Insure This By Bill Velin, Wells Fargo
Employment Practices Liability Insurance – Protection from Your Workforce
mployment Practices Liability Insur- ance provides protection for an employer against claims made by employ- ees, former employees, or potential employees. It provides coverage for alle- gations of discrimination (age, sex, race, disability, etc.), wrongful termination of employment, harassment of any kind, and other employment-related allega- tions. Every year more and more charges of illegal discrimination, wrongful termina- tion, or sexual harassment are filed against employers. Recent legislative developments, such as the Americans with Disabilities Act, the Family Medical Leave Act, and even changes made to the Civil Rights Act back in 1991, have led to a significantly increased business expo- sure to these types of claims. And no company, large or small, is immune. Fortunately, there are steps you can take to help prevent Employment Practices Liability claims. We will outline some steps you can take to reduce your exposure. However, even companies that do every- thing right, are still vulnerable to ground- less or frivolous suits. Therefore, Employ- ment Practices Liability insurance should be an essential part of your overall insur- ance program.
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1. Application and Hiring Process Establish an atmosphere of openness, honesty, and trust begins in the recruiting and application process. Such good inten- tions are often what the Equal Employ- ment Opportunity Commission (EEOC) and human rights judges look for. They can be significant factors in their deci- sions. Therefore, the following proce- dures should be followed to minimize your potential employment practices risk. • Advertise open positions in local news- papers, noting that you are an Equal Opportunity Employer.
• Require applicants to apply for a spe- cific job.
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Fortunately, there are steps you can take to help prevent Employment Practices Liability claims.
However, even companies that do everything right, are still vulnerable to groundless or frivolous suits.
• Obtain a signed job application that includes language stating omissions, fal- sifications, or misrepresentations are grounds for rejection or discharge. • Get permission to verify references. • Do a background check, including criminal convictions, prior employment, and education. • Avoid questions about an applicant’s age, national origin, race, sex, religion or disabilities.
• Keep any of this information obtained strictly confidential.
• Include employment-at-will language in all hiring letters.
• Be brief and direct in rejection letters. • Ask whether the applicant can do essential tasks with or without reasonable accommodation.
2. Develop an Employee Handbook It is important that you clearly com- municate your personnel policies to employees. An employee handbook is a good way to do this. This handbook does not need to be fancy or expensive to be effective. Here are a few guidelines to fol- low in preparing your handbook: • Clearly spell out your personnel poli- cies in the Employee Handbook. • Do not overpromise or guarantee. • Include a statement such as “nothing in this policy shall be construed as a guar- antee of employment or promise of con- tinued employment.” •Make sure disclaimers are conspicu-
ous. • Include an anti-discrimination/har- assment policy.
• Make an open door policy statement such as “employees are encouraged to
promptly report or discuss their work- related concerns/suggestions with their supervisors, the HR staff, or other man- ager of their choosing.” •Have an attendance policy and admin- ister it fairly and consistently. 3. Manage Employee Problems Establish regular communications with employees and make sure you can clear- ly and consistently explain verbally and in writing what is expected of them. Strive to be fair and accurate in evaluating per- formance or behavior. • Treat all employees consistently. • Approach discipline as corrective and positive – not punitive or retaliatory. • Use progressive discipline for all but the most serious problems.
• Document problems and provide the employee with a copy of the documenta- tion.
• Establish a schedule for regular per- formance appraisals. • Be candid and concise in perform- ance appraisal. •Use job-related criteria for document- ing promotions.
There are some specific liability risks that, in the event you are alleged to have violated them, can result in serious judg- ments and awards being made against you or your company. These risks include defamation, disability issues, personal pri- vacy, and sexual and other types of harass- ment. • Defamation – Defamation involves derogatory, untrue comments about a person’s job performance or character which damages the person’s reputation. Take extreme care when advising others
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