Why EPLI is Not Enough

Debra Franklin Business Insurance, Human Resources, Insurance 0 Comments

The United States Equal Employment Opportunity Commission (EEOC) reported that 91,503 charges of workplace discrimination were filed during the 2016 fiscal year. Believe it or not, this number of initial filings is an increase from the prior fiscal year. More staggering statistics reflected the handling by the EEOC of more than 585,000 inbound calls to their free compliance hotline and 160,000 plus visits to enforcement agency field offices.

As a human resource leader and attorney, it has been my experience that many organizations have limited understanding of the way an employee can sue their employer. So often the company rational is that “the employee can’t afford to sue us” or “we are too small, it will never happen to us”.

Consider that an individual can file a charge with the EEOC, the Office of Federal Contract Compliance Program (OFCCP), or the Department of Labor at no cost. Why? Because the charge is a report of alleged violations of laws and regulations these agencies exist to enforce. An individual is simply initiating the process for the government enforcement agency to begin exploring and investigating to see if any wrong doing took place.

Another excuse used is “don’t worry because the company has employment practices liability insurance (EPLI)”. Generally, that can be the best time to remind business leaders that this insurance – while important – is used “after” an event as a reactive tool versus an intentional and proactive strategic approach to risk management of their employment practices.

EPLI insurance is protection for when an event has already happened and is triggered long after steps should have been taken to mitigate the risks and protect the business through proactive and strategic development, implementation, and administration of effective human resource management practices. Also, the EPLI insurance policy does not educate, train, guide, or advise the business on how to manage the workforce and the employees and managers involved in various personnel and employment situations before the problem happens, while the problem is happening, or after the problem happened. In other words, it is not a replacement for effective and compliant policies, procedures, and practices for your workforce.

The top charges filed in fiscal year 2016 included allegations based on race, disability, and sex with the number one charge being retaliation. Retaliation is the action and behaviors of employers against employees who executed their rights to file a complaint against their employer based on their belief that the employer has violated a law or regulation.  Retaliation is illegal – even if the initial claim is found to have no merit or is unsubstantiated. Taking negative action against the employee for filing the claim violates the law and the rights of the individual.

While EPLI insurance is essential, you should also be thinking about how to establish appropriate risk management practices in the form of compliance and effective human resource management policies, processes, and procedures. You need to do this to ensure you are doing everything in your power as leadership to prevent and avoid discriminatory or harassing behavior and actions in your company, and also to educate and train your management team on appropriate actions and behaviors “after” an employee files a charge to avoid the risk of triggering an additional retaliation charge.

In addition to protecting your business with EPLI coverage, you want to perform a compliance audit of your employment practices, identify the gaps, develop a comprehensive corrective action preventive action plan (CAPA), implement it, and then perform periodic reviews for adherence to established policies, processes, and procedures.

It is highly recommended that you utilize a third party to perform the audit for an objective analysis and to leverage subject matter expertise that may not already exist in your company. Regardless of performing the audit with internal or external resources, failure to get a handle on your employment practices and lack of knowledge of problems that exist will not be an acceptable excuse if sued.

Want that guidance and support today? Contact Murray Securus HR Solutions and our subject matter experts by calling 717.381.2118 or emailing us at hrs@murrayins.com.

Source data: https://www.eeoc.gov/eeoc/statistics/enforcement/all.cfm

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