Employees may be a company’s greatest asset, but any risk manager knows that a rogue employee can become the source of tremendous financial, operational and public relations stress if a serious employment claim arises.
Effective risk management must include a thoughtful audit of human resources, a review of personnel policies, procedures and training, and a working plan for effective future implementation and enforcement.
Personnel Policy Essentials
When reviewing personnel policies and procedures, start with the employee handbook. Assuming there is one in the first place, when was the last time it was reviewed and updated to ensure that the policies made sense for the specific environment and comply with recent legal developments?
Whether a company employs 10 or 10,000 people, personnel policies and procedures are often the first line of defense in an employment lawsuit. Depending on the business’s culture and needs, an effective employee handbook can be as short as a few pages, or as long as a small novel. It is not the size, but the content that counts. Every handbook, at a minimum, should contain the following five elements, and risk managers need to be sure they are written in a way that appropriately complies with applicable federal and local laws:
At-will employment. An employee handbook should convey the general policy of at-will employment, reflecting that either the employer or employee may terminate the employment relationship at any time, for any lawful reason, with or without notice. A poorly worded at-will policy may draw unwanted attention from the National Labor Relations Board (NLRB). For instance, the NLRB recently questioned whether these policies could interfere with employees’ rights to discuss and attempt to change their working conditions, such as by joining a union. Employers should therefore review and amend long-standing at-will policies to ensure they are legally compliant.
On a related note, an employee handbook also needs to contain a prominent disclaimer that it is not intended and should not be interpreted as creating a contract of employment for any set term. It should also include well-worded disciplinary policies that give management the flexibility to take appropriate corrective action, if necessary, without being held to a progressive discipline procedure.
Equal employment opportunity/non-discrimination. These policies are essential for any handbook and should include the appropriate protected categories and a procedure to report any relevant complaints or concerns.
Anti-harassment. A high-stakes harassment lawsuit-particularly a sexual harassment lawsuit-can not only involve protracted litigation, but also greatly damage a company’s reputation. An updated, compliant anti-harassment policy can help prevent harassment from occurring and, to the extent such conduct does occur, mitigate its harmful effects through mandatory internal reporting, investigation and remedial action. In federal litigation, maintaining and consistently enforcing a well-written anti-harassment policy can determine whether the company will be held liable for the alleged conduct.
Wage and hour. These policies are critical to establishing and enforcing effective, legal time management and pay practices, and provide a defense to companies in lawsuits over the payment of wages and benefits. Such claims are frequent contenders for class actions, so it is imperative that a business have its wage and hour policies-including those regarding employee classification, recording of time, overtime and paid time off-in good working order.
Communications systems and social media. Many companies continue to rely on archaic communications policies that focus more on telephones and faxes than email, internet and social media. They must have updated policies about communications systems and social media. Employees need to understand their obligations and expectations relative to privacy, and potential disciplinary ramifications of misusing company-provided communications systems.
In crafting or updating such policies, employers should remember that this is another area that has attracted a great deal of attention from the NLRB. These policies need to be written with an eye toward ensuring they will not appear to inappropriately interfere with employees’ rights to discuss their terms and conditions of work.
Enforcement and Training
Personnel policies and procedures must be communicated to employees at all levels. Good policy enforcement starts with management’s awareness of and commitment to upholding and enforcing personnel policies consistently and effectively. This requires risk managers to communicate such policies whenever new employees join the company and during periodic training refreshers. When properly implemented, policy training should help management and employees to recognize and resolve workplace issues before they become legal problems.
Restrictive Covenant Agreements
A risk manager should be familiar with, and proactive about, measures being taken to protect a company’s proprietary information, services, products, customers and employees from the competition. It is therefore important to require certain employees-particularly those in high-level and sales-related positions-to execute appropriately tailored restrictive covenant agreements. Restrictive covenant law is constantly evolving and can vary significantly by state.
California law, for example, generally disfavors restrictive covenants, but in Illinois, such covenants have been routinely enforced, so long as they are reasonably tailored in time and scope and are based on a legitimate business interest. Thus, an enforceable restrictive covenant should be crafted by experienced attorneys who are familiar with the applicable, evolving state law, and will take the time to understand your business and the protections required to stave off harmful disclosure, solicitation and competition activities.