Employment Practices Audit Can Protect Against Lawsuits
While there' s no vaccination against costly harassment lawsuits, one good way to protect yourself is withan effective employment practices audit.
In an employment practices audit, an employment law firm thoroughly reviews all policies, practices andprocedures where an employer has interaction with its workforce to pinpoint potential trouble spots. "Itgoes from hiring to termination or retirement and everything in between," says Gerald L. Maatman Jr.,chairman of the employment law practice group of Baker and McKenzie in Chicago. The goal is to savemoney, improve personnel policies and practices, augment management' s discretion over its workforce,and resolve potential employment-related liability exposures before they escalate into costly litigation.
"You want to make the company as bulletproof as possible," Maatman says. Plus, an audit helps acompany "create the best possible state-of-the-art HR system so that at the end of the day you are theemployer of choice. You want to be the one applicants and employees seek out as a great employer towork for."
According to Maatman, the audit:
Detects whether an employer' s personnel policies and practices violate any relevant federal, state and local laws pertaining to employment discrimination. If potential violations are apparent, the auditor makes recommendations to amend the policies and practices to be in compliance with the relevant laws.
Determines whether policies and practices allow the company to take full advantage of applicable defenses under any relevant federal, state or local employment laws. Where the employer is not in a position to take full advantage of applicable defenses, the auditor recommends ways to supplement the existing personnel policies and practices.
Installs loss control and risk management mechanisms to identify, control and minimize employment-related problems in the process of hiring, orientation, evaluation, discipline and termination of employees.
Provides recommendations as to proper decision-making protocols for dealing with particular employment-related risks, exposures and problems that can help the employer in the defense of potential claims and lawsuits.
Maatman began doing audits in the mid-1980s when the Clarence Thomas hearings made companies moreaware of the dangers of harassment claims.
"Insurance companies hired me," Maatman says. About 15 percent of U.S. companies have employmentpractices liability insurance coverage, and some insurance companies require that companies thatpurchase coverage go through the audit process.
"I have done 500 to 700 audits in the last decade. I do a very formal process. There are probably alsosome who do it informally as a self-improvement process," he says.
How much does it cost to have an audit conducted by an employment attorney? It can range from $1,500 to$20,000, but Maatman estimates that it averages $4,000 to $6,000.
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