The law not only protects employees from work-related injury and illness, but also from poor business practices that can result in wage and hour, wrongful termination, constructive discharge, discrimination, harassment and retaliation claims. While Employment Practices Liability Insurance can protect companies against employment-related lawsuits, proactively managing exposures to lower the frequency and severity of claims is critical.
A company that does a good job hiring and creating a culture of trust and respect—where employees can develop professionally and are given the resources needed to be successful—is less likely to face employment-related claims and lawsuits. Hiring the right person for each position is fundamental to the success of the employee and the company.
Hiring the right person also can lower the risk of workers’ compensation claims. A thorough evaluation of a candidate before hiring allows employers to assess the potential of the candidate’s success and to make a well-informed decision before extending an offer. An accurate evaluation also will increase the chance of a long-term, mutually beneficial relationship.
The costs associated with replacing an employee are significant. Estimates range from the value of the current salary up to 150 percent of that salary. The hard and soft costs associated with replacing an employee are numerous, including advertising the position, overtime pay for employees who compensate for the lost productivity, paying for temporary help, placement agency fees and new employee training. Turnover is a cost of doing business, but it’s best to keep it minimal. Companies must generate additional revenue to cover these costs every time someone leaves. For example, a company must generate an additional $75,000 in revenue to cover the cost of replacing an employee with a $50,000 salary.
Without a thorough recruiting and hiring process, a company is at risk of bearing the additional costs associated with employing the wrong person. Companies often find out too late that they hired someone without the necessary skill set or with a criminal history, drug or alcohol problem, or character defect that creates issues in the workplace. These issues cost the company time as well as money, and ultimately could lead to a major financial impact if a lawsuit is pursued.
Before hiring someone, a company should develop a well-written hiring standard operating procedure. This document will bring uniformity to the hiring process, enabling candidates to be evaluated on an apples-to-apples basis and minimizing the risk of discrimination claims.
Before the Interview
Develop an appropriate narrative to advertise the position. Use legally appropriate language to describe what the organization seeks in a candidate.
Post the opening within the company and encourage employee referrals. The best referrals usually come from trusted employees. Consider offering a monetary reward to people who refer a candidate.
Identify publications and websites to advertise the position. Cast a wide net; avoid recruiting in a way that will not yield a diversity of applicants. Consider newspapers, Monster.com, Jobing.com, Craigslist, association newsletters and LinkedIn.
Use a well-written employment application that contains acknowledgements signed by candidates allowing the company to check references and work history, affirming they understand employment is “at will,” certifying what they included in the application is true, acknowledging they will receive a copy of any public record search and agreeing nothing in the recruiting process creates a contract of employment. Applications help managers evaluate applicants more equally. Résumés may not contain all of the information needed to properly evaluate a candidate’s qualifications.
Post the application for employment on the company’s website or have a copy ready to be emailed on request. Be consistent in the use of applications; every candidate should complete one.
Review résumés and applications and identify candidates who qualify for an interview. Develop a list of the most important criteria tied to the essential functions of the position and conduct an initial screen for those qualifications. Use an applicant appraisal form to make notes and rank candidates. Scripting interview questions can help interviewers stay focused on getting the information needed to qualify the candidate. It also ensures managers are consistent and can compare candidates equally, as well as avoid inadvertently asking questions that could lead to claims of discrimination.
The Interview Process
Conduct an initial telephone interview using scripted questions. At the conclusion, inform candidates they will hear back from the company, whether they are invited for an in-person interview or are not a good fit for the position.
Conduct a face-to-face interview using scripted questions and trained interviewers. Consider conducting several in-house interviews with various staff members. Provide a copy of the job description to the candidate for discussion. Specify the purpose of the position and define what tasks must be undertaken.
Administer job compatibility, cognitive ability, honesty and other assessments to determine if candidates actually possess the skills they say they have. Evaluate skill assessment outcomes and the initial interview results. Fill out a scoring form to compare candidates using the same criteria.
Invite qualified candidates for a second in-person interview. It is just as important for the candidate to get a good look at the company as it is for the company to get a good look at the candidate. The more time spent together, the more accurate the assessment.
Selection
One component of the interview process should not decide the fate of the candidate; consider all factors and evaluate the candidate’s overall competencies against the requirements of the position and the fit with company culture.
- Make an offer contingent upon successful completion of:
- background, work history and education verification;
- reference checks;
- a post-offer, pre-hire physical or drug screen (if required by the company); and
- verification of eligibility to work in the United States.
Provide the candidate with an offer letter that contains information related to:
- classification of the position (exempt or non-exempt) and job title;
- hours and days of work;
- general scope of duties;
- compensation (base and bonus if applicable);
- employee benefits (with details provided on a separate page);
- information related to the “at-will” status of the relationship;
- contingencies;
- background and reference checks;
- drug testing and pre-employment physical;
- verification of right to work in the United States;
- verification of information contained in the employment application;
- verification of current wages (if applicable);
- an acknowledgement signed by the candidate accepting the offer; and
- any other contingency that concerns the company and is legally acceptable to include.
This process may seem cumbersome, but it will help protect companies from discrimination claims and greatly enhance their ability to hire a solid employee who will stay on board long term.