How to Minimize the Risk of a Lawsuit Using an HRIS

This is similar to the title of an excellent blog article written by Jennifer King, an HR Analyst for Software Advise. The article, along with Jennifer’s interview of Ed Mills from Omniprise, mentions several specific areas where an HRIS can minimize the risk of a lawsuit including:

  • Performance Reviews
  • Training, Licensing, and Certifications
  • Hiring
  • Wage and Hour
  • Terminations

In this blog, I will provide specific examples of how an HRIS can help in each of these areas.

Performance Reviews
An HRIS can remind the HRIS administrator and managers about upcoming reviews, track the completion of reviews, and store or organize/archive historical reviews. The hardest reviews for managers to write are those of employees whose performance has been slipping. Yet those reviews are the most important, either to help the employee get his/her performance back on track or to support why the employee was let go. The HRIS can help ensure those critical reviews are not skipped. Also an HRIS can document adverse performance situations (e.g. disciplinary actions) and provide reminders of disciplinary action follow-up activities.

Training, Licensing, and Certifications
Almost every governmental agency has some requirement for training and licensing. An HRIS can provide reminders of upcoming training and licensing renewals and also indicate training requirements based on the employees’ position. In Jennifer’s interview of Ed Mills, Ed provides an example of how failure to renew forklift training can put an organization at risk.

Hiring
An HRIS can track a wide range of applicant data such as position applied for and the applicant’s credentials. For applicants who were interviewed, the HRIS can track interview notes from each interviewer. Not only can this provide a strong defense against failure to hire lawsuits, but it can also provide a basis upon which the organization can make good hiring decisions.

Wage and Hour
The biggest jeopardy here deals with how employees are classified. Employees classified as “exempt” from the Fair Labor Standards Act (i.e. “salaried”) are paid a salary regardless of the number of hours worked, so they do not have to track actual hours worked. Misclassifying non-exempt employees as exempt can be a costly error.

Recently the Department of Labor announced a timekeeping application for individuals to track their own work hours. Then if the employee is found to have been misclassified as exempt, the hours worked that they tracked on their own, absent any other data, will almost certainly serve as the basis for calculating overtime.

An HRIS can help by tracking and documenting job classifications, but it’s up to the HR department to conduct a thorough job evaluation in order to ensure employees are classified properly.

Terminations
An HRIS system can be critical in a layoff situation. If a layoff is based on seniority, then an HRIS can identify the seniority order. But most layoffs are conducted based on employee skill set and job performance. An HRIS can track job history and acquired skills allowing the organization to make layoff decisions that minimize the impact to the organization (note that any layoff will incur a major morale hit). Then prior to executing a layoff, an HRIS can help analyze the affected group for any adverse age, race, or gender impact.

For individual terminations due to disciplinary reasons, an HRIS can help document the specific reasons for termination, as well as ensuring that all the steps in the progressive disciplinary process were taken.

Other Comments
An HRIS can help minimize the risk of a lawsuit especially when used in conjunction with solid set of HR policies and consistent HR practices.

Another aspect of an HRIS is its ability to retain data over time. For example, if an employee is fired and then sues the next day, usually the circumstances are fresh in everyone’s mind so that a strong defense can be built. But a clever plaintiff’s lawyer will wait 6+ months to file the lawsuit. By then many of the details will be forgotten, unless you have a good HRIS that will always remember.

Jennifer King is an HR Analyst with Software Advise. You can read the article on her HR blog.

As you might guess, all of the HRIS tasks listed above can be performed by HRSource in spades.

Auxillium West Home Page

About Jeff

Auxillium West HR Software founder and CEO Jeff Moe is an HR industry veteran with more than 20 years of experience as an HR practitioner. Prior to founding Auxillium West, Jeff held various HR positions at Silicon Valley companies - Intel Corporation, Seagate Technology, and ArgoSystems, a subsidiary of Boeing Corporation.
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