Just released: How to raise venture capital in 2023

Download

EPLI Risk Exposure Checklist for Startups

TL:DR

Key Takeaways

Carl Niedbala - Founder Shield
Carl Niedbala

COO & Co-Founder

 

Last week we posted about the importance of Employment Practices Liability Insurance (“EPLI”) for rapidly growing startup companies.  If you read that post, it should be pretty clear why there’s so much risk exposure related to employment practices.  I wanted to follow up that post with a quick EPLI risk exposure checklist for startups.  Here’s a brief cross section of practices/policies that startup companies should consider putting into place before ramping up hiring.

1. Employee Handbook

Setting up a uniform code of conduct for your employees is crucial.  You want clear guidelines on how employees should act in the workplace.  It sounds like no fun, but in reality this will help shape the company culture.  So how do you go about doing this? Draft and implement the official employee handbook.  Luckily this isn’t as daunting of a task as it may sound.  There are plenty of free resources out there on the interwebs…just google it!  Here’s one example just for reference.

Generally, employee handbooks start out with a bit of background and the company’s mission statement.  The rules of the workplace follow, including office hours, dress code (no XL white tee shirts…), vacation days, salary, benefits, grounds for termination, etc.   The handbook should also state your willing compliance with all of the laws related to employment practices, including Title VII, the ADA, and the ADEA.  How do you cover these?  Try broaching these subjects for starters:

  • Employment at Will
  • Discrimination
  • Sexual and Other Workplace Harassment
  • Equal Employment Opportunity
  • Disabled Employees and Reasonable Accommodations
  • Procedures for Reporting, Investigating and Resolving Employee Complaints

One other thing that should be in there is an Information Security and Social Media Policy.  This isn’t really limiting EPLI risk, but it definitely helps out on the E&O, Cyber, and Media liability front.

 

2. Hiring Policies

Another good thing to have in place is a definitive hiring policy.  Again, there are plenty of resources out there to help you formulate this one (here’s a decent example).   The goal with this policy is to set definitive guidelines for prospecting, qualifying, and on-boarding employees.   You want this document to contain clear guidelines for the whole process from the moment a prospect is put in to the queue through their first day of work.  Here are some things to consider:

  • Prerequisites to be considered for hiring
  • Manner in which job openings are posted / advertised
  • Procedures surrounding internal transfers
  • Interviewing process (from screening through each round of interviews)
  • Any required background checks
  • Authorization to present a job offer
  • Any paperwork required post-offer and pre-orientation

 

3. Firing Policies

One of the major risk exposures related to EPLI is wrongful termination. It’s pretty obvious why—nobody enjoys getting fired, and it tends to bring out the crazy in people. Understanding how to reduce risk in these situations is crucial to minimizing the potential for such claims.

Therefore, it’s super beneficial to have definitive procedures in this area: when termination is appropriate, what lines had to be crossed to reach that point (warnings, violations, etc…),  and how the termination is carried out.  For example, you definitely want to have strict access revocation procedures in place so that a fired employee can’t pull an office space and wreck your company from the inside out.

Keep in mind that procedures will differ for termination for cause and without cause.  Here’s a good place to get started with your termination policies.

 Summary

While this is by no means a completely exhaustive list,  this short EPLI risk exposure checklist is a great starting point for most startups.  Of course, it’s near impossible to completely eliminate risk in this area…but that’s what Employment Practices Liability Insurance is for!  Implementing these policies will reduce not only your risk exposure, but also your premiums for EPLI insurance.  Its a double win and totally worth the minimal time investment to implement these changes.

 

Have any questions about how to reduce your liability (employment practices related or otherwise!)? Reach out to us! We’ll be here (646)-854-1058 and here info@foundershield.com eagerly awaiting your contact.


Related Articles

digital health startup risk management
June 5 • Risk Management

How to Implement a Robust Risk Management Framework for Your Digital Health Startup

Shield your digital health startup! Discover a step-by-step guide to building a robust risk management framework. Minimize threats, ensure compliance, and empower growth.

fintech rules and regulations
April 11 • Risk Management

Fintech Rules: Regulations Finance Leaders Need to Know

Master the fintech rulebook! This post breaks down essential regulations finance leaders must understand to ensure their business operates compliantly in the ever-evolving fintech landscape.

fintech legal risks
February 29 • Risk Management

7 Legal Issues Every Fintech Should Avoid (and How to Diffuse Them!)

With the emergence of new and disruptive technologies, it’s no surprise that fintech legal risks abound for this innovative industry. Let’s break down these threats and provide solutions that will keep pace with the market.

leverage business insurance
February 27 • Risk Management

How to Leverage Your Business Insurance — 5 Tips

When was the last time you considered how to leverage your business insurance? It’s more than a safety net. In fact, this approach can give you a unique edge. Here’s how.

talent acquisition for startups
February 15 • EPLI

How Talent Acquisition for Startups Can Impact Risk Management

Talent acquisition for startups can be a deciding factor toward success or failure for the company. This post reviews the intricacies of this endeavor and tips for leaders to navigate it savvily.

saas cyberattacks
December 11 • Risk Management

How SaaS Companies Can Avoid New Cyberattacks in 2024

Avoiding SaaS cyberattacks means teaming innovative technologies (like AI) with traditional risk management (like education) to stay ahead of the curve. We can show you how.