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    Insurance | 3 min read

    5 Best Practices to Help Prevent Legal Employment Disputes

    As a business leader, it is important to safeguard your organization from employment lawsuits. In 2020 alone, the EEOC secured $439.2 million for victims of discrimination in the private sector and state and local government workplaces.

    Most employment lawsuits are filed against large corporations, but no company is immune. In this blog post, we’ll share some best practices your company can use to help prevent legal employment disputes.

    5 Best Practices to Help Prevent Legal Employment Disputes

    Your first line of defense against potential lawsuits is prevention. By implementing a few best practices for your company, managers, and employees, you can minimize risk and help avoid situations that can lead to claims of misconduct. Some examples of best practices include:

    1. Implementing an effective hiring and screening program to avoid claims of discrimination during the hiring process
    1. Posting visible and easily accessible corporate policies
    2. Implementing ongoing staff education on all employment policies and providing communication about any updates and changes to your policies as they occur
    3. Clearly outlining steps employees can take if they believe they have experienced discrimination, harassment, or retaliation
    4. Implementing a policy that gives clear direction on how to document incidents and record your follow-up action plan

    As the leader of your organization, it's important that you live by your policies and procedures so employees understand where the company stands on these issues and feels comfortable coming forward if they feel their workplace rights have been violated.

    Protect Your Business with Employment Practices Liability Insurance (EPLI)

    Employment Practices Liability Insurance (EPLI) coverage helps businesses cover the cost of damages and lawsuits resulting from lawsuits filed by employees against their employers, including allegations of wrongful termination, workplace discrimination, invasion of privacy, and harassment.

    EPLI can protect employers against claims of:

    • Discrimination (based on protected classifications including age, sex, race, religion, color, and/or national origin)
    • Sexual Harassment
    • Wrongful termination or discipline
    • Wrongful infliction of emotional distress or mental anguish
    • Invasion of privacy
    • Breach of employment contract
    • Negligent evaluation
    • Employee benefit plan mismanagement
    • Deprivation of career opportunity
    • Failure to employ or promote
    • Retaliation

    Whether large or small, EPLI is one way to protect your business from the potential monetary damages a lawsuit can bring.

    EPLI covers a business against claims by employees that feel their legal rights have been violated. The most common claims include sexual harassment, discrimination, wrongful termination, breach of contract, and failure to employ/promote.

    The cost of an EPLI policy varies based on the type of business you have, the number of employees you have, and various other risk factors. A policy may reimburse the costs of defending a lawsuit in court and for judgments and settlements rendered against your business.

    Keep in mind, this type of policy will not pay for punitive damages or civil or criminal fines, nor will it cover workers' compensation claims.

    Conclusion

    A recent report by Good Jobs found that the overwhelming majority of large corporations—including 99% of the entire Fortune 500—have made payments to plaintiffs in at least one employment discrimination or harassment lawsuit since the beginning of 2000.

    Avoiding employment disputes begins with following proper employment practices. This means, in addition to adequately adhering to all employment laws, clear documentation and dedicated processes are your best friend. A strong statement of no tolerance by senior management from the top down is also key.

    An EPLI policy can protect your business from potentially astronomical damages that could impact your bottom line, as well as your reputation. Begin conversations internally and talk to your insurance provider about commercial insurance coverage solutions that can give you peace of mind in today’s uncertain environment.

    This material is provided for information only. It is not intended as legal or tax advice. You should consult your legal counsel for advice specific to your business situation.

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    Brett Morgan

    Brett Morgan specializes in alternative risk transfer programs, professional liability, Directors & Officers liability, and employment issues centered on protecting clients’ assets. He has an extensive background in understanding property exposures and a customer’s business processes. Brett has taught various seminars on business interruption, protecting your company while conducting business in foreign countries, and protecting your client’s internal controls from theft.

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