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.
Because her employer provides sick-time benefits, she calls the store manager and tells him she cannot work that day. He 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 cannot 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, and Norma files a complaint with the Equal Employment Opportunity Commission (EEOC).
Complaints like this have become more common during and after economic downturns. The EEOC has reported higher volumes of job-bias and retaliation claims in periods when employees face difficulty finding new work.
Some employers respond by doing the minimum for legal defense: they write anti-discrimination and anti-retaliation policies into handbooks, make supervisors attend training once a year, and then consider the job done. Those steps alone may not prevent problems if managers do not enforce policies consistently.
Training that does not address current patterns of discrimination and retaliation will not stop these behaviors. If employers do not monitor whether training actually changes supervisors’ behavior, 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 will look at an employer's policies and training practices and will also consider its claim history; employers in some fields compare coverage options such as Employment Executive Search Agencies Insurance to evaluate limits and exclusions.
Preventing claims and lowering insurance costs
- Study the financial impact of claims. Look at settlements, legal costs, time lost to litigation, workplace morale, and any increase in insurance premiums.
- Ensure you have clear, strong policies against discrimination and retaliation, and make them easily accessible to employees.
- Require supervisors and managers to attend meaningful training that discusses what is and is not permissible, and include evaluations of discriminatory behavior in performance reviews.
- Create a workplace culture that does not tolerate illegal activities; senior managers should model the conduct they expect from subordinates.
Experts say economic downturns tend to produce more discrimination complaints, but that trend is not inevitable for every employer. Effective training and consistent enforcement cost money, but those costs are typically far less than insurance deductibles, higher premiums, demoralized workplaces, and damaged reputations.
Employers who rely on temporary or contract staffing should review industry-specific options and consider specialized coverage such as Employment Temporary Services Agencies Insurance when assessing overall risk management.
If you need help understanding policy options or next steps, consider reaching out to your broker or talk to an agent who can review coverage gaps and compliance practices with you.
Frequently Asked Questions
What counts as retaliation by an employer?
Retaliation includes adverse actions an employer takes because an employee complained about discrimination or exercised protected rights, such as demotion, termination, or hostile treatment.
What is Employment Practices Liability insurance?
It is a policy that helps cover legal defense costs and settlements when an employer is accused of wrongful employment practices like discrimination, harassment, or retaliation.
How can small employers reduce the risk of claims?
Maintain clear policies, provide meaningful training, document performance issues carefully, and enforce rules consistently and fairly.
When should an employee contact the EEOC?
An employee should consult the EEOC or equivalent agency when they believe they have experienced discrimination or retaliation and internal resolution has failed or is not possible.