Managing Workplace Risk

Risk management can help businesses protect themselves, their workers, and the public. It can also help companies meet the legal and ethical requirements of providing a safe work environment.

For example, the primary workplace safety and health law that businesses should adhere to is the Occupational Safety and Health Act of 1970. It requires all private-sector employers to furnish a safe workplace, free of recognized hazards, to their employees, and requires employers and employees to comply with occupational safety and health standards adopted by the US Department of Labor’s Occupational Safety and Health Administration (OSHA) division. Compliance with OSHA standards not only can help prevent needless workplace tragedies from accidents but it can also help minimize injury-related employee absences and minimize workers’ compensation and other insurance costs.

Many business owners feel that OSHA’s laws are too complicated and numerous to comprehend. But most of these regulations relate to common-sense tactics and best practices. For example, the regulations require practices like wearing seat belts when driving vehicles or operating machines with seats; ensuring that safe scaffolding and fall protection are in place for employees working at heights; wearing goggles or other face protection during welding or while working with abrasive materials; providing adequate ventilation for workers in enclosed areas where fumes are present; and protecting healthcare workers from accidental pricks from needles and other sharp medical instruments.

In addition to complying with safety regulations, businesses can minimize risk by following federal and state laws relating to employment practices liability risk management. For example, federal laws cover everything from race, age, and gender discrimination to fair labor standards. State laws cover workers’ compensation, employment security, veteran’s hiring preference, and protections for whistle-blowers.

Employment discrimination is a significant legal risk for employers. However, discrimination can be prevented by applying the appropriate procedures in areas such as hiring, promotion, and performance appraisal policies and training managers and supervisors in methods to prevent discrimination in the workplace. According to the Society of Human Resource Management Diversity & Inclusion committee, some of the most common areas where discrimination occurs are age, race, religion, disability, national origin, and gender.

Harassment in the workplace—whether discriminatory or sexual in nature—is another area of significant risk for employers. According to federal and state laws, illegal harassment is inappropriate behavior aimed at individuals in protected classes, which, by federal laws, include age, race, color, religion, sex, national origin, disability, and veteran status. Harassment includes verbal or physical conduct that degrades, belittles, or shows hostility to an individual. Harassing conduct can involve verbal abuse, intimidation, bullying, slurs or negative stereotyping, demeaning jokes, or written or graphic material that degrades or shows hostility toward an individual or a group.

Sexual harassment is a very specific type of workplace risk. The Equal Employment Opportunity Commission, which enforces federal laws prohibiting work-related harassment, defines sexual harassment as unwelcome advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.

Employment practices lawsuits can be extremely expensive and damaging to businesses. However, companies can significantly lower their risk of lawsuits by reducing claims in the areas of wrongful discharge, discrimination, and harassment.