Labor and wage laws exist to protect workers from businesses that might otherwise take advantage of them. Companies that are found skimming wages or otherwise breaking the law could find themselves in a world of trouble. Not only will they face fines and penalties, but they will also have issues with recruiting and retention long after the legal matters are settled.
Chances Are, the Trust Has Been Lost
Legal issues can be extremely difficult to recover from, particularly if it involves dishonesty or stealing. If your current employees were directly impacted, it is likely that they will leave. But they could take their ill will with them, letting others know about their experience working with your organization. This means that your personal or business reputation will also suffer, and that recruitment efforts will likely be strained.
Beyond just affecting your employees, your other business relationships could also be impacted. It could be difficult to land new projects or to find vendors that will work with you. And, if you do, chances are that it will be at a financial disadvantage. Any difficultly you have winning and sustaining work will also mean that star employees will start to look elsewhere.
The Slow and Painful Process of Rebuilding
Depending on your particular situation, you may discover that the name of your business has been too tarnished and you have to start from scratch. You may need to go through a serious rebranding effort if you want to jumpstart your recruiting efforts.
Whether you stick it out with your current business or start something new, the first task is to accept full and complete responsibility. This will be a sign of change and maturity, showing that you could be someone that individuals want to either start or continue to work with. In order to increase the likelihood of retention or recruiting, you need to have open communication with current and potential employees. Let individuals know what happened – but more importantly, let them know about the concrete steps that are being made to fix the legal issue.
The Bottom Line
Even if reparations are made, coming back from legal issues – especially those that have directly or indirectly affected employees – will be incredibly difficult. In fact, many businesses will be unable to recover entirely. The simple recommendation would be to just not put yourself in the way of any potential legal issues as, more often than not, it will not be worth it at the end of the day.