Ready, Set, Hire: An Overview of Legal Issues in the Hiring Process for Businesses (Part 2 of 6)

During the last blog entry, I discussed the first two issues that employers are likely to face in the hiring process: job postings and interviews. This week, continuing with the theme chronologically, we will tackle issues involving insurance and the use of compliance posters. While the general principles are applicable across many states, we will refer to Pennsylvania as an example for the purposes of this entry.

Employer Insurance Coverage

As a matter of public policy, most, if not all, states require employers to maintain insurance on their employees to make sure that the employees have wage loss and medical coverage in the event of a work-related injury. The Pennsylvania Workers’ Compensation Act, enacted about a century ago, is one example. Not only does the law mandate coverage, but there are also serious financial and potentially criminal consequences for failing to provide Workers’ Compensation coverage, and it is not a stretch to say that one work injury could put a small employer without insurance coverage out of business.

While not technically insurance coverage, all Pennsylvania employers must pay into the Commonwealth’s unemployment compensation system, in accordance with the number of employees that they have. This is also a common requirement across most states. These payments are then used to help pay wage loss benefits for individuals who become unemployed through no fault of their own. Most small to mid-size employers maintain an unemployment compensation account that is charged when former employees begin to collect.

Other Forms of Insurance Coverage

Two other forms of insurance are recommended for employers, regardless of its geographic location. Depending upon the nature of the business and if customers come on to the business’s premises, liability insurance should be acquired to provide coverage in the event that a customer sustains an injury on the premises. The second recommended type of insurance is Employers Practices Liability Insurance (EPLI). This type of coverage applies when a prospective or former employee alleges illegal conduct, such as discrimination, on the part of the employer with respect to hiring, promotion, demotion, or termination. Again, for many small companies, one incident that leads to legal action alleging discrimination may be significant enough to put the company out of business altogether.

Compliance Posters

In addition to mandatory insurance coverage, employers in Pennsylvania are also required to post certain notices, called “Compliance Posters,” in their jobsites so that employees have access to information about applicable laws that govern labor and employment. These notices must be placed in a location that can be seen and read easily by employees. Much like mandatory workers’ compensation coverage, failure to post the applicable compliance posters can result in penalties and fines. The compliance posters include topics such as child labor laws, the minimum wage law, the equal pay law, unemployment compensation, workers’ compensation, and equal employment opportunity laws. Your state’s Department of Labor and Industry website is a good resource for employers to learn about the required compliance posters.

In summary, it is important for employers to understand both the required and recommended insurance products available to them, and to understand the required compliance poster requirements, as there are many pitfalls and penalties for not abiding by the law.

Next week, we will discuss the pros, cons and legal issues associated with post-offer/pre-employment physical examinations.

This is a guest contribution by Eric J. Stark, Esq., of Caldwell & Kearns, P.C. in Harrisburg, PA. You can contact him via email or at 717-232-7661.

Caldwell & Kearns, P.C. is located at 3631 North Front Street, Harrisburg, PA 17110. They specialize in real estate, employment, business, and family law. Visit their website for more information.