Running a restaurant business has its share of moving parts, like ensuring customers are happy, the food is top-notch, and your staff is well-trained and motivated. However, one area often gets overlooked behind the scenes: human resources (HR). From hiring to managing employee issues, HR can be a complicated and potentially costly aspect of your business if not handled correctly.
Mistakes in HR management can lead to legal disputes, financial penalties, or even a damaged reputation. Luckily, restaurant insurance coverage can help mitigate some of these risks. In this blog, we’ll look at some of the most common HR mistakes that could cost your restaurant and how having the right insurance coverage can protect you.
1. Not Properly Training Employees
It’s easy to assume that new hires will pick things up quickly, but failing to provide proper training can lead to costly mistakes. Employees who aren’t adequately trained may not follow health and safety regulations, which can result in fines or lawsuits. Additionally, poor training can lead to workplace accidents, disputes, or damage to your business’s reputation.
How Insurance Helps
The right workers’ compensation and general liability insurance can protect your restaurant from the financial fallout of workplace injuries or accidents caused by poorly trained staff. It can cover medical costs, legal fees, and lost wages in case of a workplace injury.
2. Ignoring Labor Laws and Regulations
The restaurant industry is subject to various labor laws and regulations, from wage and hour laws to OSHA requirements. Failure to comply with these laws can result in hefty fines, penalties, and lawsuits. For instance, underpaying employees or misclassifying workers as exempt can lead to wage theft claims, which can be expensive to settle.
How Insurance Helps
Employment Practices Liability Insurance (EPLI) can protect your restaurant if you’re faced with allegations related to wrongful termination, harassment, or wage and hour disputes. This type of insurance covers legal fees, settlements, and judgments, helping you navigate costly legal battles that could arise from HR-related mistakes.
3. Not Documenting Employee Performance Issues
Sometimes, restaurant managers and owners fail to document performance issues with employees, hoping they’ll resolve themselves. Unfortunately, this can lead to more significant problems, particularly if you need to terminate an employee. Without a documented trail of performance issues, the employee may claim wrongful termination, potentially resulting in a lawsuit.
How Insurance Helps
While insurance won’t directly fix a lack of documentation, EPLI can help cover legal costs if you’re accused of wrongful termination. Good HR practices, like keeping detailed employee performance records, can help protect your business from legal action, and insurance can help cover those costs if things go wrong.
4. Hiring Without Proper Screening
When running a busy restaurant, rushing through the hiring process to fill a position quickly can be tempting. However, failing to screen candidates properly—whether conducting background checks, checking references, or verifying employment history—can lead to dangerous or unqualified hires. This can result in workplace theft, harassment issues, or even liability for injuries caused by an employee’s incompetence.
How Insurance Helps
Liability insurance can help protect your restaurant from damages caused by negligent hiring practices. Insurance ensures your restaurant is covered if an employee’s actions lead to harm or damage. Additionally, employee dishonesty coverage can help protect your business if an employee steals from the company.
5. Failure to Address Workplace Harassment
Workplace harassment is a serious issue in any industry, but it’s particularly relevant in the restaurant business, where employees often work closely together in high-pressure environments. Failing to address harassment—whether it’s sexual harassment, bullying, or discrimination—can create a toxic work environment, lead to lawsuits, and tarnish your reputation.
How Insurance Helps
If an employee claims harassment or discrimination, EPLI can help protect your restaurant from the financial impact of a legal battle. While restaurant business insurance doesn’t prevent harassment, it can cover your legal fees and any settlements or judgments resulting from these claims. Having clear policies and a culture of zero tolerance for harassment is crucial to preventing these claims from occurring in the first place.
6. Neglecting Employee Benefits
Offering competitive employee benefits can help you retain top talent in the competitive restaurant industry. But if you don’t provide employees access to things like health insurance, retirement plans, or paid time off, you risk losing skilled workers to competitors offering better benefits. In some cases, failure to provide certain benefits may also violate state or federal laws.
How Insurance Helps
Health insurance is not only good for employee morale but also often a legal requirement, depending on your restaurant’s size. Having the right employee benefits insurance can help ensure compliance with regulations and keep your workers happy and healthy. In addition, business interruption insurance can help your restaurant survive financially if you experience unexpected setbacks, allowing you to provide essential employee benefits.
7. Not Having an Employee Handbook
An employee handbook is crucial in setting clear expectations, outlining policies, and creating a cohesive workplace culture. Without one, employees may not understand the rules regarding things like time off, dress code, or conduct. In a dispute or HR issue, not having a formal handbook could make defending your restaurant in court more difficult.
How Insurance Helps
While an employee handbook isn’t covered by insurance, having one can help your business avoid HR mistakes in the first place. When employees understand the rules, you can avoid issues that lead to costly claims. If legal action is taken against your restaurant, insurance can cover the legal costs related to the dispute.
Keep Your Food and Beverage Business Protected & Thriving with Restaurant Pro Insurance
HR mistakes can be a significant headache for restaurant owners, but they don’t have to derail your business. By staying on top of labor laws, training employees properly, and maintaining a positive workplace culture, you can avoid costly mistakes that could put your restaurant at risk. And when things go wrong, the right restaurant liability insurance can provide the coverage you need to protect your restaurant from financial disaster. From workers’ compensation to liquor liability insurance, commercial auto insurance, EPLI, and general liability, restaurant insurance is essential to mitigating HR-related risks.
Stay proactive, protect your business, and ensure your restaurant can thrive—no matter what comes your way with Restaurant Pro Insurance. If you need help navigating your insurance options or want to learn more about how insurance can protect your restaurant, reach out today!