How to Strengthen Your Employment Practices Risk Management

Employers must account for many risks and exposures, including lawsuits and allegations that may arise from within their ranks. They must also adhere to certain legal requirements regarding fair employment, and even isolated incidents in which an employee feels they’ve been wronged could lead to costly employment practices liability lawsuits. Your organization should prioritize understanding these risks and how to curb them.

Employment Practices Liability Lawsuits

If your business or organization is accused of improper behavior or treatment toward employees, subsequent employment practices liability lawsuits could bring significant fiscal and reputational harm. These accusations can come from current and former employees, as well as prospective candidates, and may include the following:

• Discrimination
• Wrongful termination
• Harassment
• Improper hiring practices
• Failure to promote fairly
• Negligent evaluation
• Retaliation
• Mismanagement of employee benefits
• Breach of employment agreement

How to Limit Employment Practices Liability Risks

Assessing and addressing these potential risks should be a top priority for any organization, regardless of size or industry. Specifically, leaders and decision-makers may want to commit to the following strategies:

• Maintain a comprehensive handbook. An employee handbook can be an invaluable resource, outlining key employment-related topics, including acceptable workplace conduct, job expectations and reporting procedures. Make sure this resource is distributed to all employees and regularly reviewed.
• Understand applicable rules and regulations Maintain consistent knowledge of legal requirements regarding employment practices and be sure to update your company policies accordingly. These mandates may change, and it’s your responsibility to be aware and remain in compliance.
• Establish a healthy culture. Your company culture can go a long way in preventing employment practices liability lawsuits. Encourage all members of your organization to report unethical or illegal behavior and ensure appropriate processes are in place to prevent retaliation or suppression.
• Update job descriptions. Regularly review job postings and descriptions to ensure they remain current. Duties and responsibilities may change over time, and failing to document such adjustments could lead to misunderstandings and allegations of improper hiring practices or wrongful termination.
• Document performance. Ensure all formal performance reviews and disciplinary actions are fully documented. Include reasons for actions and steps implemented to remedy the situation.
• Consider insurance options. Even the most careful and diligent employers may eventually face a lawsuit. An out-of-context statement or offhand remark could quickly snowball toward costly losses. That’s where having employment practices liability insurance (also known as EPLI) can be key, potentially saving your business from extensive legal costs and losses.

We’re Here to Help

Contact Lyceum Insurance Services to learn more about employment practices liability risks and how to cultivate an ideal and healthy workplace.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.