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Two Common HR Policy Mistakes Can Increase Risk of Employee Lawsuits

Thursday, June 13, 2013   (0 Comments)
Posted by: Susan Dyer
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A Utah construction company was required to pay three former employees a total of $230,000 in May 2013 when the Equal Employment Opportunity Commission (EEOC) successfully sued the company for harassment.

Credit unions should take note of this case, not because the company was punished for harassment—we all understand why that can’t be tolerated—but because this company increased its liability with two common mistakes:

1. The company’s HR policy directed employees to report harassment to their immediate supervisors. Employees had no other option.

2. The company fired an employee in retaliation for his complaint.


Assuming your credit union already has a policy against harassment, make sure the policy will actually work and protect employees.

Here are some basic guidelines for an anti-harassment policy:

It must be professionally written.
Your anti-harassment policy should be part of an overall employment practices policy that is approved by the board. This policy must be written by a human resources professional and/or employment attorney who ensures it complies with federal and state laws. The entire employment practices policy, including harassment elements, should be read and signed by all employees annually. Among other things, this protects your credit union from charges that employees who violate the policies were unaware of them.

Employees must have the opportunity to report harassment to someone other than the alleged harasser.
An anti-harassment policy must document how employees can bypass their harasser to lodge a complaint. This means at least two people should be designated to accept these complaints. You may need to offer employees the option to lodge harassment complaints with a neutral third party, if you can’t otherwise guarantee that employees have a safe avenue.

Prohibit retaliation against an employee who reports harassment.
Your written policy should state that reports of harassment will be investigated promptly. It should also state that retaliation—by firing or other means—is not permitted against the person who complained or those who participate in the investigation, such as witnesses to the harassment. EEOC lawsuits can require employers to pay extra punitive damages and back-pay for firing employees who lodged harassment complaints. You may be liable for damages for firing an employee who complains, even when the complaint is proved to be unfounded.

Be clear about work-related harassment off-premises or by non-employees.
Work-related harassment doesn’t always happen at work, and it isn’t always committed by other employees. Your policy should prohibit harassment at work-related functions held outside the workplace, such as a holiday party at local establishment. And your policy must protect employees from being harassed by directors, contract employees, third-party vendors, or others with whom the employees interact as part of their job.

These are only a small part of what it takes to create and enforce an employment practices policy. Our Risk Managers can help assess and make recommendations to safeguard your credit union. Contact your CUNA Mutual Group sales representative at (800) 356-2644.

Coverage may vary or may not be available in some states. This summary is not a contract and no coverage is provided by this publication, nor does it replace any provisions of any insurance policy or bond. Please read the actual policy for specific coverage, terms, conditions, and exclusions.

CUP-0613-4B9F ©CUNA Mutual Group, 2013 All Rights Reserved.

Credit Union Protection insurance products offered to credit unions, including the Fidelity Bond, Management & Professional Liability Policy, Special Insurance Package, Plastic Card Policy, Cyber & Security Incident Policy, and Property/Business Liability Policy are underwritten by CUMIS Insurance Society, Inc., a member of CUNA Mutual Group. CUNA Mutual Insurance Agency, Inc., an affiliate within CUNA Mutual Group, is the marketing agent licensed to broker various other property and casualty coverage. To determine underwriting company information for each policy type, please refer to the actual policy documents and declarations pages. CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates.