Employment Practices

Employment practices liability cases against employers are on the rise. Employer's "practices" in hiring, employment, and firing can give rise to distinct legal liabilities on a variety of grounds. Federal and state laws including the Americans with Disabilities Act and the Civil Rights Act have resulted in a heightened awareness among employees as to their rights and employer responsibilities. Liability can arise from the pre-hiring process through the exit interview, even if the employee was never hired, or only at the company a few days. Even if the claim is groundless or fraudulent, the defense of a lawsuit is time consuming and resource draining.

It is estimated that three out of five employers will be involved in a lawsuit involving an employment practice. Employment practices liability can be the result of a variety of claims, including:

• Sexual and other forms of harassment
• Discrimination
• Libel and slander
• Wrongful termination
• Failure to promote
• Violations of privacy rights
• Deceit
• Breach of contract.

The first defense against a lawsuit based on an employment practice is a strong awareness of the legal requirements and a commitment to preventing any problems. If problems do arise, an employer should address them before they become a lawsuit. It is much cheaper to avoid a labor or employment issue than to try to contain it after it erupts. Risk management and reduction strategies can be created with the assistance of a knowledgeable labor and employment attorney who can perform a diagnostic checkup of an employer's policies and procedures. Once potential areas of exposure are identified, an attorney can counsel an employer on appropriate changes and in most cases, educate management in methods of liability exposure reduction.

Although competent counsel can provide the most updated risk management techniques to minimize employment practices exposure, the potential of a claim is still an unfortunate reality. The explosion of employment practices litigation in the 1980's led insurers to insert employment-related practices exclusions in Commercial General Liability, Workers' Compensation, Employers' Liability, Excess and Umbrella Liability Policies. Consequently, employers must buy separate Employment Practices Liability Insurance or retain the exposure.

Employment practices liability insurance provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination, wrongful termination, sexual harassment, and other employment-related allegations. It covers the employer, including directors and officers. Although in existence for over ten years, employment practices liability (EPL) insurance has historically been unaffordable for most small to mid-size companies. Over the past several years, however, coverage has become reasonably priced, despite the fact that employment claims continue to rise, and the cost of litigating employment disputes has become more expensive.

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Employment Practices: Liability Checklist

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