What’s the worst thing that can happen in your business? Part 1 of a Series

Posted by: Scott Schaner

​Fire? Robbery? Maybe, but something more sinister and maybe not so obvious, may be underpinning your organization and you won’t know it until it’s too late. 
 
Case in point: One of your managers, Joe, gets a little playful with the crew from time-to-time and lets down his guard to crack some jokes.  Joe has recently been promoted and wants the team to feel like that he hasn’t abandoned them and still considers himself to be part of their crew team, but in his new position, he cannot act the same way he used to and get away with it.  Joe doesn’t realize that some of his old joke cracking habits offended one of his team.  As a matter of fact, the team member has taken offense to many of Joe’s jokes but never complained until now.  Now that Joe is in a management position, the offended team member reports Joe to Human Resources.  Additionally, the team member retained an attorney.

​Your organization may not be big enough to retain a HR department and you, as the owner, are your own HR department.  Are you sure you can handle the situation to avoid the risk of being found at fault for the actions of one of your managers?  Do you have a legal department that can handle this situation?  Do you have a handbook that details the policies and procedures for your organization?
 
The bottom line is that you’re at risk for an employment claim as soon as you hire any new employee.  What can you do to minimize your risk?
 
Here are a few items that can help minimize claims:
 

1. Have a thorough, detailed, hiring process that includes a consistent onboarding process. Provide a detailed handbook that every employee receives and reviews line-by-line and signs an acknowledgement of receipt that they 1. received the handbook and 2. reviewed the handbook with the person in charge of hiring.
2. Hold your management team accountable for their actions and have regular HR training on how to consistently demonstrate professional behaviors.
3. Conduct regular performance evaluation reviews for all of your employees.
4. Document performance opportunities consistently and fairly.  You cannot hold one person accountable for a violation of policy because he or she a terrible employee, yet you allow your best employee to get away with the same violation.
5. Be consistent with all of your employees.  Always.  Treat everyone with respect equally no matter his or her job title and no matter his or her tenure with your organization.

 
Lastly, make sure you carry EPLI: Employee Practices Liability Insurance.  EPLI will generally cover the following: wrongful termination, discrimination, sexual harassment, retaliation, a variety of types of inappropriate workplace conduct, defamation and more.
 
One note about EPL Insurance: just because you carry this coverage, it doesn’t mean that you’re free and clear to not worry about bad employee practices.  Yes, you should consider getting yourself covered for the highest limit, as some carriers have limits to $1,000,000, but bad employee practices are not good for your long-term business growth aspirations.  The best insurance is within the walls of your business and how you choose to run it.