It’s painful to imagine—an employee feels like they’ve been wronged or discriminated against. When this happens, they have the right to sue their employer, even if the accusations are groundless.
It’s not something any business owner wants to experience, but unfortunately it happens more often than you might imagine. According to a report from the Equal Employment Opportunity Commission, more than 84,000 employment practices liability charges were filed against private employers in 2017.
Here’s the even more challenging part: Even if the accusations aren’t true, a lawsuit could leave a business owner stuck with hundreds of thousands of dollars in legal bills. So what might prompt employees to sue in the first place?
Why might employees sue?
Let’s start with a quick recap: Under federal law, it’s illegal to factor in any of these things when you hire, train, promote, pay, discipline, fire or make other work-related decisions, according to the U.S. Equal Employment Opportunity Commission:
Sex (including pregnancy, sexual orientation, or gender identity)
Genetic information (including family medical history)
Claims or lawsuits that accuse discrimination can take many forms. Here are a few hypothetical situations that could present the grounds for an employment lawsuit:
Harassment: An employee’s coworkers continue to use offensive slurs and make derogatory comments, despite the employee asking them to stop.
Deprivation of career opportunity: An older employee isn’t given access to a new training program explicitly so younger coworkers “with more potential” can attend instead.
Religious discrimination: An employee wants to attend religious services, but isn’t given reasonable accommodations to let him swap shifts with a coworker to attend.
Pregnancy discrimination: A pregnant employee on bedrest asks to telecommute for two months. Her request is denied, even though a coworker recovering from hip surgery was permitted to telecommute earlier that year.
Retaliation: An employee files a complaint for discrimination, then is mysteriously disciplined (or even fired) shortly afterward for a supposedly unrelated event.
What Can Employers Do?
As an employer, it is important to be proactive. Start by establishing strong guidance in your employee handbook and ensuring that your team knows their rights and responsibilities at work. Don’t forget to keep all employment records required by law.
If you see discrimination or harassment happening, stop and address it right away to let your team know it’s not tolerated. The EEOC provides this helpful checklist of your responsibilities under federal employment discrimination laws.
Even if you do everything you can to be proactive and fair… you still might be faced with a lawsuit. Are you financially prepared?
Employment Practices Liability Coverage Can Help
Employment Practices Liability coverage, or EPL, is an endorsement you can purchase to add to select, existing Erie Insurance business insurance policies. Most standard EPL insurance policies offer a measure of protection against lawsuits brought against your business by employees alleging wrongful acts (such as sexual harassment or discrimination) or wrongful termination.
Read more about ERIE’s EPL coverage .
By getting to know you personally, your local Erie Insurance agent can provide customized solutions sized just right for your business. Talk to your local ERIE agent to request a quote for Employment Practices Liability or read more about custom solutions for business insurance.
*Coverage and associated services provided under an arrangement with The Hartford Steam Boiler Inspection and Insurance Company. Coverages, benefits, limits and deductibles will vary. Conditions, exclusions and limitations will apply. Refer to our disclaimer for more information. Talk to an ERIE agent for state specific policy information.