Understanding Employment Practices Liability Risk

September 22, 2018

Did you know you are at risk of an employment claim from the moment you interview a prospective employee? Whether you hire the employee or not, you may face risks either way. If you don’t hire that person, he or she may allege some sort of discrimination.

On the other hand, if you do hire that person other issues may come up. For example if you fire the person later due to poor attendance, they may claim wrongful termination. Or maybe a female employee believes their male-counter part is earning more than they are and claims discrimination based on gender or negligent decision related to compensation.

Unfortunately, these type of claims and lawsuits are growing over the years and every company is at risk of employee lawsuits. Fortunately, there are some measures you can take to minimize these risks. Here are some good practices to help significantly lower your employment practices liability risk:

  • Review your risks and potential loss exposures with your insurance agent.
  • Familiarize yourself with employment laws and ensure you are following them.
  • Purchase adequate employment practices liability insurance.
  • Develop an employee handbook outlining your company’s policies and procedures including attendance, discipline and complaints. You should also include an equal employment opportunity statement.
  • Create job descriptions for each position, clearly defining the expectations of skills and performance required of that position.
  • Conduct regular, periodic performance reviews of each employee and record the results in the employee’s file.
  • Develop a screening and hiring program to eliminate unsuitable candidates on paper before calling them in to interview.
  • Include an equal opportunity statement in employment applications.
  • Conduct background checks on all possible candidates.
  • Implement an “open door” policy that allows employees to report infractions without fear of retribution.
  • Document all employee issues as they arise and include the company’s solution or resolution to the issue
  • Keep a written record of all your hiring, firing, and promotion decisions. This documentation can provide evidence for your defense in the event you are accused of unfair actions regarding employment, termination or promotion.

Contact Us! 

At Jessica Liu Insurance Services, we want to help protect you and your business and minimize your risks. Let us help you ensure you and your business are sufficiently covered – just call us today at 415-386-2283 to speak with an agent or email us a message at [email protected]!