Thursday, September 17, 2009

An Ounce of Prevention Beats a Pound of Cure: Why Every Contractor Should Pay Close Attention to Personnel Policies

"Have the design plans been approved by the architect or engineer?"

"Is financing in place?"

"What are the codes that have to be complied with?"

These are among the many questions that are asked before almost any construction project begins. And prudent contractors make sure they have the answers in advance, so they don’t run into any uncertainties down the road.

While most contractors make sure they know the answers to those construction-related questions, what about questions concerning their own business.

"What happens to accrued vacation pay when an employee voluntarily leaves?"

"What is the policy for reporting and investigating sexual harassment?"

"What kind of employee behavior is grounds for immediate termination?"

If you had to scratch your head and think about the answers to these questions, then your company could be exposing itself to needless risk that could largely be avoided.

Given the high number of layoffs and reductions in force the construction industry has faced in the last 18 months, there are ample opportunities for former employees (or current ones) to try and squeeze out a few more dollars with claims or threats of litigation. Maybe they didn’t use all their vacation time and now feel they should be compensated for it. Or maybe they feel that a few off-color jokes around the water cooler actually arose to sexual harassment. With the right policies and practices in place, a lot of these headaches can be minimized.

Every employer, whether in the construction industry or otherwise, should have an employee handbook in place that lays out the company’s policies and procedures. It lets employees know what they can expect out of their employer, but it also lets them know exactly what is expected out of them. And it helps prevent the gray areas from which disputes often arise.

Many contractors allow employees to use company vehicles. What happens when your employee stops by the bar on the way home while driving a company van? Should an accident ever happen, you can rest assured the claimant will be looking at the name on the side of the van first. You may not be able to completely eliminate potential headaches, but with appropriate alcohol and drug policies in place, you can at least mitigate them and minimize your potential liability.

What about overtime–are employees entitled to it even if it was not approved in advance? What if you did not even know the employee was working overtime until they submitted their hours? This is another matter that can be addressed by having clear policies in place in an employee handbook that both employer and employee can reference.

These are just two of the many employment issues that affect contractors in a real, tangible way. Having policies in place via an employee handbook doesn’t just save time in trying to determine what the company policy actually is (often times after the fact), it also saves money. If you have a policy that employees forfeit any accrued vacation pay upon termination of employment (voluntary or otherwise), you will know exactly how to respond when a former employees seeks payment for the two weeks of unused vacation he left behind.

It’s no secret that the last 18 months have been difficult on the construction industry, and contractors are looking for any ways they can find to save costs. In personnel and employment matters, prevention and good planning are the keys. The old adage really is true–an ounce of prevention beats a pound of cure.