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Reduce Your Employment Liability Risk

Posted by | Wednesday, November 07, 2018
Reduce Your Employment Liability Risk

Employment Liability is the risk your company has to actions from employees, former employees, and those interviewed but not hired, relating to employment actions such as hiring and firing behavior, promotions, discrimination, and other forms of legally protected actions between an employer and an employee. The US Equal Employment Opportunity Commission details the specific legal coverage for employees in America. These include protection against discrimination based on age, gender, pregnancy, ethnic background and immigration history, sexual orientation, disability, credit scores, and previous bankruptcy, among other issues.

There are several issues businesses can address to try and reduce their liability and prevent actions from disgruntled job seekers and employees. Having written policies and procedures in the form of an Employee Handbook, one that employees need to sign that they have received and read, is an important first step. Employee Handbooks should include the specific policies that can result in job actions. Policies regarding zero-tolerance for discrimination, substance abuse, any form of harassment, and any form of violence is a good place to start. Be specific about if these actions need to have occurred on or off duty, and on or off premises. 

Ensure that HR staff does due diligence regarding references and credentials, and perform a complete background check including criminal background. If the business has a policy to not hire anyone with a previous drug or violent felony conviction, for instance, it is better to detail that in the Employee Handbook and in any hiring documents.

Ensure that job descriptions are detailed on expected performance and skills. Many businesses do a paper screening of the applicant pool before interviewing. It is important to not include any information that can be used for discriminatory screening, such as date when graduated high school or college, or number of children, or marital or pregnancy status.

Many businesses include an At-Will Employment clause on their HR paperwork, and detail the specific understanding that the job, job offer, and employment is at the will of the employer, and can be terminated at any time, for any reason, and with or without notice. If employers offer a policy regarding HR complaints, reporting discrimination, harassment, or other forms of legally protected rights, make sure that it is an open-door policy that exists without reprisals for those reporting.

Finally, businesses should include a EPLI- Employment Practices Liability Insurance. This is one type of a number of business liability insurances that can cover the increasingly complex nature of business law in America. Many times, this coverage includes legal fees and monetary rewards for employment actions. Many larger businesses have a suite of liability coverages, including those specific to officers and leadership, product, property, and auto liability coverages, protection against a breach in cybersecurity, and others. For startups, smaller policies can cover the first years of a business with careful prevention.

The cost of EPLI is determined by the number of employees, any previous lawsuits, and the established rules and practices the business has in place. Any claims against the EPLI coverage need to come while the policy is in effect, not if the incident occurred during policy coverage. In many cases, careful due diligence screening applicants, careful preparation of employment documents, and an Employee Handbook that details specific policies and procedures can provide protection against employment actions.


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