How to Strengthen Your Employment Practices Risk Management
November 4, 2022
It is difficult for employers and human resources generalists to keep pace with employment regulations during the best of times. These are not the best of times.
Social activism (e.g., Black Lives Matter, #MeToo, Diversity, Equity and Inclusion) and a highly polarized political climate have exacerbated already well-established HR challenges. Add a pandemic to the mix and it becomes almost impossible. Reductions in workforce; remote workforces and policies; reorganizations; COVID and post-pandemic reopening exposures; and workforce vaccination mandates, exceptions and accommodations are a lot to manage.
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Getting the Most from Your Employment Practices Liability Insurance
This blog post looks at what employers can and should be doing to strengthen their employment practices risk management and reduce the risk of employee lawsuits.
Set the Tone for Compliant Employment Practices
Strong leaders set the tone for their organizations by requiring the development and enforcement of comprehensive workforce policies that facilitate a positive and constructive work environment. Even more importantly, they personally embody this culture. In other words, they walk the talk.
Where leaders are engaged, written policies and procedures are living documents, updated frequently to remain legally compliant and socially aware. However, even companies with large, fully staffed human resources departments have difficulty keeping pace with today’s rapidly changing environment. This is especially true for those with multistate operations.
So, how can companies address this problem if there isn’t a budget for adding staff?
- Employ a third-party consultant to help manage the burden.
- Subscribe to professional services that monitor changes in legal and regulatory requirements and provide vetted policies and procedures content.
- Use the value-added resources made available by insurance carriers.
Educate to Reinforce Employment Policies and Procedures
Anytime a company updates its policies and procedures, leadership should share and explain the changes to all employees. Staff with supervisory responsibilities should be trained to ensure that the company’s rules are applied consistently and fairly to everyone, because a culture that allows for preferential treatment is a culture that promotes discrimination.
Ongoing management training and development is a good investment in improving a company’s risk profile. From an employment practices perspective, the training could mirror the lifecycle of an employee and include the following:
- Hiring. The exposure to claims begins at the selection and recruitment level. Even applicants who are not selected and never in your employ can bring a claim. Ensure that written applications do not contain unlawful questions. Additionally, make sure that anyone interviewing candidates understands what to ask, what not to ask and how to ask.
- Day-to-day management. Staff should at a minimum be trained to identify and address workplace harassment and discrimination, one of the largest drivers of employment-related lawsuits. Employees should be advised of complaint procedures that encourage the target of (or witnesses to) the behavior to report issues without fear of retaliation. Managers should know the company’s process for addressing complaints and understand its anti-retaliation policy.
- Performance management. Supervisors must be trained and equipped to deal with employees who do not meet position objectives. Actions taken to address these issues must be documented and fact-based. Ensure that employees acknowledge a performance improvement plan and understand the timeline and ramifications. For behaviors in violation of other workplace policies, progressive discipline consistent with handbook rules should be imposed and documented.
- Discharging. Anyone involved in ending the company’s relationship with an employee should be trained in the organization’s discharge procedures and apply them consistently. If the situation is particularly volatile, legal counsel should be consulted in advance.
Other relevant training topics from an employment practices perspective could include diversity awareness, conflict resolution and specialized communication skills.
Document Expectations with the Employee Handbook
A regularly updated employee handbook goes hand in hand with a company’s updated policies and procedures. It documents the workplace expectations and provides a consistent reference for all employees.
At a minimum, the employee handbook should contain the following:
- Equal opportunity policy
- Employment-at-will statement
- Anti-harassment policy
- Code of conduct
- Ethics policies
- Information systems (IT) acceptable use policy, including social media
Organizations should share the employee handbook with new hires at onboarding as well as annually with all employees and obtain an acknowledgment of receipt. Communicate with the entire workforce regularly throughout the year (e.g., company newsletter, company and department meetings) to reinforce policies and procedures. Employers who make sure that employees understand how to provide feedback, voice concerns and air grievances may put themselves in a position to address issues rather than defend lawsuits.
Employment Practices Liability Resources Are Available
Check with your broker to learn about compliance and loss control resources available to you as an EPLI policyholder. Most carriers include this as part of the premium you are already paying.
Finally, remember that even if you do everything right, employment claims and employee lawsuits can still be brought against you. Just the cost to defend a claim that is groundless, false or fraudulent can amount to tens of thousands of dollars or more. This is what makes employment practices liability insurance so valuable, but it’s also important to work with someone who specializes in this type of coverage. Download our free e-book, Getting the Most from Your Employment Practices Liability Insurance, to gain a better understanding of how EPLI coverage works and some pitfalls to watch for.
The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.
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