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While most business owners are excited to venture into the world of entrepreneurship, most never anticipate the problems that can arise from managing employees. Remember the good old days when you could complain about being underpaid and overworked, and the boss was the spawn of Satan? Guess what, the tables are now turned and although you may love your employees and they seemingly love you, in their eyes, you are now the one with the pointy red tail carrying the pitchfork!

What do you really know about your employees when you hire them other than what they tell you? How many of you have the applicant fill out a standard form with three references? Of course, every applicant will put in the names of three people whom will give them glowing reviews. How many of you actually follow up on those references and ask these people for additional references that know the candidate? In today's economy no one really has much time for implementing a thorough screening process, and it would be easy to just rely upon the word of the applicant and their performance as the indicator of their personal integrity and work ethic.

As California has typically been revered as the "pro-employee" state in its labor legislation, employers should be careful in crossing the murky waters of this unfamiliar territory. Precautions are necessary not only to protect your business from a disgruntled employee alleging wrongful termination, or workplace discrimination, but will also protect your insurance rating under workers compensation and unemployment insurance claims. Did you know that your business' risk rating goes up every time an employee makes a claim under workman's compensation or unemployment insurance? Inevitably, this leads to higher premiums for your business and money out of your pocket.

Although there is nothing you can do about the claims alleged by your employees, you can protect yourself in different ways that will make it harder for a disgruntled employee to go after your business. Many businesses that hire more than one employee are starting to develop operating procedures and workplace conduct manuals in order to better facilitate the expectations between management and employees. While employee handbooks will not guarantee that your business won't be subject to a lawsuit or insurance claim, with proper implementation and enforcement, it can be a valuable shield to thwart egregious allegations.

While some scenarios seem rather straight-forward, how does one contend with work-place violations that are a more in the grey area? Do any of you have employees that ride the time clock, use the company vehicle to run personal errands, or constantly show up to work late? In each case, your business may be exposed to potential liability which can mean money out of your pocket. These types of practices need to be addressed in advance, and an employee manual is an effective method of protecting everyone. It creates a guideline among the employees and management of what to expect while working for your business. More importantly, an employee manual serves as notice of inappropriate behavior and gives the employer liberty to establish reprimand procedures at its own discretion.

Although an employee manual is important for each business to have, equally important is consistent and unbiased enforcement. You can virtually negate the advantages of an employee manual by inconsistent application because such behavior may be construed as a waiver of your rights. Therefore, if you decide to go through the time and expense of developing a manual for your growing business, you will need to make sure that management is executing upon it in order for it to have any value.

As every business is different, it is strongly recommended that you consult a competent legal professional in addressing these issues as they pertain to your particular business needs. Although this article is not to be construed as legal advice, hopefully, it has provided you with sufficient information should you decide to take the next step in growing your business.

David Michail has been a business and corporate attorney since 1996. For more information about developing an employee manual for your business, please feel free to contact Mr. Michail at (310) 559-4333 or at david.michail@michaillaw.com.