Tips for preventing disputes when your employee is family

Many employers in small- or medium-sized companies hire family members to work for them. Employers might do this as a favor or because they want to hire someone they can trust. Whatever the reason, employers would be wise to protect themselves and the company in the event of a dispute. There are a few ways to do this: 

  1. Formalizing agreements. While you may trust your family member implicitly, you should still have in place legally binding contracts that protect your business. This can include non-disclosure agreements, confidentiality clauses and employment contracts that clearly define the scope of employment, among other elements. Don't be tempted to make informal agreements that are not enforceable.
  2. Setting clear boundaries and expectations. Many disputes involving family employees arise because someone thinks someone else crossed a line. The employee might take liberties he or she does not have permission to take; an employer might make the employee feel disrespected with overly informal comments or unreasonable requests. To prevent these altercations, employers should clearly define roles, reporting hierarchies and performance standards. Informing the employee of his or her rights will also be crucial.
  3. Having an exit strategy. If conflict arises or if one person decides to terminate the working relationship, having a plan in place can be vital. For instance, you might agree to resolve disputes in arbitration or mediation; you might also discuss protocol for giving notice or termination. Another option might be to hire a family member as a contractor so that there is an end date to his or her work in place.

Discussing these and other solutions with an attorney before bringing them to your loved one can ensure you are prepared and have your business' best interests at heart.

Disputes involving employees can be complicated enough; when an employee is a family member, the repercussions of conflict can reach far beyond office walls. As such, employers would be wise to take extra care with attempting to prevent and resolve any issues.

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