Based on these trends, we predict substantial increases in the number of individual employee claims and government-backed investigations over the next several years. And, we expect that the hospitality industry will be a prime target. This is so because the hospitality industry touches virtually every person in the country in some way on a regular basis, and many hospitality employees are often young, transient, and looking for only temporary, part-time, or seasonal work. If your company works or contracts with the federal or a state government, an investigation or subpoena is even more likely. Hospitality companies should expect that it is a question of when—not if—they will become involved in some sort of investigation or litigation. So, what should you do to protect your company before and after the law comes calling?

Create a Paper Trail

An ounce of prevention is worth a pound of cure. The single greatest – and by far the most dangerous – pitfall for a company faced with a subpoena, government investigation, or litigation is incomplete record keeping or insufficient record retention. Even if a company has done everything right, it may nevertheless face substantial risk if it cannot prove it. It is, therefore, critical for companies and their corporate counsel to maintain detailed and accurate records of employee complaints, management and employee training, schedules, hourly rates, payroll and tips, and disciplinary action, among many other things. Without detailed records, companies could be facing an uphill battle in any investigation or litigation. Therefore, it is critical that companies create and maintain accurate records. Practicing good record retention is the best way to protect the bottom line.

Walk the Walk

Perhaps the most avoidable mistake a company may make that can lead to a lawsuit or government investigation is to ignore bad behavior or trivialize an employee or customer complaint. If an employee informs a supervisor that they have experienced sexual harassment or discrimination or they are concerned that they are being paid less than another employee for performing the same work: listen, investigate, document, follow up, and follow through. Following these simple steps is preventative as well as remedial. A company can avoid a lawsuit or investigation by taking appropriate action in response to a complaint, and an investigation is less likely to lead to liability if the company can prove that appropriate action was taken.

Lawyer Up

Successful companies have good relationships with their lawyers, particularly in the hospitality industry. A brief check-in with corporate or outside counsel on day-to-day issues can identify areas of risk and solve small problems before they become big headaches, all at a very low cost. And corporate counsel, when not familiar with particular areas of law or potential recent developments, should not be afraid to ask for help from outside counsel. Often, lawyers provide free updates or publications to their clients on changes in the legal landscape. And, when a lawsuit or investigation commences, having a trusted outside counsel that knows your company, understands your corporate policies and company atmosphere, and is invested in a long-term relationship can be a major benefit to your company and its bottom line.