EMPLOYMENT PRACTICES LIABILITY
I
t is hard to believe that any
business would intentionally
discriminate in employment based
on race, religion, sex, or any other
protected class. Even so, the laws
exist for a reason, and businesses with
no ill intent can often face legal issues
due to adverse impact discrimination.
What, to many managers, may appear
to be a neutral EEO employment
criterion may actually discriminate
against a class in one way or another.
Intent doesn’t matter; only how it is
interpreted after it happens.
Understandably, if a manager isn’t
intentionally discriminating, then
avoiding discrimination probably
isn’t at the top of their list. Why?
Because it’s something that could
happen that never even occurs to them.
Unfortunately, it’s also something
which cannot be ignored. Damage
claims can be high, and lawsuits can
take years to get resolved.
The job of HR is to ensure that hiring
processes, requirements, and other
factors avoid both intentional and
unintentional discrimination. That
compliance needs to remain intact
through the entire employment
relationship, not just the hiring
process. The bottom line that HR
professionals need to communicate
to managers is that even seemingly
innocent policies can put the
organization at risk of lawsuits.
HR Morning, an organization
presenting news for HR professionals,
has done research on this and found
that the average cost of a lawsuit in
this situation is $125,000. Even more
alarming is the fact that 25 percent
of these judgments are over $500,000
(hrmorning.com/what-discrimination-
charges-cost). This situation is not
limited to hiring or firing, either, and
also includes things like ensuring a
safe and respectful workplace. All of
these things fall into a category known
in insurance terms as Employment
Practices Liability (EPL).
Ultimately, one of the best ways to
avoid issues with EPL is to simply
prevent situations from which it can
arise and make sure everything is well
documented. To that end, here are some
of the best practices that organizations
can follow:
• Keep documents detailing decisions
you have made with personnel. Make
sure to include the reasons for why
these things have been done, with
dates and associated documents.
• Ensure employees know you have
an “open door” policy, or at least
some kind of clear process for
how to report any issues that they
have with their employment. It is
also important to make sure that
employees know they won’t be
punished for doing so.
• Relax. Rash decisions made in the
heat of the moment are often the
cause of these types of problems.
Taking the time to relax and breathe
is often all it takes to handle these
situations with a more level head.
• Don’t post on social media about
employees. With the potential for
things to go viral and get out of hand,
it is better to avoid it altogether.
• Treat everyone equally in the
workplace. Don’t offer anyone
special perks that you aren’t giving
to everyone else. This can include
alternative work arrangements like
telecommuting, etc.
•
Make sure you give clear
expectations to everyone: standards,
timelines, goals, priorities, etc.
While you’re at it, make sure they are
written down somewhere and you
keep track of them. These metrics are
often what can be used to show fair
practices if someone has to be let go.
•
To this end, think about creating
an employee handbook.
• Go through periodic performance
reviews of employees and be sure
to note any issues in the file of the
employee being reviewed.
• New hires pose a higher risk, so
a thorough screening and hiring
program is essential to weed out
unwanted candidates prior to calling
them for an interview.
• Include equal employment
opportunity statements on your
employment application and
ensure you have a statement that
employment will be “at-will.”
• Have a zero-tolerance policy
regarding discrimination,
harassment, and substance abuse.
Beyond this, there is also EPL insurance.
These policies are specifically designed
to cover the expenses of lawsuits brought
about when employees sue over wrongful
termination, discrimination, harassment,
and related issues. Coverage begins when
an employee (or employees) claim that
they cannot complete their work in a fair
environment or that they have had their
rights violated in some way. With such
high-dollar amounts associated with
lawsuits arising from EPL issues, it simply
isn’t a feasible plan to hope for the best.
It’s important to note that this insurance
is not meant to foster an “us vs. them”
mentality between management/
ownership and employees. It, like other
policies, is simply meant to alleviate
some of the risk associated with doing
business. People who sue for these issues
are not inherently malicious. They may
feel legitimately slighted, which is why
following best practices is important.
Does your organization currently have
an EPL policy? If not, you may be at risk.
That risk, again, is present regardless of
the actions you take. Even by taking all
the preventive steps and following best
practices, all it takes is one disgruntled
applicant to cry foul and suddenly you are
stuck dealing with it whether you like it or
not. It pays to be covered. Even on the low
end, not many organizations could easily
deal with the sort of costs that EPL issues
can bring with them.
How much this coverage could cost
depends on a few things: how many
employees you have, whether or not you
have faced lawsuits in the past, employee
turnover, and whether you are currently
following well-established policies and
practices to avoid EPL issues.
To speak with one of our EPL experts and
find out how to prevent any risk to you or
your organization, contact us at 952-941-
9418 or NesbitAgencies.com. +
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