TriNet: How to effectively manage human capital and limit litigation exposure

The top two concerns of CEOs are talent management and risk management, according to a 2011 study by PricewaterhouseCoopers.

It’s not difficult to ascertain why. In addition to creating a positive work environment that attracts the best employees, good talent management avoids exposure to lawsuits. That’s a particular concern nowadays, as the U.S. Equal Employment Opportunity Commission (EEOC) received a record 99,947 charges of employment discrimination in 2011, with $455.6 million paid in relief.

“It’s a matter of being fair and consistent,” says Carin Zubillaga, SPHR, principal human capital consultant at TriNet, Inc. “Branding has also become important to companies, and they want to know how they can become a desirable employer.”

Smart Business spoke with Zubillaga about what companies can do to limit talent risks.

What do companies need to know today?

Employers need to understand that talent risks start at the onset of the hiring process. Many think they don’t have to be concerned about labor laws until employees are hired. In reality, employers need to create a solid job description to put their best foot forward and hire the best possible candidate.

Are there standard hiring practices everyone should follow?

The most important thing is to have a hiring process. It may differ depending on the level of the position. But, for example, if you ask every candidate for one position the same questions, you can easily benchmark answers to help you find the best fit among all applicants.

Another best practice is to conduct training for all managers or individuals involved in the hiring process. Talk about what can and can’t be asked in an interview. Many people have different ideas as to what’s OK — some think that if you share personal information, it opens the door to ask the applicant. That’s something you absolutely don’t want to do.

Ask your interviewers to not search for candidates’ names on Google or look up their Facebook pages. Already, there are more cases on the use of social media during hiring. Even professional background checks aren’t always reliable. A background report wrongly said an individual had been convicted of a felony, which led to his termination. Now, he is seeking compensation for lost wages, employment opportunity and other damages.

Make sure you pick the most qualified candidate based on knowledge, skills and ability. And be a professional: Close the loop by notifying applicants who didn’t get the job.

Do independent contractors pose particular problems?

If someone is an independent contractor, the employer is not required to pay payroll taxes.

Therefore, the IRS and Department of Labor look for misclassification because they’re missing out on funds; misclassification can result in back taxes and penalties.

There is a series of tests to discern if someone is an independent contractor, such as whether they’re required to be there from 8 a.m. to 5 p.m. or allowed to work for other companies. More often the person shouldn’t be classified as an independent contractor. To determine accurately, use the online test offered by the IRS.

Once a person has been hired, does employment at-will mean you can terminate employees without risk?

Even in employment at-will states like California, problems come up when employers do not adhere to their own policies. If you have a course for disciplinary action that outlines specific steps, that process must be followed. For example, most companies build in language for serious offenses ‘up to and including termination.’

Retaliation has become the EEOC’s top claim. If someone files a compliant against a supervisor and that’s the only reason he or she is terminated, you’ve got a problem.

Sticking to your policies regarding employee issues will mitigate a lot of legal risk. Your state may have employment at-will, but there are laws that trump that and provide the potential basis for a lawsuit.

When it comes to effectively managing talent, consistency is key. Have a process and treat people how you would want to be treated. That is one way to brand yourself and become an employer of choice.

Carin Zubillaga, SPHR, is a principal human capital consultant at TriNet, Inc. Reach her at (813) 379-4552 or [email protected].

Learn all you need to know about human capital management at the TriNet Hub.

Insights Human Resources Outsourcing is brought to you by TriNet, Inc.