Employment Practices Liability Insurance (EPLI) has been garnering serious attention in the past few years, and for good reason...
According to the Society for Human Resource Management, three out of five companies are sued by former employees every year. Other research indicates:
That the number of employment discrimination cases filed in Federal Court has doubled since 1992
Of all cases tried, 56% result in verdicts for the employee
The average plaintiff's verdict in employment law cases exceeds $250,000
That information alone is enough to scare many business owners into making some serious changes in how they do business. It's definitely time to investigate what changes business owners should consider making. If you were sued by an employee, what would happen? Even if you have Employment Practices Liability Insurance (EPLI), you'd still be out your deductible and, more importantly, you'd be distracted from your business to fight a lawsuit.
Here are some of the most common mistakes that lead to employee lawsuits. Are you making them?
Hiring the wrong person. Hiring is hard work and very time-consuming. The tendency is to short-cut a thorough evaluation process to get it over with. But hiring wrong means firing soon; and that means an exposure to a lawsuit.
Poor (or absent) training of supervisors and managers. Managers can have poor communication skills or be ignorant of laws governing employee treatment. If a manager discriminates against an employee, the company will be held liable.
Not asking if there's a problem. Often workplace victims and witnesses are afraid to speak up. So they use the legal system, instead of confronting management. By asking employees if there are any problems, you can solve them before they result in lawsuits.
Ignoring first signs. It's better to risk the embarrassment of asking premature questions than to suffer a lawsuit when it's too late. If you suspect or sense a problem, investigate - keep it private to those involved, but be open about your reasons.
Failing to get help. Get legal and/or human resources advice when you have a situation you're not sure about. Better to be safe than sorry.
Lawsuits can be drawn out, expensive, and distracting. If you don't have EPLI it's time to consider why you might need it. We hope you never have to face an employment practices lawsuit; however, taking the correct measures now could save you a bundle in the future. Give us a call so we can help you protect your business.