How to Protect Yourself from Employee Lawsuits

Lawsuits brought against employers by current or past employees, and even prospective employees who feel they were unfairly denied employment, have been rising in recent years. Settlement amounts for these types of lawsuits are also increasing, and smaller companies without a human resources department are especially vulnerable.

You can help mitigate your risk by defining and consistently following hiring practices and office policies. Get started by following these three steps:

  • Acknowledge your risk
  • Establish hiring policies and procedures
  • Protect yourself against legal claims

Acknowledge your risk

The most common risks business owners are exposed to in their hiring practices include:

  • Hiring decisions
  • Promotion, discipline, and termination
  • Discrimination
  • Sexual harassment
  • Invasion of privacy

The key to protecting yourself, as always, is to document, document, and document. Retain resumes and all communications with the job candidate, both physical and digital. Also, keep any portfolio or support materials a candidate may submit for consideration. You should take notes at all interviews, noting the date, time, and place the interview occurred. Write down what impressions you had – good and bad—and how you think those may affect the candidate’s performance. If you follow up on references, keep notes about what you were told. And always have more than one person in the room for interviews and when executing hiring or firing decisions.

Establish hiring policies and procedures

If you don’t already, develop a written hiring policy. It would help if you also did this for performance reviews, employee terminations, and office policies. A quick internet search can help you find resources and boilerplate forms to help with this process. Documents to look for include

  • Interview checklists
  • Performance expectations and measurement tools
  • Job salary grades
  • Performance evaluation procedures

With your procedures and policies in place, you’ll need to make sure anyone in a management or hiring capacity is trained on your expectations. Employees will also need to be educated on office rules and procedures. Providing this in a written format is ideal so that you can refer to it during employee disputes. You may also find it beneficial to outsource your staffing needs with a contracting firm or a third-party human resources provider.

Protect yourself against legal claims

Even with the above measures in place, you can still be vulnerable to employee legal complaints. If you feel you need to take an extra step, look into Employment Practice Liability Insurance (EPLI). These policies protect you from employees or job candidates who think they have a legal claim against you.

EPLI can be surprisingly affordable, especially if your risk is low, so it’s worth looking into coverage. It’s most certainly cheaper than legal costs.

If you’d like to learn more about Employment Practice Liability Insurance, give us a call or contact us for more information. Sun Mountain Insurance is always happy to help.