The top 10 Employment Liability Concerns noted by the Society for Human Resource Management (#SHRM) and the American Bar Association over the last 15 years are completely avoidable for every organization from small family-run businesses to giant government agencies. The key is in understanding that having a comprehensive insurance, a great law firm on your side, and an avid HR department is not your best first line of defense. Rather, your best first lines of defense include: awareness, a healthy organizational culture, and behavior-based training — all of which require the application of psychological science to the workplace.
How does psychology help eliminate employment liability concerns?
Let’s take a closer look at some of the top ten employment liability concerns from SHRM’s article.
Wage and Hour Claims
Violations of the Fair Labor Standards Act can be accidental and intentional. Mistakes range from failing to provide rest/meal periods, intentionally misclassifying employees as exempt, falsifying time records, and avoiding paying overtime. Forgetting to provide rest/meal periods correctly are failures in awareness, either of the laws and policies or the situation. Rather than depending on supervisors to know all applicable laws, it’s more efficient to use a few key strategies. Build social norms to create awareness, use behavior-based training to maintain awareness, and use situational leadership to correct awareness failures. Blatant dishonesty (like falsifying time cards) is the direct product of unhealthy organizational cultures. Culture becomes unhealthy when leaders aren’t trained in effective rounding, performance assessment, behavior-based feedback, or conflict management.
Misuse and improper dissemination of data claims arise from everything from individual instances like doctor discussions that give away HIPPA information about patients in the elevator, to massive security issues like the on-line exposure of thousands of customer’s social security numbers. When it comes to information security, frustrated and careless employees are the number one risk. Emotionally charged employees purposefully and inadvertently expose company secrets, whereas building a culture of trust and managing employee engagement ensures emotions are used well in the workplace (and minimize your security risks.)
Employers with 15 or more employees, employment agencies, and labor unions are subject to anti-discrimination laws such as Title VII, ADA, ADEA, and the Tower Amendment. Individuals may perpetuate discrimination both intentionally and explicitly; it’s more commonly perpetuated by subtle, unconscious, and automatic organizational processes. Either way, discrimination is illegal and exposes businesses to an average claim settlement cost of $250,000. In terms of discrimination perpetuated by individuals, behavior development coaching provided by psychologists can significantly reduce the number of discriminatory incidents in the workplace. But psychology helps prevent the more costly issue of organizational process level discrimination. Job analyses, hiring process validation studies, compensation studies, and organizational assessments conducted by psychologists ensure fair and more importantly, the high performance work practices (HPWPs) account for an average 30% of performance differences among organizations (i.e. those who use them keep making money versus organizations that don’t).
Don’t let employment liability concerns limit your thinking to legal repercussions and liability insurance plans. Opportunity costs cripple productivity long before the first claim comes up. Apply a little preventative psychology to reduce your legal exposure and maximize your organization’s ability to build and sustain talented teams.
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