In this first part of this series, we discussed the importance of interviewing and background checks in the quest to attract and retain top talent. In part two, we’ll take a look at some of the employment law issues that you need to consider before you make a hire.

From the Family Medical Leave Act to overtime exemption policies, there is a minefield of employment laws waiting to trap unsuspecting operators in today’s litigious environment.

A survey by the Chubb Group of Insurance companies found that 26 percent of privately-owned companies have been sued by an employee or former employee in the past few years. Employees at 22 percent of the companies have filed a discrimination or harassment complaint with the Equal Employment Opportunity Commission or state agencies. What’s worse, the survey estimates it costs more than $100,000 to settle an employee lawsuit.

How do you protect yourself?

“Make sure you are hiring the right person up front,” says Cathy Fyock, author of Hiring Source Book: A Collection of Practical Examples. “You can’t ask someone have they ever made legal claims against their organization or filed a workers’ comp claim, but you can establish what your culture is and make it very clear what are your expectations when you are dong the interview so that you are picking people who really do match the culture. Asking questions that will reveal their interpersonal skills and how they treat people will help.”

Of course, it’s not always a manager treating an employee or customer poorly. It could be a direct accusation against the owner’s treatment of the manager. Experts say these accusations often arise after an employee is terminated. Therefore, employment contracts and watertight documentation is the best defense.

Experts recommend a 90-day probation period for new hires. This gives the new employee adequate time to catch on to the system. If they can’t get with the program, then they are let go with no strings attached. Give underperforming employees a verbal warning, followed by a written warning before dropping the hammer.