5 Ways to Cut Down Employee-Related Liability

By Epicomm
In June 10, 2013

Having workers on staff can create potential liability for you as an employer. However, you can take actions that will minimize your exposure or protect you from claims.

1. Have a clear sexual harassment policy

Exposure: Claims of sexual harassment.

Solution: Have a sexual harassment policy that makes it clear you will not tolerate such practice in your workplace. The policy should include the action that an allegedly aggrieved worker should take to lodge a complaint (e.g., who to tell, orally or in writing, etc.). Put the policy in writing; have each worker sign a statement saying that he/she has read and understands the policy. Consider having each worker take a sexual harassment class, which you can host on your premises or through an online course.

2. Use employee manuals

Exposure: Claims of wrongful termination.

Solution: An employee manual sets guidelines for the actions that you’ll take for workplace infractions, such as lateness, excessive absenteeism, and violations of phone/email/dress code/social media policy. Have each worker sign a statement saying that he/she has read the manual and understands company policies.

3. Have workers sign nondisclosure agreements

Exposure: A worker takes company secrets to another company.

Solution: Educate employees about the need to keep trade secrets confidential. Upon hiring, have them sign nondisclosure agreements detailing their need to keep trade secrets confidential. Also, limit access to trade secrets.

4. Document everything

Exposure: Patently false claims, such as from a worker who quits or was fired for a serious infraction (e.g., stealing), who makes a claim for unemployment, or a worker submits a workers’ compensation claim.

Solution: A paper trail can protect you against liability for false claims. For example, if you warned a worker that he or she would be terminated for stealing, be sure to document the conversation and the fact that you alerted police. If a worker is injured on the job, insist on an immediate doctor’s visit so you won’t be caught off guard by a workers’ compensation claim later on.

5. Maintain adequate EPL coverage

Exposure: Claims by employees for discrimination or other workplace-related actions.

Solution: Despite your best efforts, you may still be sued for discrimination or other perceived violation. Having employment practices liability (EPL) coverage gives you two measures of protection:

  • Legal representation in the case (although you can obtain your own counsel)
  • Cash to pay an award if you lose an action (up to the limit of your policy)

Bottom Line

Talk with an employment law attorney who can review your workplace practices. The attorney may be able to recommend other actions to protect your business from employee-related claims.

Article provided by Sentry Insurance, courtesy of Barbara Weltman, publisher of Big Ideas for Small Business, a monthly newsletter. Barbara has been a tax and business attorney since 1977 and, through the years, has developed a reputation as an insightful source of knowledge for small businesses.

For more information, visit: http://www.barbaraweltman.com

Leave A Comment