all employees to the same rules. If employees are treated differently, then others in the same situations, they can file successful discrimination complaints.

Be Fair in Decisions

When making decisions on personal use, use job-related facts, not an employee’s race, genders, private lives, and personal biases. This will help you avoid discrimination, wrongful terminations, and privacy violations.


As a manager or business owner, you should never get involved in office gossip or spreading rumors of employee’s problems. Participating in this behavior or allowing it to take place is a way to provoke an employee to file a lawsuit. An employee might sue for defamation or emotional distress, not to mention participating in spreading rumors and gossip can poison the work environment and create undesirable situations.

Establish and Follow Policies

The employee handbook and workplace tool need to convey essential information so employees can clearly understand policies and procedures. This will help your company from any lawsuits by having employees sign acknowledging that they have read and clearly understand the policies and procedures. When you have adopted regulations, updating, following, and enforcing them must be done consistently.

Keep Detailed Records

If an employee sues your business, you will have to recall and describe what transpired while the employee worked for the company, to prove why your account of what happened is the accurate version. You need to keep dated, informative records on any employee incidents and decisions such as performance reviews, disciplinary warnings, and firing reasons. Being slack in keeping detailed records until an employee files a complaint or lawsuit will hurt your credibility.

PEO Company & Lawsuits

A PEO, professional employer organization is a firm that your business can outsource that helps with human resource consulting, safety and risk mitigation, payroll processing, employer tax filing, workers compensation insurance, health benefits, employers’ practice and liability insurance (EPLI), and lawsuits. Your business enters into a co-employment agreement with the PEO service, and through the co-employments, the PEO becomes the employer of proof for tax purposes.

So, when you are in a co-employer agreement with a PEO service, you share liabilities that are associated with employment-related claims, such as wrongful terminations. Having the resources of a PEO company is an excellent resource of knowledge from a variety of experts who can alleviate the stress of costly settlements. The human resource experience of a PEO service helps in making sure that agreements for termination, policies, and procedures are all in compliance with state laws.

The Takeaway

In the end, a PEO service provides a small business with comprehensive workers compensation and assistance for managing risk in the workplace. By submitting your business with workers compensation insurance, employers are generally protected from the need to defend personal injury claims of their employees. A PEO service can help reduce risk management in your company and avoid a workplace injury from potentially occurring. If you consider an agreement with a PEO service, find the best PEO Companies on sites like

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I'm the leader of Techno FAQ. Also an engineering college student with immense interest in science and technology. Other interests include literature, coin collecting, gardening and photography. Always wish to live life like there's no tomorrow.

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