Two New Areas of Employment Litigation

Leap | Carpenter | Kemps Insurance Agency | Jun 16, 2020 | minute read

Whether you are a large corporation or a small business, the employer/employee relationship has changed. In today’s world, employers can no longer assume all employment relationships will go smoothly. Employment claims can be distracting and emotional for business owners. They may feel betrayed by employees they've known and trusted.

Finding a suitable Employment Practices Liability Insurance (EPLI) program has become one of the single most important things owners and managers can do.

There are two new areas of Employment Practices Liability (EPL) concerns of which you need to be aware:

  1. Improper Employee Evaluation - This is a one of the fastest growing kinds of EPLI claims. Employers who do not have any sort of performance review process, or do not have a thorough process can be sued. An employee may make a claim of negligent evaluation if the employer does not conduct fair and accurate reviews. An employee may also claim failure to promote if he or she is inaccurately evaluated or unfairly passed up for a promotion; often this is related to sex, age and race.
  2. Improper Hiring - It may be hard to believe, but people who you don’t hire can sue you for not hiring them, if they believe the hiring process is not legal. Employers can face employment practices liability over the way they post the job or conduct the interview. Employers need to manage the hiring process to eliminate any discrimination in the language, application, and interviews.

Employment Practice Liability Insurance

Employment Practices Liability Insurance (EPLI) is designed to help employers respond to growing EPL exposures. An EPLI policy covers claims made against directors, officers, employees, the company and its subsidiaries. The policy can cover wrongful dismissal/termination, sexual/racial/disability harassment, sexual/racial/disability/religious discrimination, employment related libel, slander, defamation and invasion of privacy, wrongful failure to employ or promote and retaliation.

Reasons To Secure EPLI

  1. Harassment & Emotional Distress Claims. A manager at a company party made racial remarks to a coworker. Other managers did nothing to assist the employee. These remarks continued for over a 10-minute period of time. The employee filed a demand in the amount of $250,000 for emotional distress resulting from harassment.

  2. Pregnancy Discrimination Claims. A top sales leader announced her pregnancy. A few weeks later she was not invited to a golf outing with clients and prospects to which she had previously attended, and management reassigned her top prospects to a junior sales rep. When she inquired about this, management replied that they assumed, due to her pregnancy, she would not be interested attending this event. After she received a much smaller bonus than in previous years, the associate filed a claim for pregnancy discrimination with the EEOC. The claim was settled for $125,000.

  3. Hostile Work Environment Claims. A married manager of a heating company had an affair with one of his administrative assistants. The assistant ended the affair and was terminated a month later. The assistant then filed an EEOC charge against the firm and the manager, alleging a hostile work environment and retaliation. The case was settled for $325,000.

  4. Many Insurers Offer Free Legal Help. You can call an attorney to help you through a tough issue.

Company reputation is at stake. A company’s reputation in the marketplace can be severely damaged by employment practice claims. The negative publicity may be followed by potential reluctance of your clients and/or suppliers to trade with the company.

Share This Blog

Like our content? Subscribe to Our Blog!


Related Articles

About The Author

LCK Insurance Agency is one of California's most prominent independent insurance agencies. They offer commercial business insurance, employee benefits, life & health insurance, and personal insurance.

Need more Specific Advice?

Tell us about your exposures, and we'll write an article about how we would mitigate your risk.