Mitigating EEOC Claims and Employer Risks
By Rowanne Roman, May 21, 2015
Did you know that the moment your company conducts an interview with a prospective employee that you are at risk of an employment claim?
Regardless of the candidate’s qualifications, the rejected candidate can allege that you discriminated against them in your decision not to hire him/her for the position. In Cook and Dupage Counties, an employment claim for ‘failure to hire due to discrimination’ can cost thousands in attorney’s fees, settlement costs, and potential punitive damages to the employer whether or not the claim has merit.
Current employees can make similar employment related allegations that can fall under the ‘wrongful termination’ or ‘retaliation’ charges within the EEOC, Equal Employment Opportunity Commission. When it comes to employment related claims, all organizations, regardless of size or industry, are impacted and if you think such a claim will never be made against your company you may want to read on.
Since 2009, Illinois has averaged over 5,200 EEOC claims per year against employers. Employment related claim parameters continue to broaden, making it is easier than ever for current or past employees to file a claim against an employer with the EEOC. The types of discrimination enforced by the EEOC include:
- Equal Pay/Compensation
- Genetic Information
- National Origin
- Sexual Harassment
For a current or past employee to file a job discrimination lawsuit against the employer, s/he must first file a charge of discrimination with the EEOC. Additionally, if the aggrieved person does not want to be identified, s/he can have an individual, organization, or agency file a charge on his/her behalf. If a claim is filed within the 180-day requirement, mediation may be possible, but if not, an investigation will be opened against the employer. It is then the practical burden of the employers to show that they acted properly and according to the law. Whether the claims are taken to court or settled outside of court, the defense costs and settlement fees can be significant in addition to the time required to adjudicate the claim.
So how can you protect your company from employment claims? For starters, the following actions can be taken to help lower your risk of an employment related claim:
- Review the exposures with your insurance broker and consider purchasing an employment practices liability policy. Some policies today will provide the coverage for free.
- Have a clearly defined job description for each position stating the expectations of skills and performance.
- Establish a screening and hiring program to eliminate candidates that are unsuitable on paper prior to scheduling an interview.
- Conduct background checks on all potential employees.
- Institute a zero tolerance policy regarding substance abuse, discrimination, and any form of harassment. It is also good practice to have an “open door” policy in which employees can report incidents without the fear of retribution or retaliation. A confidential EAP plan may also assist with incident reporting and claim mitigation.
- Develop a record-keeping system to document incidents when they arise as well as what the company did to resolve those incidents.
- Conduct periodic performance reviews of all employees and carefully note the results in the employee file. Employee files should also maintain any reports or incidents involving that employee.
- Create an employee handbook that details your company’s employment policies and procedures for disciplining and/or terminating an employee. Require that all employees read the handbook and a statement be signed to that effect.
Every company in Illinois should consider an EPLI, Employment Practices Liability Insurance, policy that provides coverage for allegations of wrongful acts that can arise from the employment process. The most frequent types of claims are wrongful termination, discrimination, sexual harassment, and retaliation. EPLI is usually written on claims-made basis, which means that the incident that resulted in the claim occurred during the coverage period. The policy premium will depend on various factors including the size of your company, the number of employees, the type of business conducted, the location of the business, the number of claims and lawsuits previously filed, and how long your company has been in business.
The premium is considerably less for companies that have never had an employment related claim in the past. For companies that fit into this category, contact a specialty EPL broker and request a quote for the coverage. For companies that have a policy in place, have it reviewed by a specialty EPL broker to certify that it contains the most recent coverage enhancements available in the marketplace today and is priced at today’s benchmark premium.