The Time is Now to Manage Your Employment Practices Exposure
Unfortunately, this area of liability is just getting worse. With the economy still struggling and employment still down, claims have seen significant increases. In 2010, the U.S. Equal Employment Opportunity Commission (EEOC) reported 99,922 charges filed for harassment, and harassment charge receipts filed and resolved were $319.4 million.
As litigation and damage awards continue to rise, it is predicted that employment liability will only become more complex. Employers must limit their exposure by focusing on:
- Desirable Human Resource policies and procedures
- Employment Practices Liability (EPL) Insurance Coverage
EPL insurance works hand-in-hand with your internal employment practices to provide the necessary resources to defend your company against a suit or to pay a claim. However, managing your exposure can save you time (administratively defending a suit can be arduous) and money (deductibles, increased premiums, and payments excess of your limits). The three most common employment-related lawsuits today are:
- Wrongful termination - the discharge of an employee for invalid reasons
- Discrimination - the denial of equal treatment of workers who are members of a protected class
- Sexual Harassment - when a worker is subject to unwelcome sexual advances, obscene or offensive remarks, or the failure to stop such behavior
There are ways an organization can help prevent claims from happening by being proactive as it relates to process and procedure within the company. The first thing an organization must do is conduct an HR audit to review:
- Employee Handbook
- Recruitment and hiring practices
- Disciplinary and termination practices
- Performance review requirements
- Promotion and demotion procedures
- Workplace rules
- Training and supervision of employee
The behavior of your employees and management is critical to preventing claims. As a result, training is a must! What seems obvious to you may not be the case for an employee. It is your responsibility to point out what is appropriate and what is not. In fact, in California AB 1825 makes it a requirement for companies with 50 or more employees to provide 2 hours of Sexual Harassment Training for all managers/supervisors every two years. There is no question that an investment of time and resources up front will help any organization down the road manage their Employment Practices Exposure. Not only will it help defend a claim because of proper policies and procedures, but may prevent the claim from happening at all, and wouldn’t that be nice!