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Steps You Can Take to Reduce the Risk of Employment Claims
December 2010
In This Issue
Employers and the Economy
Employment Practice Management
Hiring Tips
Staff Reduction Tips
Quick Links



Employers and the Economy 
With the current economic conditions, redutction in force becomes a consideration for some employers needing to reduce labor costs and increase the efficiency of their business, while others are experiencing a growth in their business. The following are suggestions to help reduce the risk of claims arising the hiring or terminating of employees.

With the potential for business fluctuations, before reducing staff, you may want to consider some of these alternatives: wage freeze or reduction, reducing benefits, reducing work hours, redistribution of work from outsource companies to your employees, early retirement and termination of employees with performance problems.


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Reducing the Risk of Employment Claims
Greetings!

Employment related claims are one of the fastest growing areas of insurance claims. The majority of these claims involve wrongful termination, sexual harassment and discrimination. An alarming increase in harassment and discrimination are occurring in the forms of emails and texting. Some other types include reduction in force, negligent employee evaluations, failure to employ or promote; and third party claims involving customers, vendors and others that may have contact with your business.

Employment Practice Management

 

The following are some tips to help you manage your employment practices and reduce the likelihood of incurring employment practices claims.

1.  Create specific, written policies regarding employment matters and communicate these polices to all employees.

2.  Update your employment policies to comply with all applicatable laws and document your procedures used in dealing with employment issues to ensure that they are implemented fairly and with consistency.

3.   Job descriptions should acurately describe an employee's job requirements and company expectations. Job descriptions should be revised as needed and formally communicated to your employees.

4.  Job evaluation process should be created that is objective and approved by your employment attorney. Management should be trained, and kept current, on how to conduct employee evaluations. Employees should receive regular feedback concerning their performance.

5.  Any inappropriate conduct brought to management's attention or observed by management should be addressed immediately and investigated thoroughly.

6. Violation of company policies by an employee should be dealt with quickly.

7.  Your management team should be provided with training in making employment related decisions and kept current on employment laws.

8.  All training methods should be documented to include the content material of the training, who was trained and when the training took place. 

9.  The reporting of inappropriate activity in the workplace should be encouraged by your management and the method of reporting should be available to all your employees. Retaliation by management against any employees making a complaint should be discouraged and disciplined immediately.

10.  Discourage any inappropriate jokes in the workplace that may be interpreted to be discriminatory or harassing.

11.  Before making any significant employment decisions review and consult with your employment practices attorney. Check with your insurance agent since some EPLI insurance carriers provide this as a complimentary service.

12.  Your insurance agent and your current or anticipated EPLI insurance company may have training material and services available for your use.  Contact your agency to discuss the availability of any training material. 

Hiring Tips

 

1.  Develop and document a formal hiring process to include your policies for screening and interviewing applicants.

 

2.  Detail job descriptions for all positions to include required skills, education, experience and physical requirements.

 

3.  Employment applications that includes applicant giving you permission to verify information contained in the application and authority to perform background check. Applications should be filled out completely and signed by the applicant.

 

4.  Perform background checks on all applicants and thoroughly verify resume and application information. 

 

5.  Try not to hire an applicant until background check is completed.  

Staff Reduction Tips
 
1.  Plan carefully and review this action with your employment practices attorney concerning any laws that may impact your actions.

2.  Review your plans with your EPLI and Workers Compensation carriers and consider hiring a human resources consultant to design a pre-layoff plan. 

3.  Document your decision to show that they are legitimate and not based on any type of discrimination. Avoid using seniority or age as a deciding factor.

4.  Carefully consider cases where an employee considered for reduction is close to qualifying for a benefit such as reitrement, vesting rights, bonuses, etc. Make sure all required ERISA notices are given to employees.

5.  Provide remaining employees with information regarding company goals and expectation from its employees in reaching those goals.

6.  Perform exit interviews carefully explaining your decision for staff reduction and if possible, offering job counseling and other assistance.
There are many suggestions and requirements for employers in performing their duties and interacting with their employees.  As mentioned in several areas above, before making any significant employment decisions, consult with your employment practices attorney.

Sincerely,



Marvin E. McDougal, President
Automotive Risk Management & Insurance Services, Inc.
California License No. 0B89379