How Organizations Can Reduce the Risk of EPLI Claims

How Organizations Can Reduce the Risk of EPLI Claims

The recent recession saw a rise in employee lawsuits against their employers for such claims as age discrimination, sexual harassment, disability discrimination, racial discrimination, and retaliation. Even if the claims wind up being ruled unfounded, employment practices liability (EPL) cases can be a drain on time and monetary resources for business. EPL insurance policies protect businesses from the financial costs incurred from employment-related lawsuits filed for a range of reasons, from wrongful termination to harassment to discrimination, among other claims. 

Protections Against EPL Lawsuits

In general, the more protection a business puts in place against EPL claims the better internal policies and procedures are implemented, the lower the business’s premiums will be for EPL coverage and the more likely the business will be considered a candidate for coverage. Laying down the foundation with strong training and employee handbook policies is the best place to start. It is also a good idea to periodically institute seminars for management staff on topics such as sexual harassment to help obtain a lower premium rate and make a business a better candidate for coverage. Taking the following steps can help minimize the risk of such a lawsuit arising: 

  • Employee handbook – It’s typically not as important how long or detailed the handbook is as what topics are in there. It should contain the business’s equal employment opportunity policy and provide employees with an internal mechanism to complain about discrimination or harassment.
  • Code of ethics – This policy tells employees that they shouldn’t do certain things, like giving kickbacks and engaging in other ethical violations to reduce the employer’s exposure to punitive damages.
  • Anti-retaliation provision – Include a statement saying that it’s the policy of the business not to retaliate against employees over accusations of discrimination or harassment.
  • Handbook auditing procedures – Having an audit procedure in which the handbook is periodically updated to keep up with changes in the law is important and can help in the defense of a business.
  • Educate management and employees – Train management, supervisors and employees about ethical and legal workplace practices. You may want to include diversity and sensitivity training as part of your employee education program.
  • Hire carefully – Screen employees thoroughly, avoiding any discriminatory practices. Clearly define job expectations for all employees.
  • Regular employee reviews – Review employee performance and keep a written record of reviews.
  • Keep documentation – Maintain written records of all employment-related practices, complaints, investigations, responses and so on.

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