Friday, February 13, 2015

Safety Belts & Airbags for HR Tech

As you contemplate HR tech, think about cars. Cars have revolutionized personal transportation and improved many lives in the past century, but they have also been instruments of death.  In 1974, more than 54,000 Americans died in car accidents while traveling 1.3 trillion miles.  Today, Americans travel over three trillion miles a year in cars, and 10,000 fewer people are killed each year.  Why?  Because of safety belts, airbags, and other safety measures, often created in response to litigation and regulation.

HR tech has the ability to solve real life problems and improve the way we run our organizations. But, like cars, HR tech comes with risk. While the risk involved is not, thank goodness,  a matter of life and death, HR tech has the potential to create liability for employers related to recruiting, loss of employee data, analysis of employee data, monitoring employee wellness, and employee surveillance. Litigation and regulation will likely both increase as HR tech is used in more and more employment decisions. In anticipation of that, we encourage mindful acquisition and implementation.  In short, we’d like employers to add safety belts and airbags to their chosen HR tech.  Here are some examples:

1.         Require Vendors to Follow the Law.  Ask HR tech vendors what efforts they make to follow the law.  How often and by what methods do they test their security measures if the tech is a software-as-a-service solution (SaaS) or requires that employee information be stored by a third party?  How do they verify or validate their product to ensure that no discriminatory disparate impact results from its use?  Consider requiring that service agreements include confirmation of vendor compliance. Vendors should be aware of these considerations and should not be surprised by employers’ attention to them.  

2.         Seek Indemnification.  While the employer makes the final employment decision, vendor technology can limit, shape, or influence the decision-making process.  Employers can ask that a vendor indemnify them for any liability caused by the use of the technology, and  indemnification provisions can be put into a purchase or service agreement.

3.         Train Employees on the Law and the Risks.  It is the employer’s responsibility to make sure that those who use HR tech know what the law requires and how to avoid unlawful outcomes that could arise from its use.  Before they start using a particular software or service,  employees should be informed of the risks related to its use, taught how to use the software or service lawfully, and taught how to document their lawful and appropriate use.  

4.         Consider Insurance.  While not all employment claims can be insured and not all insurance will cover risks associated with the use of HR tech, employers should review their insurance coverage with these risks in mind and ask their carrier or broker about available coverage.

Safety measures like these are tried and true, although you may not have thought of them in connection with HR tech until now. Keep them in mind, and be careful out there.

Posted by: Kate Bischoff