Whether you’re one of the Springfield metro area’s more than 500 manufacturing companies, a mom-and-pop shop or a big-box store, being an employer is becoming far more complex and expensive.
Our society’s expectations, the legal landscape and employee rights have quickly evolved in the last decade. Compliance and employment regulations have become so burdensome that cottage industries and specialists have emerged to advise and help employers. Insurance products also have been developed and modified to meet these changing times. Even the city of Springfield added additional classes of people to the list of employees who are protected from discrimination through its sexual orientation and gender identity ordinance.
Discrimination is the most common form of employee lawsuits. The U.S. Equal Employment Opportunity Commission received more than 90,000 of these charges in 2013 alone. The top three discrimination complaints involve race, retaliation and sex. Other common issues involve wrongful discharge, harassment and failure to promote or hire.
The legal and enforcement environment is constantly changing and to avoid legal trouble employers should familiarize themselves with labor and employment laws. The Civil Rights Act of 1964, the Equal Pay Act, Family Medical and Leave Act, Age Discrimination in Employment Act and the Americans with Disabilities Act are just a few of the major federal labor laws. Each state and community also has laws and regulations concerning employment.
According to the Missouri Economic Research & Information Center, area manufacturing wages totaled $338.8 million in 2013, but retaining employees is about more than just wages. Businesses can improve their risk profile by improving their human resource practices. Some specific areas to focus on are hiring, training and performance management. It is extremely important to make sure the employee handbook and policies and procedures manuals are up to date and have the proper provisions.
The consistent application of your HR practices and regular documentation of employee files should be a standard operating procedure. Hiring or outsourcing HR expertise is virtually a must for businesses today.
Businesses also can protect themselves through employment practices liability insurance.
This coverage protects employers by paying for legal defense and covered judgments. Defense costs are normally paid within the policy limits. Selecting an adequate policy liability limit is extremely important. Most policies have substantial deductibles normally beginning at $5,000 to $10,000.
EPLI is provided on a claims-made form with a retroactive date. It’s important to understand this date precludes claims occurring prior to the retroactive date listed on the policy, regardless of when the claim is made.
Qualifying for coverage and the application process is normally focused on the nature of the business conducted, the size of the company, past claims history, HR practicesand whether any shifts in employment – hiring or downsizing – are expected. Some documents that may need to be reviewed include the employment application, employee handbook, employee benefit schedules, performance evaluation process and annual reports such as a Securities and Exchange Commission form 10K, if applicable.
The typical EPLI policy protects the business and its employees including supervisory and managerial employees, boards and officers if involved personally. Businesses may want to consider adding expanded coverage to include claims brought against them by customers for discrimination or harassment. Some policies may allow the business to select their own counsel, however, most require the use of panel attorneys who specialize in employment law.
Businesses large and small need to understand the legal and regulatory environment, constantly update their HR practices and protect themselves financially in the event of an employment violation – founded or unfounded. Employees are the most important assets of any company. They can also be a risk if proper procedures and protections are not up to date.
Richard Ollis is president and CEO of Springfield-based Ollis and Co. He can be reached at richard.ollis@ollisco.com.[[In-content Ad]]
