History clearly demonstrates that business organizations of all types and sizes across the United States face internal and external attacks in the form of litigation claiming wrong doing or violations of federal, state, or local laws and regulations. In the scope of employment practices, there are certain processes and activities that expose the business externally such as recruitment, hiring, and termination. There are a significantly greater range of employment practice risks that occur within the initiation of a relationship with an employee and the separation of that employee; employment classification, Fair Labor Standards Act classification, compensation, benefits, recordkeeping, discipline, training, performance management, communication, leave management, reasonable accommodations, and documentation to name a few.
Below is a table of some of the recent Wage and Hours Division of the United States Department of Labor cases for the period of Nov. 1, 2016 to Dec. 1. To review these cases in detail you can visit the DOL website any time to learn more at https://www.dol.gov/newsroom/releases/agency/whd.
| Business Type |
Penalties & Damages |
| Logging Company |
$193,000.00 |
| Plastic Recycler |
$424,000.00 |
| Cable Equipment |
$350,000.00 |
| Residential Care |
$518,000.00 |
| Diner |
$154,000.00 |
| Police Department |
$8,700,000.00 |
| NY Chambers Street Project |
$1,200,000.00 |
| Ashley Furniture |
$216,000.00 |
| Construction Company |
$21,000.00 |
| Life Time Fitness |
$976,000.00 |
| Cleaning Service |
$70,000.00 |
| Cleaning Company |
$196,000.00 |
| Food Retailer |
$571,000.00 |
| Bakery |
$150,000.00 |
The first question you might be asking yourself right about now is how your company would handle a lawsuit of this significance and survive. What I would prefer you ask yourself right now is how can you establish the appropriate human resource management foundation of policies, practices, and processes to prevent or mitigate this type of exposure for your business. Like the efforts established for investments, asset management, tax planning, retirement planning, and insurance coverage such as general liability, disability, life, and workers’ compensation, any business with employees should take proactive strategic steps to understand, identify, and implement risk management initiatives for their employment practices. Certainly, many companies have purchased Employment Practices Liability Insurance, which provides reactive management to workplace related claims. What you should be thinking about is proactive risk management of your employment practices.
What does risk management for employment practices involve?
A comprehensive analysis of the employment practices performed in your organization. An intentional proactive program to ensure the activities of your leadership, management, and workforce are executed not only in a profitable, effective and efficient manner, but also in a manner that limits or minimizes risk and exposure for the business. Here are three recommendations to start building a strong foundation for a proactive employment practices risk management program.
- Train your leadership, management, and supervisors on all the federal, state, and local regulatory obligations that directly affect your company. These are not the same for every company, as the business location(s), employee headcount, industry, and other factors impact what is necessary for management and execution of employment practices. This type of training is often referred to as “Manager and the Law” for employees with supervisory responsibility and overall management of the organization.
- Develop and implement effective and efficient recruitment and onboarding programs that ensure your business is hiring the most qualified applicants that can provide the greatest value and impact to the organization. At the same time your interviewing practices and documentation, or lack thereof, becomes a tremendous risk for your business which demands appropriate training and support to mitigate the risk and exposure of this personnel activities.
- Define the process for the separation of an employee, including the steps taken by the company to afford the individual an opportunity to improve and meet expectations. Demonstrate you have provided the tools, resources, and support for the individual to be successful prior to accelerating the process to termination without appropriate documentation and support. Ensure your management is familiar with compliance obligations related to a final paycheck, benefits, references, and even building access and security. Regardless of at will employment status, when litigation is initiated by a former employee (or current employee) you want to make sure you can defend your actions through not just your words, but through your documentation that is consistent for all the workforce. These steps mitigate the exposure related to unintentional discrimination and unfair treatment.
Establishing a strong foundation for employment practices risk management provides you a myriad of benefits as an employer. Aside from positioning yourself proactively to defend against litigation claims, your communication, culture, and workplace environment will be healthier and more attractive to both employees and customers. Your leadership will not be reactive but instead strategic and proactive in building practices that support business goals through their greatest asset, the employees. While audits by the regulatory agencies happen, your biggest risk to litigation claims are from your own employees and job applicants to your business. Empowering your resources with the knowledge and guidance they need to establish effective and compliant employment practices will benefit your business for years to come.
** The opinions expressed are those of the author and do not necessarily reflect those of the ownership or management of Chadds Ford Live. We welcome opposing viewpoints. Readers may comment in the comments section or they may submit a Letter to the Editor to: editor@chaddsfordlive.com
Warren is the President and co-founder of SymbianceHR and provides strategic oversight for service delivery, business operations, and technical guidance on consulting engagements. He is a human resources subject matter expert with over 25 years of experience as a strategic human resources business partner, project manager, and people leader across private and public sectors organizations.
Warren is responsible for the strategic planning of all client consulting engagements from initial needs assessment and compliance review through delivery of customized strategic solutions that meet the client’s business goals. He has a proven track record of providing executive coaching and guidance to business leaders and human resource professionals at all levels including the C-Suite of Fortune 100 companies.
Warren is also the Chief Talent Officer and cofounder of SymbianceHiRe, a Symbiance company dedicated to providing direct placement talent acquisition services and temporary and contract staffing solutions to the business community.
Warren holds a B.S. in Human Resource Management, an MBA in Project Management, and a M.S. in Industrial and Organizational Psychology. Warren is the author of “Applicant Interview Preparation – Practical Coaching for Today.”
