When was the last time you discussed employment issues with your insurance agent and/or other trusted advisors? Well, it may be time because hiring, retaining, and firing your domestic staff can put you at risk for claims of wrongful termination, discrimination, or sexual harassment, just for starters. Then there are the security issues if you don’t hire the right employees.
Staff recruitment, retention, and firing are challenging and difficult processes for any employer. When this task is assumed by a family or a trusted advisor such as a business manager, these issues can be magnified because of the limited experience in this role. When you become an employer, the risk management of your home and family changes.
Proper planning and preparation can mitigate or remove many of the potential pitfalls. Here are some of the suggestions and solutions we have developed from working with hundreds of high net worth individuals, business managers and family office personnel.
The Hiring Process
Hiring employees can be a daunting process and you may want to reach out to a staffing agency to assist you. Screening the staffing agency is important as well. There are certain roles you want an agency to include such as: initial screening, background checks, drug screening, motor vehicle reports, and immigration status. You also want the staffing agency and all candidates to execute a nondisclosure agreement.
Once you have found possible candidates, take prudent security precautions and do not divulge any personal information that could be used in the future. For example, it is wise not to meet at your home or office.
Finally, consult with your attorney to draft a confidentiality agreement and employment contract.
For all domestic employees consult with your accountant or tax advisor about employment taxes and the handling of payroll. In addition, there may be specific insurance you should carry, depending on what benefits you have agreed to provide to your employees. At the very least seek advice from your insurance agent about workers compensation coverage, employee benefits, employment practices liability insurance, automobile insurance and health coverage.
It may seem unnecessary, but best practice is to have a good employee manual and procedures guide in written format with consistent policies and rules for employees to follow. This will promote good will with staff members and set guidelines for the management of staff.
Technology can provide an added level of security. In addition to securing your Internet connections with a sophisticated level of encryption along with secure passwords, you will be well served to have a clear understanding with employees of how much access they have to your computers. If they have computer access, then regularly update anti-virus, malware, firewalls, etc. and have your computer consultant check periodically for intrusions or changes to your system
Before terminating any employee consult with a labor attorney to make sure you have set up the termination process properly. Following any termination, but especially if it is adversarial, it is important to alternate your schedules and routines as a security precaution. This will reduce the potential for kidnapping and intrusion risks. Alert everyone who needs to know about the termination and update all security codes and passwords.
One of the most important risk mitigation tools for domestic employees is Employment Practices Liability insurance. This insurance covers such claims as wrongful termination, discrimination, harassment, sexual or otherwise. Many of the practices outlined above will prevent or mitigate these claims and can be used in defense of claims. Ultimately, what you want is expert guidance during an Employment Practices claim.
Workers Compensation is provided on most homeowner’s insurance policies, but when you have full-time staff, you must add them specifically to the policy.
Health Insurance may be part of the employment offer. You may want to pay for the insurance that your employees obtain or you may want to obtain a policy for them. If you agree to provide this benefit, make sure it is spelled out in your employment contract.
Automobile insurance should be updated to include any employees who are allowed to drive your vehicles.
Many of the top tier companies, such as Chubb & Son, provide extensions of coverage along with your homeowners policy. This can include higher limits for theft of unscheduled jewelry or art, options for employment practices coverage with higher limits, and Workers Compensation when employees are specifically added. Chubb is one of the few carriers that offers background checks and security services for many of their clients.