Bad Hire-Higher Costs

August 6, 2007

A business owner hired a friend’s daughter who recently graduated from college. Her application looked great and the job interview went well. Background checks were waived and she was hired as a sales associate.

 A few months later, other people in the department began complaining about the young woman, claiming she was moody, demanding and rude to the clerical staff. She also expected other salespeople to handle service calls when she wasn’t in the office, which was often. One long-time employee became frustrated with the working conditions and left the company.

In this example, reference checks could have revealed that the employee had been fired from a prior part-time job for the same type of behavior. In addition, a drug test would have uncovered a substance abuse problem.

Business owners can purchase employment related practices liability insurance to protect themselves from lawsuits alleging discrimination and harassment or wrongful termination. However, insurance coverage can’t compensate for the lost productivity, worry, and embarrassment that can result from a regretful hiring decision.

Hiring the wrong person can lead to employee injuries, employment related lawsuits, and higher employee turnover. Federated’s employment practices resources can help you minimize the costs associated with hiring mistakes. Information and sample materials are also available on proper procedures and documentation needed for terminating employees who don’t work out. 


This article provided courtesy of Federated Mutual Insurance Company, your association’s recommended insurer.  This publication is intended to provide general recommendations regarding risk prevention.  It is not intended to include all steps or processes necessary to adequately protect you, your business or your customers. You should always consult your personal attorney and insurance professional for advice unique to you and your business.  ©Copyright 2005 Federated Mutual Insurance Company, All Rights Reserved


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