Six Simple, Low-Cost Steps to
Avoid Costly Employment Claims
Ann Marie Towle-Mason, SPHR, and Celene Adams
companies call their human resources consultant after an employee files a claim against them.
by then it can be too late.
employees filed nearly
employment claims in 2007, according to the U.S. Equal
Employment Opportunity Commission (EEOC).
average verdict in employment practices liability cases,
which comprise 30 percent of all civil litigation in
courts, had approached more than $450,000 per judgment
by 1999, a figure that does not include other costs such
as lower productivity and morale, damage to reputation
and higher turnover.
good news, however, is that happy employees generally
donít file claims against their employers. Since
employee grievances usually pertain to issues they have
with their managers, not to the company in general, if
you train your managers to take preventive measures, you
can significantly reduce or eliminate employee claims.
you may be saying, ďIt costs money to reduce exposure
to employment claims!Ē
Not necessarily. Here
are six effective, low-cost ways you can minimize
Select the right people for
data shows that most employee turnover happens in the
first year of employment, which is attributed to poor
hiring decisions. Spending time up-front to set up a
system for selection will increase the likelihood that
the person is a good fit for the job and for the culture
of the company.
Write down a realistic job description.
Develop key questions to ask each candidate based on
the job description.
Target your advertising, consider interns, and try
Always conduct a brief and specific telephone
Keep the personal interview on track.
Donít forget to call former supervisors before
making an offer.
Train your managers in effective interviewing
employees incorrectly is a common reason companies
suffer claims. Wage and hour claims are among the most
prevalent complaints. The Employment Standards Administrationís Wage and Hour Division
recovered more than $220 million in back wages for more
than 340,000 employees in fiscal year 2007, exceeding
the record levels collected in fiscal year 2003 by 3.8
percent. The agency concluded approximately 30,000
compliance actions and assessed more than $10.3 million
in civil money penalties.
understanding the complicated rules is often to blame.
assume that a salaried employee is exempt from overtime.
Be wary of deducting wages from exempt employeesí
Include bonuses and commissions into overtime pay
Hourly employees must have an uninterrupted 30-minute meal period.
Show employees how to do the
job and monitor their performance
your employees how to do their jobs takes time.
But it saves time in the long run. Once youíve
shown your new hires the ropes, make sure they carry
through. Managers sometimes tend to be hands off.
But, after youíve demonstrated the essential
tasks, watch how theyíre implemented, give feedback,
and use discipline if necessary.
Take the time to develop a realistic training plan.
Assign responsibility for the successful training of
Include your best employees in the training plan,
but donít place the entire burden on them, and
recognize and reward your employee-trainers for the
Provide constant, meaningful feedback along the way.
Donít wait to correct deficient performance.
Give complaints the red-carpet
listening to complaints relieves a lot of the stress an
employee feels. Employees
will usually try to resolve their complaints internally;
however, if you fail to take the time to hear them out,
your employees can go to an agency such as the
California Department of Fair Employment and Housing
(DFEH) or the EEOC, or they can go directly to an
although listening is a good first step, you have to do
Allow employees to go above their supervisor with
Train supervisors and managers on how to accept and
Listen carefully and without judgment.
Donít try to solve the problem before looking into
Treat complaints as confidentially as possible, but
donít promise complete confidentiality since you are
required by law to investigate certain types of
Insist on respect and show it
employment claims concern harassment or discrimination.
nation in exposure to employment law claims. The average
cost to defend and pay an employment claim in
$300,000. The average jury verdict in a sexual
harassment case in the state exceeds $1 million. Managers need to create
a culture of respect to reduce or eliminate such claims.
Communicate your company values.
Walk the talk every day in every situation.
Donít tolerate hurtful behavior.
Create opportunities for employees to learn about
Conduct harassment and diversity training.
Know when and how to invite
people to leave
youíve given an employee all the tools he or she needs
to succeed and youíre still not getting results, face
reality and decide how to end the employment. You
donít want to surprise employees in terminating them,
however, as this will increase their impulse to seek
retribution. Many times, an anticipated termination can
become a win-win, because an employee who knows he or
she is not doing well will often look for another job.
And if you end the relationship with dignity instead of
anger, you will decrease the chance of a claim against
Decide whether the employee can do the job or just
doesnít want to.
Discuss and document performance and require
Make it clear what an employee needs to do in order
to keep the job.
Ask the employee for a commitment to doing what is
Give an employee the choice to resign or be
terminated whenever possible.
Offer severance pay in return for a signed
separation agreement and release of claims.
Treat employees in the same manner when they are
leaving employment as you did when they arrived.
your supervisors in these techniques will help your
company avoid costly employment claims.
Your supervisors, more than anyone or anything
else, create a human resources culture by the manner in
which they enforce your policies. Such training will
serve to prevent employer liability and minimize the
recovery of damages, including punitive damages, should
they be awarded.
Marie Towle-Mason, SPHR, is President of HR Source
Consulting, Inc. and a Managing Consultant with Aspen
Risk Management Group.
Contact Ann Marie at: 619-294-9863,
or via the
Web at www.aspenrmg.com
Adams is a San Diego-based freelance writer.
Contact Celene at