Over the last couple of years US employers have seen more employment law changes than in the last three decades combined. Human Resource professionals nationwide anticipate this trend to continue. What do business owners need to know or should be doing in order to remain compliant and protect their assets?
Many small businesses, especially ones that don’t require a full time HR on staff, don’t realize that 78% of employment legislation is required by employers with as few as 15 employees. Noncompliance is frequently the basis for significant financial risk and not knowing is no longer an excuse. The Society of Human Resource Management (SHRM) reported that the Department of Labor (DOL) recently added 250 new investigators to the DOL’s Wage and Hour division, a staff increase of 1/3. Most other divisions have increased their staff, some by as much as 28% in 2010. The DOL has shifted emphasis away from compliance assistance and is staffing to increase enforcement and accountability from business owners. The DOL oversees the Wage and Hour Division, Office of Federal Compliance Programs, OSHA, Employee Benefits Security, and more.
Furthermore, the Equal Employment Opportunity Commission (EEOC) has been reporting record high claims for discrimination, harassment and retaliation the past couple of years. Business Management Daily cited, “the EEOC has historically been known for going after large, big ticket lawsuits, however this has now changed. They are going after anyone who is non-compliant and investigating all claims”. Also, small businesses that don’t have any documented policies and practices, are usually quick and easy targets because they are unable to provide documented practices in defending claims. Do you know the EEOC can still pursue a case even if the complainant drops the case and no longer wants to pursue it? The EEOC is now posting cases on their website, and along with it, the names of the affected companies and any “bad actors” involved. As great as social media is today, do companies really understand the long term impact on their reputation when something like this is continually found forever more on the internet?
Additionally, purchasing employment practice liability insurance may cover your incremental expenditures if a case arises; however, your publicized reputation won’t be protected. Employers can protect themselves by identifying areas of concern that need immediate attention by doing a risk assessment/audit of current business practices. By doing regular audits or reviews of current practices can help employers identify what processes are adequate, legal or ineffective. According to SHRM, most lawsuits can be traced to four distinct stages of the employment relationship:
- · Hiring – (job descriptions, application forms, employment contracts, classifications, references)
- · Employee Evaluation – (performance appraisals, process, compensation, record keeping and promotions)
- · Employee Discipline – (rule infractions, evidence, poor performance, insufficient documentation, leave practices, undefined policies)
- · Termination – (situational comparisons, proper warnings, adherence to complaint procedures or lack of them)
In today’s climate, businesses need to engage in constant observation and continuous improvement of the company’s policies, procedures and practices in order to mitigate legal risks. Businesses can’t afford staying abreast of critical changes that keep you compliant with the law. When these changes do arise, employers need to view the changes as opportunities to enhance and align their strategic goals with their policies and practices throughout. One way to do this is to continuously monitor HR systems to ensure they are up-to-date and have built in checks and balances. Another approach is to designate someone on staff (or an outside consultant) to monitor legal developments to ensure HR policies and practices are kept current. It is also important to keep records of audit findings, internal changes made, turnover, complaints filed, hotline issues, employee survey results, etc. in order to keep a pulse on problematic areas, growth or declining spots. This can help make decisions of what to address first, allocate resources to, and identify where preventative training is required in the future.
Staying up-to-date on pending and anticipated regulatory activity is vital to your organization. Being informed about your results can provide the ability to focus on areas for improvement, avoid legal liability, and can help a company internally align practices with their strategic goals. Incorporating a continuous process improvement culture in your organization will also ensure that your company achieves and retains their competitive advantage for today and in the future.
For more information about this topic or any HR issues you may have contact Shannon Hensel at www.henselhrconsulting.com.