Critical Strategies To Limit Harassment and Discrimination Charge Exposure

Harassment and discrimination are dominating the conversation on the news, media, and now, executive meetings. Mainstream coverage of high-profile cases has heightened the collective consciousness of the very serious issues of harassment and discrimination. It has also heightened executives’ anxiety over the legal ramifications for their businesses.

They are concerned with good reason. The EEOC recorded 84,254 workplace discrimination charges in 2017. (This is down from 91,503 charges in 2016.) In Pennsylvania alone, there were 4,516 charges in 2017.

Even false allegations have a high cost: unfounded claims affect office culture, brand reputation, and your ability to focus on growing the business.

In today’s climate, every business leader has the responsibility to create a safe work culture, clearly define procedures to prevent or manage harassment or discrimination complaints, and secure third-party protection from allegations.

What’s Your Exposure?

As a business leader, you make important personnel decisions on a daily basis. From hiring new workers to assigning tasks, each of your decisions affects employees in a unique way. Although these actions are critical to running your business, they also could create exposures that lead to costly claims. Most commonly, the cases covered in the mainstream include the following:

  • Recruitment practices
  • Employment applications and offers
  • Employee orientation
  • Performance and promotion reviews
  • Termination
  • Interaction with the public

Your level of exposure will depend on your team, the practices and procedures you have in place, and the coverage you have to protect yourself. Claims arise out of employee-employer relationships, as well as interactions with the public. Some example scenarios include the following:

  • Current Employees – An employee feels she is getting paid less than a coworker due to her gender or race
  • Job applicants – An applicant feels he was turned down for a job due to a disability
  • Former employees – A former employee was terminated after alerting a supervisor to her pregnancy
  • Public – A restaurant patron charges a waiter with unwanted sexual advances

Small and Medium Business’ Risk

While large brands attract national attention, charges devastate small and medium businesses. Financially, legal and punitive costs feel steeper to a smaller business with less money and fewer resources. From a culture standpoint, people who work in smaller businesses engage with each other more frequently, and any level of harassment will have a disproportionately large impact. Imagine the greater disruption if two employees out of twenty need to be separated, over two employees out of a hundred.

Small and medium businesses might not have an HR team dedicated to keeping pace with changing workplace procedure requirements. This makes it more difficult to stay compliant, as well as more difficult to respond quickly and satisfactorily to grievances.

Strategies to Affect Your Company’s Exposure

Leaders that intentionally build a healthy workplace culture are likely lowering their risk of lawsuits. While many factors contribute to a positive workplace environment, leaders could consider having a diverse executive staff, removing layers of hierarchy within the organization wherever possible, and creating confidential and secure methods for employees to share their concerns with leadership.

There are also risk management practices that can be put in place to help reduce your exposure. Some basic risk management solutions include the following:

  • Verify your Employee Handbook outlines all policies and terms of employment in clear and concise language
  • Ensure your Handbook outlines methods of communicating complaints, and that you provide more than one person who is trained and prepared to address complaints
  • Require employees to sign an acknowledgement form for receipt of the Handbook
  • Have all employment policies, procedures, and documentation templates periodically reviewed by outside legal counsel
  • Develop training for supervisors including interview skills, performance reviews, and a “zero-tolerance” policy

It is critical to work closely with your insurance and legal experts to learn more risk management strategies to navigate the complex and changing world of Employment Practices Liability.

Strategies to Protect Your Company

Even if a company follows all the best practices, it doesn’t mean employees won’t file lawsuits. Every unfounded claim comes at a cost.

A single harassment lawsuit can cost more than $100,000 to defend. This cost comes before settlement or damages are awarded. (Settlements can easily reach six figures, and there are no caps to what a jury can award for damages.) To a small or medium-sized business, these costs can be devastating. But, protecting your company with Employment Practices Liability (EPL) Insurance can soften the blow.

EPL insurance works hand-in-hand with your internal employment practices to provide necessary resources to defend your company against a suit or claim. It safeguards against claims related to discrimination, harassment, retaliation, and wrongful termination. Specifically, EPL insurance provides the following:

  • Coverage for alleged acts – EPL insurance not only protects organizations from wrongful acts, but unfounded alleged acts as well.
  • Timely responses to lawsuits – EPL takes the burden of timely response and the heavy load of paperwork, helping to decrease the amount of time insureds need to spend on the lawsuit.
  • Access to legal help – Strong EPL policies provide the insured with access to legal resources. This can prove invaluable in you need advice quickly.
  • Risk management strategies – Having access to risk management training and human resources consulting can make your company better equipped to avoid claims.
  • Additional protection for your directors and officers – While Directors and Officers (D&O) Insurance can defend against employee-related lawsuits, dedicated EPL insurance is necessary for many organizations. Having a policy that provides separate coverage for lawsuits connected to wrongful terminations, discrimination, invasion of privacy and similar employment claims ensures that the limits on your D&O policy aren’t exhausted unnecessarily.

EPL insurance protects your business against claims and provides you with actionable tools for creating cultural and corporate policies that promote appropriate behavior. Ultimately, you are not only protecting yourself, but your employees and brand reputation with EPL insurance. For an in-depth analysis of your company’s exposure and methods for mitigating that exposure, contact Dave King at dking@horstinsurance.com or call 717-581-9880.

Get started with Team Horst