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Employment Practices Liability: Avoiding HR Mistakes

Employment Practices Liability Avoiding HR MistakesWe often discuss the employment practices pitfalls businesses across all industry segments face, increasingly so with a tighter regulatory and legislative environment. From employee claims alleging religious discrimination to sexual harassment and other unlawful practices, employers must be vigilant with their hiring practices and workplace policies and procedures. Following are just some of the common HR mistakes to avoid that can serve to minimize employment practices lawsuits.

  1. An outdated employee handbook. When was the last time you updated your employee handbook? This document should be updated at least every two years so that the information is current, with employees receiving either a revised printed copy or notification when a new electronic version is available. You should also require employees to sign an acknowledgment that they have received the handbook and will abide by the policies. Solid policies can reduce your company’s liability, as well as provide standards of conduct for your employees.
  2. No documentation for performance-based terminations. Documentation prior to termination is important. After every discussion with an employee about his or her adhering to a progressive discipline policy not only provides employees an opportunity to improve their performance, but can also demonstrate that negative employee actions (such as a demotion or termination) are due to performance-based reasons. Be sure you always document who was present, what the problem is (with examples), when the problem(s) occurred, where improvements need to be made, how to facilitate such improvements, and possible consequences if improvements are not achieved.
  3. Insufficient employee records. As a business owner, a personnel file should be kept for each employee, and each file should contain paperwork related to the employee and stored in a secure place. You may also want a secondary employee folder to include health and welfare-related benefits information that may be protected under the umbrella of the Health Insurance Portability and Accountability Act (HIPAA). This should include health, life and dental benefits forms, drug testing results, personal or family medical leave information, doctor’s notes, benefits enrollment papers and worker’s compensation. In addition, as an employer, you should conduct routine audits of employee files to make sure all pertinent information is thorough and accurate. It’s also important to verify that information is being appropriately protected since the potential for human error in such areas is high as well as the risk of a cyber exposure – whether this information is in paper form or digital.
  4. Ignorance of applicable laws and regulations. All business owners should be aware of pertinent laws and regulations and comply with the tenets of them. Many business owners find themselves afoul of the law after growth propels them into a new level of compliance. For example, when employees are misclassified as exempt employees and they work unpaid overtime, they may be entitled to back pay.

In addition, to making sure your HR policies is in order, review your Employment Practices Liability Insurance (EPLI) for proper coverage. As insurance professionals in this area, Axis Insurance Services is poised to assist you in ensuring that your coverage will respond in the event of employee workplace issues such as claims of discrimination, wrongful termination, etc. We specialized in management liability including EPLI and have access to several top-tier markets to secure robust coverage on your behalf.  Give us a call at (877) 787-5258.

 

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Blogged on: June 25, 2015 by Mike Smith
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