Hidden Liabilities - Is Your Company at Risk?
Updated: May 26, 2021
The Importance of the Human Resource Department Checkup
Ignoring your human resources (HR) processes and policies is like never checking or changing the oil in your vehicle or skipping your annual medical checkups. By the time you discover that there is a problem, it might result in a major expense or even be fatal to your business. An HR department checkup can prevent huge headaches and save your business by addressing areas that may become future liabilities.
Below are a few of the most common hidden liabilities that I normally find during an HR checkup. As you peruse the list, keep in mind that all of these are fairly easily addressed and will lead to less liability, more clarity, increased productivity and a stronger company culture.
There is either no company handbook in place or it is outdated and/or incomplete
Defend your company against expensive employment claims with a well-crafted, legally compliant handbook, tailored to your industry, company size and culture. This will demonstrate you took action to ensure that everyone is aware of the rules that they must follow. Additionally, a great handbook notifies employees of the laws that apply to them and establishes your company’s commitment to complying with those laws.
Your company employee handbook sets the stage for your company culture, provides everyone a guideline on acceptable workplace conduct, and helps to ensure consistent employment practices. If your handbook is outdated or contains policies that don’t apply, you are setting yourself up for the confusion and inconsistencies that lead to employment claims or litigation.
Managers are not trained to effectively handle employee relations and discipline issues
Since Susie is the best salesperson in the organization, why not make her the Sales Manager? Counterintuitively, the best employees don’t always make the best managers. Too often, top performers are promoted into their first management position and given little in the way of tools to succeed. Effective managers and leaders and developed through training and support.
When leading and managing people there are many moving parts. Your managers need training on applicable employment laws, leadership skills and employee relations. Proactive transfer of information decreases the probability of employee litigation, other employment-related claims and will help your organization succeed.
Employees are driving for business purposes with no policy or process in place to protect your company
If employees are driving to appointments or jobs around the city, or even running occasional errands, check driving records during the hiring process. The employee may not have a valid license, insurance or could have multiple tickets or accidents on their record.
Let’s suppose an employee has a suspended license due to a DUI and has let their insurance lapse but has continued driving on company business. If the employee is involved in an accident while driving on for work purposes, your company could have to pay out of pocket to cover expenses.
A solid driver policy, regular motor vehicle records checks and an umbrella policy with your insurance company are must-haves to keep you from spending thousands of dollars in the event of an accident.
Job descriptions don’t exist, are outdated and/or don’t include all of the basic information
The importance of job descriptions is an entire separate article! Well-written job descriptions outline what is expected from an employee. Here are a few of the other functions of job descriptions:
They help a business comply with the Fair Labor Standards Act by classifying employees correctly as exempt or non-exempt, as this classification is based on job duties, not title.
They outline the essential functions and physical requirements, providing information needed during the interactive process for reasonable accommodation requests under the American’s with Disabilities Act (ADA).
They list the skill and experience requirements of the position for recruiting purposes.
Job descriptions help the company create a fair and competitive compensation strategy.
In addition to the above common areas of liability, there are quite a few not listed. If you would like to receive more helpful information, please contact me for a free HR Checkup.
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Edwards HR Consulting | Albuquerque, NM | Roberta Edwards, President | (505) 917-4558