Norma is an assistant manager at a video store. After feeling very sick for a couple of days, she goes to the doctor and is diagnosed with strep throat. Since her employer provides sick time benefits, she calls the store manager and tells him she cannot work that day.
The manager dismisses her illness as "just a sore throat" and orders her to report for work. She complies, but the strep infection takes most of a week to go away because she could not rest. On the third day, she calls in sick again despite the manager's obvious displeasure.
Six weeks later, the manager terminates her employment, citing declining sales as the reason. Norma believes otherwise and files a complaint with the U.S. Equal Employment Opportunity Commission (EEOC).
Since the great recession began in late 2007, complaints like this have become common. The EEOC reported that it received almost 100,000 job-bias complaints in 2010. Employment law experts say the recession and increased enforcement have contributed to the rise, and they also point to internal problems with some employers.
Some employers may do only the minimum they think will provide a legal defense if an employee sues. They write anti-discrimination and anti-retaliation policies into handbooks and make supervisors attend training once a year, then take no further steps.
Policies do little good if managers do not enforce them. Training that does not address current trends in discrimination and retaliation complaints will not stop those problems, and without monitoring, supervisors may conclude the company is not serious about compliance.
Employment Practices Liability insurance covers an employer's legal liability for wrongful acts against employees, including discrimination and retaliation. Insurance underwriters examine an employer's policies, training practices, and claim history; they will be wary of frequent complaints and may charge higher premiums or deny coverage.
For employers in particular sectors, specialized policies and guidance can be relevant; for example, see Insurance for Employment Executive Search Agencies for industry-specific considerations.
Recommended steps
- Study financial results to determine how much these types of claims have cost or might cost in the future in settlements, legal fees, lost management time, diminished morale, higher insurance costs, and reputational damage.
- Ensure you have clear, strong policies against discrimination and retaliation and that they are readily available to all employees.
- Require supervisors and managers to attend training that includes discussions of what is and is not permissible when it comes to discrimination and retaliation, and make clear that performance evaluations will reflect incidents of discriminatory behavior.
- Create a workplace culture that does not tolerate illegal activities of any kind; senior managers should model the behaviors they expect from subordinates.
Employers can also review insurance options tailored to staffing and service providers; see Employment Temporary Services Agencies Insurance for relevant policy examples and considerations.
Effective training and consistent enforcement cost money, but those costs are typically far less than insurance deductibles, higher premiums, demoralized workforces, and damaged reputations. To compare coverage or discuss options, talk to an agent.
Frequently Asked Questions
What is Employment Practices Liability insurance?
It is insurance that helps cover legal costs and settlements when an employer is accused of wrongful acts such as discrimination, harassment, or retaliation.
How do insurers evaluate my company?
Underwriters review written policies, training programs, management practices, and your claims history to assess risk and set premiums.
Can training reduce the likelihood of a claim?
Yes; effective, relevant training that is enforced and monitored can lower the chance of problematic incidents and support a stronger legal defense if a claim arises.
What should an employer do if an employee alleges retaliation?
Investigate promptly, document actions and decisions, take corrective steps if needed, and ensure managers understand the company's non-retaliation policies.