From the moment an employer hires its first employee, it assumes risks and potential liabilities, including the potential for lawsuits, employment-related disputes and compliance issues. The laws and regulations governing labor and employment relationships have complex implications. Of course, it is always better to be proactive rather than reactive. This is a practical checklist that applies to all employers regardless of industry. These recommended risk management measures will help employers mitigate exposure to future claims and help protect them and their owners.
Every business should consider obtaining employment practices liability insurance (EPLI) coverage. Legal requirements can be overwhelming for employers, and what seems like the smallest mistake can expose a business to liability. Lawsuits involving employment-related disputes in fact occur frequently.
By purchasing an EPLI policy, a company’s legal costs and attorney fees would largely be covered if an employment-practices claim arises. Moreover, EPLI coverage can also minimize potential loss exposures, human resources-related expenses, and training costs.
Restrictive covenants are beneficial legal tools to protect employers from exposure to legal claims and outline the expectations of employees and independent contractors. Restrictive covenants can help protect a business’s marketing strategies, proprietary systems, inventions, and customer lists from unauthorized use or disclosure.
The following are common restrictive covenants:
Employers must properly classify independent contractors. An independent contractor agreement is a fundamental risk mitigation tool to achieve that goal. It should clearly delineate the essential terms of the independent contractor relationship, such as the work to be performed, payment terms, liability, and termination. By establishing these matters in a written agreement, the chance of a dispute is reduced. The agreement also helps ensure compliance with various laws.
Depending on the industry, employers may consider implementing a technology policy or use agreement. This should outline employee responsibilities and rights and set forth the company’s expectations of employees regarding technology in the workplace. A technology policy or agreement is also a good way to clearly articulate any restrictions regarding technology use on company property, such as the use of company computers or mobile devices for personal use. Finally, it can also help educate employees to identify and avoid potential cyber threats, which can mitigate risk to the business. Such policies or agreements are especially important given the increase in remote work and vulnerabilities in unsecured wireless networks.
It is likewise important for an employer to have an effective social media policy. A social media policy can limit the risk of potential claims arising from social media posts and their impact. It can also set clear rules for what employees can and cannot say on social media about the company. Likewise, it may also set forth rules for use of personal social media during work hours.
These measures are fundamental risk mitigation tools for employers. It is also important for employers to have current policies that set forth and prohibit impermissible conduct. Finally, these policies should set procedures for clear communications between company management and employees. Together, these measures will help foster a pleasant work environment while mitigating against the risk of employment-related claims and disputes.
