What's Trending in Employment Practices Litigation?

Posted by Gaiyan Wu on Mar 22, 2016 11:00:00 AM

steve_carell_the_office.jpgAs a small business owner, you’ve probably thought you didn’t need Employment Practices Liability Insurance (EPLI). Nobody sues small businesses or their owners, right? Well you may not want to gamble your business on that assumption. A business is far more likely to file an Employment Practices Liability claim than a General Liability or Property Claim, yet many businesses forego the EPLI coverage while they wouldn’t consider going without coverage for fire.

Over the last 20 years there has been a 400% rise in employee lawsuits. Today, more than 40% of EPLI claims are filed against small employers – those with less than 100 employees. Of those lawsuits, wrongful termination suits have risen over 260%. The average jury trial awards $217,000 to employees while the average cost to settle an employee lawsuit out of court is $75,000. This is all important information to consider when deciding whether to purchase and EPLI policy with an average cost of $2000 - $4000 for a business with 25 employees.

The top trending employment practices litigation cases are:

  • Unpaid internships
  • Illegal background checks
  • Pregnancy
  • Health-related employment discrimination

New or growing sources of claims include:

  • Wage and hour claims. These claims brought under the Fair Labor Standards Act against employers regarding overtime and minimum wage laws. Due to the law’s complexity and the recent changes, employers may not even be aware that they are breaking the law.
  • Discrimination based on sexual orientation. On March 1, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) announced that it has filed its first two discrimination cases based on sexual orientation.

So what can you do to protect your business and limit your risk?

  • Provide job descriptions and define expectations for employees
  • Hire carefully and set up a hiring or screening process to evaluate employees avoiding discriminatory practices
  • Educate Management and Employees about ethical and legal workplace practices.
  • Maintain clear written policies regarding employment practices, including one detailing how employee can report concerns and how management can respond.       Policies should be published for all to access in an employee handbook.
  • Perform regular employee reviews.
  • Maintain written records of all employment related practices, complaints, investigations, responses, etc.

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Topics: EPLI

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