Most employers’ single largest asset and liability is their employees. Every company needs its employees. But employers and human resources departments face a huge number of legal hurdles managing their stable of talent.
Modern HR departments’ procedures have been developed as a direct reaction to the countless legal actions stemming from former and current employees. For many employers, even the threat of the possible lawsuits has a paralyzing effect on everything from hiring and firing to benefits programs.
Hiring employees is just the start of the hurdles. Employers must be careful not to give any indication of discrimination. The largest employers may have affirmative action practices to follow and union rules to navigate. But even smaller employers are finding that they can be sued for not hiring a potential employee, regardless of that person’s qualifications.
A part of the hiring process, as well as an integral part of employee retention, is an employee benefits program. Employee benefits may include medical, dental, vision, life and disability insurances. For many employers, benefits represent a very expensive expression of their gratitude and appreciation for their employees, in addition to being able to use them as a hiring and retention tool. Unfortunately, just the simple act of having an employee benefits program opens employers up to a new set of laws ranging from COBRA and HIPAA to FMLA and ERISA; and, of course, more opportunities for discrimination lawsuits also emerge.
Attracting the best, long-term employees requires employers to offer some form of retirement benefits in addition to insurance based employee benefits. Reports across the nation show that Americans are saving less than ever, making it morally imperative that employers provide and encourage some tax-advantaged retirement savings program whether it’s a 401-k, 403-b, Roth IRA, etc. Now employers not only have to worry about how well their own businesses are doing, they have to worry about how well the stocks and mutual funds available in their retirement programs are doing. If employee retirement accounts plummet because of poor performance of the portfolio, the employer could be on the hook.
Day-to-day management of employees can also be difficult. Many employers deal with issues ranging from disgruntled employees to drug use, and simply terminating these employees will only bring on the threat of wrongful termination lawsuits, even in our “at-will” state. HR departments are also faced with handling L&I claims that may require them to coordinate with the state agency, Employment Security, doctors statements and legal counsel.
A growing number of employers are relying on the cost effective and wide ranging advice of an employee assistance program, or EAP. These typically provide employees with a resource for advice regarding just about any life issue, but many of them also provide another resource for HR departments to consult with issues regarding difficult employee-related issues.
With all of the pitfalls surrounding employees and employee benefits, there is a very easy way to avoid most issues that can arise. Employers should have a written policy for everything. All employee policies should be written into an employee handbook and each employee should be required to sign stating they have received the handbook. HR departments having written policies for hiring, time-off, benefits, and firing will protect against many of the lawsuits that could arise based on discrimination.
Of course, written policies alone will not protect against everything. Employers should have their policies reviewed by professionals in their respective fields. HR professionals and employers should not be expected to know everything there is to know about managing all the laws regarding employees. It is their job to implement those laws, turn them into policies and manage employees using those policies.
What is important is that employers consult with good advisors. Working with employment attorneys to establish procedures and managing policies with a benefits broker will significantly reduce the liabilities that employers are subject to. Additionally, attorneys and benefits brokers should carry professional liability insurance to protect their advice (don’t be afraid to ask for proof). By hiring them, getting their advice in writing and following it, employers can be further protected from liabilities.
Chris Free is a Washington State licensed insurance agent. He is co-owner of Rapport Benefits Group in Tacoma, and sits on the board of directors of the South Sound Association of Health Underwriters.