Employment Liability: How Employee Handbooks, Policies and Procedures Can Help Manage Your Risk

By Linda Pandolfi

There is, perhaps, no area of risk management that is more technically complex than employment liability—and the exposure is exactly the same no matter what the size of the community. Legal and human resource professionals advise that sound policies and procedures be in place and properly implemented. These policies must be in compliance with a veritable alphabet soup of federal and state laws and administered in fairness and with consistency.

Workplace Pressures
Managing employment liability risk is becoming increasingly difficult due to the following workplace pressures:

  • · An aging population and workforce (for example, age discrimination issues and special accommodations needed)
  • · A diversifying workforce, which can prompt sexual harassment, racial or other discrimination issues
  • · The changing nature of work (for example, part-time schedules and telecommuting)
  • · Health hazards in the workplace (for example, carpal tunnel syndrome, toxic mold and sick building syndrome)
  • · Emerging issues related to health care financing, pension fund management, retirement systems and Social Security
  • · Evolving rules on hiring and firing practices.

As a result, today’s workplace environment presents more hazards and perils than ever before. Ironically, the same factors also contribute to more effective job performance. For example, older workers bring more experience and a diverse workforce better represents the community and draws on a wider range of talent.

Foster Good Relations
So… what can you do to meet today’s employment liability risk challenges as an employer? Keep in mind that many legal and insurance experts estimate that as much as 80 percent of workplace risks are due to relationship failures. “Good relations between employers and employees are key to low or no losses," says Kevin M. Quinley, a Chartered Casualty Property Underwriter, Associate in Risk Management and contributing writer to Claims magazine.

It is also important to note that very few employment practice claims appear to emanate from today’s newer, more challenging and exciting work environments. For example, more auto dealerships have reportedly been sued in recent years by employees than have technology-oriented or “dot com" companies. This trend seemingly provides a key to the root of all employment practices: If you place people in an environment where they feel good about themselves, they are much more likely to be focused on adding value and taking responsibility than to file lawsuits.

Be sure that employees feel comfortable in reporting or discussing any problems and that supervisors respond to any complaints in a positive and caring manner. Create and adopt an employee handbook that clearly spells out the procedures that you will use to provide fair treatment to all employees.

Help Employees Succeed
Include a grievance procedure that is objective, provides “due process" and is applied consistently. Employees should be given the opportunity to tell their side of the story. Use discipline as a retention and development tool rather than a tool to get rid of people. Instead of applying punishment, such as treating people badly, to improve performance, use an approach that helps employees to succeed.

Implement an employee appraisal system that provides timely, relevant and useful feedback. Provide training opportunities that will improve employee skills, promote efficiency and encourage employees to continuously strive for excellence. When corrective action is necessary, focus less on rules, regulations and an adversarial command-and-control style of management and more on continuous development, results, collaboration and relationship building.

Take a firm stand against harassment and discrimination. Develop a policy that encourages all supervisors and staff members to take responsibility for the work environment. Establish a complaint procedure that makes it “safe" to report problems and does not punish or retaliate against the complaining party.

Comply with all federal and state wage and hour laws. Consult with your attorney, the New Hampshire Department of Labor and your insurance carrier to make sure that you have met all requirements regarding minimum wage, overtime pay, meal and rest periods, youth labor restrictions, mandatory postings and notifications. Be sure to include policy statements in your employee handbook that address these compliance issues.

Last but not least, remember to put safety first! People cannot achieve outstanding performance if they feel threatened, work in an unsafe environment or are shown blatant disregard for their general well being. Your internal policies and procedures must foster wellness, compliance with all applicable state/federal safety rules and regulations and also take a strong stand against violent behaviors.

By creating a positive work environment you will be able to attract and retain a highly motivated, committed, effective and efficient workforce that can make your community proud. Carefully crafted employee handbooks, policies and procedures are key to establishing and maintaining such a positive workplace culture and thus are powerful and effective tools for managing your employment liability risks.

NOTE: Newly updated employee handbook samples, policies and procedures, training opportunities and wellness programs, all designed to support a positive, healthy work environment, are available to members of New Hampshire Local Government Center’s (LGC) HealthTrust Property-Liability Trust, Workers’ Compensation Trust. For more information, please contact your group’s LGC Risk or Health Management Representative directly or call LGC’s Risk and Health Management Department at 800.852.3358.

Linda Pandolfi is a Risk Management Representative of New Hampshire Local Government Center (LGC). She has been providing risk management services, plus training in employment law and human resource issues, for LGC Property-Liability Trust members since 1995.