Conducting a Legal Risk Assessment

1.1 LRM Investigation

Conducting a Legal Risk Management investigation is of major importance to a company. Many companies have not conducted a proper LRM investigation of its departments to determine what legal risks need to be identified and minimized. It is recommended that initial LRM investigations be conducted in departments that have major dealings with the public or are heavily regulated, as these departments or divisions will have more legal exposure than most.

Human Resources (HR) is a prime example of a department within a company that not only comes into contact with the public, but that in many countries has to deal with many employment laws and regulations. A sample HR audit follows.

1.2 Sample Employment Policies and Processes Audit

I. Audit Objectives

The primary objectives of the audit can be stated as follows:

1. To review current Employment Policies and identify policies that require modification;

2. To gather data that will enable XXX to identify and evaluate the problems and/or issues that appear to be of present concern to the employees;

3. To identify those facts that will aid XXX in determining its relative strengths and weaknesses in maintaining an environment that inhibits litigious activity;

4. To collect sufficient information so that XXX can clearly define any problems that may exist and be in a better position to develop the relevant, feasible, pro-active countermeasures that will help XXX achieve and maintain the level of employee commitment, loyalty, enthusiasm, and general morale that is needed to maintain a productive and efficient work environment;

II. Audit Objectives

During ____________, Risk Management shall employment policies in place at XXX, the current processes in place shall review and conduct numerous private, confidential interviews of employees in supervisory positions (managers, senior managers and vice presidents). The purpose of these confidential interviews is to learn facts and obtain impressions and perceptions of the issues that currently exist at the various locations. The interviewees will be asked a series of open-ended questions intended to allow discussion of any issue or concern which the individual chose to address. The open-ended technique is designed to ensure that the interviewees will feel comfortable and be more willing to discuss the issues of greatest concern to them.

During the interviews, many topics with the interviewees, including their views on the extent of wages, fringe benefits, communication, and working conditions shall be discussed.

The audit will identify issues of concern to supervisors and/or employees as relayed to the supervisors, discuss the ramifications of each issue and consider as to how XXX might best address the issues.

III. Employment Policies and Procedures

A. Policy Review

There are a number of policies that need to be updated and revised to provide direction to the Human Resources department, supervisors and employees.

• Section 1 Employment

Recommendation:

Revise the policies to clarify the Job Posting Policy, the Employee Referral Program Policy and the Employment Termination Policy definitions and explanation.

• Section 2 Performance Management

Recommendation:

Revise the Performance Evaluation Policy to clarify the role of the managers and expand upon the need for regular feedback to employees to avoid issues that can arise with an employee who does not receive regular feedback who needs to be managed through the Corrective Action Plan

With regard to the Attendance and Punctuality Policy, we need to review this in conjunction with other policies in place to ensure consistency.

Several issues regarding policy inconsistencies are discussed in subsequent sections of this report.

• Reward and Recognition

Recommendation:

The Promotions Policy needs to be revised to allow more flexibility within the area of promotions.

• Employee Relations

Recommendation: Several policies in this section require revision.

With regard to the Sexual Harassment and Anti-Harassment Policies, these need to be revised to provide details as required by the law. A clarification of the complaint procedures and examples of sexual harassment are integral components of these policies. Moreover, references to the training requirements should also be incorporated.

With regard to the Affirmative Action Policy, this entire process needs to be reviewed and revised to ensure compliance and accurate data maintenance.

With regard to the Drug and Alcohol Policy, this policy should be revised to ensure compliance with the law. Additionally, consideration should be given to random drug testing within the company.

• Personnel Records

Recommendation:

The policies in this section are in compliance with the current state of the law in the relevant jurisdictions.

• Personnel Records

Recommendation:

With regard to the Security Inspection Policies, although these policies are compliant with the current state of the law, we need to exercise extreme caution if the need arises to implement this policy.

• Health and Safety

Recommendation:

The policies in this section are in compliance with the current state of the law.

• General Employee Information

Recommendation:

With regard to the Business Travel and Expenses Policy, this policy should be revised conform to the current Compliance Policy.

B. Employment Document Review

• Section 3 Compensation and Benefits

Recommendation: A number of policies require revision in this section.

Specifically, the Time Keeping Policy require clarification regarding who can input time changes and the issue of adjustments to non-exempt employee time reports. There must be increased awareness regarding employees who come in early and/ or work through lunch without properly swiping

With regard to the Employee Benefits Policy, this policy should be revised once the relevant plan documents have been reviewed and finalized.

With regard to the Family and Medical Leave Policy, this policy needs to be revised to give further detail and explanation to employees.

With regard to the Personal Leave Policy, this policy should be revised to clarify the terms of the personal leave and its interactions with other types of applicable leaves (e.g. FMLA, disability leave).

• Employment Application Form

This form needs to be modified to rectify some issues regarding the information that is elicited as well as proper waivers for XXX to obtain necessary...