HR Risk Management – Hiring Best Practices
How you hire is almost as important as who you hire. And most times, they can impact one another. Bringing a new employee on board can create a huge impact on your business or organization. The right fit will bolster your organizational culture, increase productivity, and hopefully result in growth. However, the wrong hire can create conflict, slow productivity, and potentially result in an expensive lawsuit. This article will focus on human resource risks, the hiring process and how to use it to create a consistent message to your employees as well as protect the organization from future risks. Topics covered include standardizing the process, pre employment physicals, pre employment drug testing, pre employment background checks, employee handbooks, avoiding employee benefits liability risks, and managing part-time, temporary, and volunteer workers.
Standardize Your Application Process & Be Consistent
This should go without saying but we’re going to touch on it quickly before we get to the real meat and potatoes. Use a standardized employment application and process with every applicant. The keys here are documenting the process so you have backup if any potential applicant or even someone you hired alleges the hiring process was inconsistent, unfair, or illegal. This doesn’t mean you can’t change the process. Just make sure that any changes in the hiring process are planned in advance and once they are initiated, should be consistently applied. The ‘Be Consistent’ moral of this story is echoed in each of the sections below…because it’s just that important!
Pre Employment Physicals, Drug Tests, and Background Checks
The scariest part of hiring employees and support staff, from a risk management standpoint, is that they come with a past that is completely unknown to you. That past can be full of huge positives which is why you are thinking about hiring them. It can also be full of dangerous unknowns that can catch you buy surprise after the hiring process is complete. Doing your homework is a must when hiring employees. In fact, these procedures can help reduce or eliminate negligent hiring lawsuits that might be brought against you by customers and/or folks outside of your organization. Keep in mind that this is subject to employment law in your state of operation so always check with legal counsel before implementing or changing your procedures with respects to these recommendations.
Pre-Employment Background Checks
- How they help you – background checks can identify risky or unlawful behavior prior to hiring. This is particularly important when hiring for a position that requires the handling of large amounts of money/assets, access to sensitive financial information, close contact with clients/customers, or safety-sensitive positions. Prior behavior to look out for includes arrests or infractions related to theft, embezzlement, violence, and general unethical/unlawful behavior.
- Pitfalls – background checks aren’t an absolute way to capture this type of information because certain infractions may go undocumented or kept private. Also, past behavior isn’t always an indicator of future behavior so analyze these reports with a bit of context. In fact, many states and federal statutes may limit the types of actions you can or can’t take with respects to denials of employment or firing based on a background check.
- Best Practices – PERFORM BACKGROUND CHECKS CONSISTENTLY across your hiring process. DO NOT single out applicants for these types of checks. If you do it for one, you must make a practice of doing it for all. That last thing you want to have happen is attempting to avoid an employee prone to theft but opening up a much bigger issue when that employee sues for discriminatory hiring practices.
- How they help you – pre-employment drug tests for many positions are mandatory (such as CDL drivers and security/law enforcement positions). However, even when they aren’t required for hiring, these tests can be valuable when done consistently. Potential employees with drug abuse behavior or prior drug-related legal infractions can create an exposure to theft, third-party injury or property damage, or higher chances of on-the-job employee injuries.
- Pitfalls – as with background checks, these tests need to be done consistently and can’t be used to single out a current or potential employee. In addition, with the growing trend of legalized medicinal or recreational marijuana, you will need to create a firm position with respects to tolerance of these types of situations. Medical marijuana use can be allowed if you reasonably believe the duties of the position can be performed safely/responsibly. There are several legal cases and legal opinions on the books that maintain an employer’s ability to fire and/or withhold hiring based on the use of marijuana. Always consult legal counsel if there is any question surrounding a current or potential employee’s use of marijuana or other substances that might hinder their job performance or create an unsafe working condition.
- Best practices – USE TESTING CONSISTENTLY (sorry for harping on this but it is a must), testing doesn’t uncover every possible substance that might hinder a worker’s performance or impair their judgement/physical state so include other operational awareness training for supervisors and managers to help identify employees that might have substance issues, and view the results of drug testing in context (see medicinal marijuana use passage above).
- How they help – physicals can be used to evaluate a potential employee’s ability to do a job safely. In addition, a physical can uncover a pre-existing physical condition or ailment that can reduce the cost of or avoid a workers’ compensation claim in the future. The physical creates a baseline to judge an employee’s health off of at a later date. Finally, these tests can also identify issues of fraud when an employee seeks to be hired for a job so that they can gain treatment for an existing injury or receive duplicate compensation for a workers’ compensation injury they had at another job.
- Pitfalls – physicals don’t always uncover injuries that someone can compensate for or hide. In addition, any health information is covered by HIPAA so those regulations should always be kept in mind. Physical conditions can fall under ADA protection so consult an attorney whenever there is any confusion about what action to undertake or avoid.
- Best Practices - CONDUCT PHYSICALS CONSISTENTLY (I get it, totally annoying but still very important), provide the physician with a listing of job duties/functions so they understand the physical requirements of the position, utilize physicians that take a pro-active approach to testing, seek legal advice when setting up your testing practices, and always keep HIPAA and the ADA in mind.
Some HR Professionals refer to it as their Bible. An employee handbook is a necessary and crucial part of any organization’s human resources as well as risk management program. The information contained within it sets the expectations of anyone who works for or in an organization. It also outlines the rewards and disciplinary actions that may follow acceptable and unacceptable behavior. If you don’t have an HR Bible, you’d better get one immediately.
Benefits of Having an Employee Handbook
- Introduces Employees to Your Culture, Mission and Values – these three items should be taken into consideration by every employee, every day – each decision should be made through the filters of culture, mission, and value
- Communicates to Employees What is Expected of Them – in terms of their work product as well as conduct
- Communicates to Employees What They Can Expect from Leadership – holds management accountable to stick with the policies and procedures and promotes consistency
- Helps Ensure Key Policies are Clearly and Consistently Communicated – clear and consistent should be the two main goals when crafting the policies included in the handbook as well as when they are instituted
- Showcase Your Benefits Package – let your employees know what they are getting beyond their salary
- Ensures Compliance with Federal and State Laws – sometimes frustrating but always necessary
- Helps Defend Against Employee Claims – never allow an employee the ability to say that something wasn’t communicated to them or that a policy you are enforcing wasn’t done so consistently or to the letter of the handbook
- Lets Employees Know Where to Go for Help – crucial if/when a harassment, unhealthy workplace, or discrimination allegation is made – also very helpful when employees need personal help (think Employee Assistance Program)
Employee Handbook Best Practices
- Begin with a template but then tailor it to your specific industry/operation
- Review the handbook annually for updates and communicate them effectively when they are needed
- Have your attorney provide input and include them in the annual review
- Steer clear of legal jargon so every employee can understand it and doesn’t feel overwhelmed
- Don’t make it too wordy – be clear and concise
- Make your handbook accessible – paper, website, email, mobile compatible, etc.
- Include some flexibility – you can’t plan out every minute or interaction of your employees; always link your policies and procedures back to your culture, mission, and values
Employee Benefits Liability Planning & Pitfalls
Part of maintaining an enthusiastic and high functioning workforce along with attracting top talent is the benefits package that you offer. In fact, millennials entering the workforce are asking for more and more when it comes to their benefits. Also, the current health insurance market creates tons of exposure in this arena. So, what are the potential pitfalls and how do you address them?
What Could Possibly Go Wrong?
Employee benefits liability is a coverage that can be included in your insurance program. But don’t let that allow you to rest on your laurels if you currently have coverage. Benefits liability claims can result in huge payments owed to employees and/or dependents and can create a massive drop in morale within your workforce. Most of these claims originate from two sources – Poor Communication to Employees and Program Design
- Poor communication can result in employees or dependents misunderstanding which benefits they are eligible for, deadlines for eligibility, or extreme disappointment when employee expectations are not met
- Program Design issues can be inadvertent or intentional; inadvertently excluding eligibility for an employee or group of employees or intentionally excluding eligibility when regulations or legal statutes are misunderstood or ignored
- Utilize an experienced HR professional or consultant to design and update your Benefit Packages annually
- Always consult legal counsel, especially when your workforce is collectively bargained or included employees with complex contractual agreements
- Communicate all changes in the benefit program as soon as possible and in as many ways as possible (requiring employees sign off that they have received notice is always advisable)
- Provide in-person and web-based seminars and Q&A sessions (for current employees & new hires)
- Whenever financially feasible, use an outside provider to maintain retirement or benefit accounts that hold valuable assets – they will be bound by fiduciary duty laws and should carry a significant insurance policy to cover any breaches in that duty; this will also eliminate the employees’ perception that handling assets in these plans is being done based on management’s bias or lack of expertise
- Anticipate and stay informed of regulatory and legislative changes that may affect your current Benefits Program or changes you are seeking to implement in the future
- Maintain an open line of communication with employees so they can voice their interest in program enhancements/offerings
Managing Part-time, Temporary & Volunteer Worker Risks
Let’s just get this out of the way…Temporary, Part-time, and Volunteer workers need to be treated like they are your full-time employees. Just because someone isn’t paid or paid on a 1099 versus a W2 doesn’t mean they won’t create a liability claim or compensable injury claim that you need to pay for! Here’s how it’s done…
Part-time & Temporary Workers
- Train your part-timers and temporary workers just as aggressively as your full-timers – they do most of the same things as your full-timers, just over a shorter period of time
- Hire part-timers and temporary workers with the same scrutiny as your full-timers (when feasible) – Background checks, drug testing, physicals, reference checks, etc.
- Part-timers and Temporary workers need to receive and acknowledge receipt of an employee handbook/manual – the version of the manual can be a version specific to part-timers and temporary staff (ie – readjust sections such as benefits eligibility) or you can simply include adjustments within the standard employee handbook for part-timers and temp workers (ie – footnotes or subpoints that outline how things might differ for them)
- Make certain your Workers’ Compensation insurer knows you use part-time or temporary labor and how much of it you utilize – these workers are covered under most states’ Workers’ Compensation laws
- Training – volunteers won’t need as rigorous a training program as your full-timers but they will need some cursory form of training to make certain they can perform their duties safely. Include a section on acceptable behavior, chain of command, and limitations of their duties
- Hiring – volunteers aren’t typically hired but they present a specifically high level of risk because, without being their employer, you don’t have as much control over their actions. This means, when feasible and dependent on their role (ie – close contact with children, access to property of value, use of vehicles/equipment, etc.) you should be performing background checks, Motor Vehicle Report checks, drug testing, etc.
- Volunteers don’t need to receive an employee handbook but will need some written notification of their roles/duties and the risks associated with those duties as well as a requirement to sign off that they have been received and the volunteer agrees.
- Volunteer workers are typically not covered under Workers’ Compensation coverage - You will need to purchase a volunteer accident medical insurance policy to help cover any injuries sustained by volunteers during their time of service. Volunteer accident medical coverage provides money for medical treatment without any admission of liability. This can help head off a lawsuit if a volunteer is injured during their service.
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