Five Reasons Employment Practices Liability Insurance is More Important Than Ever

Posted by John Cofini on Fri, Nov 15, 2019 @ 12:11 PM

employment-practices-liabilityIn today’s litigious environment, employers must have employee practices liability insurance. This important policy provides coverage for employee lawsuits over common claims, including harassment, discrimination and wrongful termination. It can cover legal costs including defense and settlements.

While employment practices liability insurance has always been a good idea, several recent trends make it more important than ever. Here are five reasons your business needs employment practices liability insurance now.

Reason One: The #MeToo Movement

Sexual harassment in the workplace is no longer being tolerated. The #MeToo movement has resulted in increased focus on workplace sexual harassment, and this has resulted in an increase in lawsuits.

According to the Equal Employment Opportunity Commission (EEOC), lawsuits alleging sexual harassment increased 50 percent from 2017 to 2018. The EEOC recovered $47.5 million for victims of sexual harassment in 2017. In 2018, that number jumped to $70 million.

Reason Two: The Push for Diversity

The push for diversity isn’t a bad thing. In fact, research from McKinsey has found that companies with diverse executive teams are more likely to have above-average profitability. Diversity is good for your bottom line.

It may also be legally required.

In California, the Women on Boards law will require companies with executive offices in the state to have at least one female director by December 31, 2019. Some companies will be required to have at least two female directors by December 31, 2021, depending on the size of the board.

This increased focus on diversity could result in an increase in discrimination lawsuits, as well.

Reason Three: Reverse Discrimination

Companies that try to hire and promote diverse candidates may think they’re doing the right thing, but depending on how they go about things, they could get hit with claims of reverse discrimination as a result.

According to Forbes, twelve white, male police officers have filed a lawsuit against the San Francisco Police Department over claims of race and gender discrimination.  They say that despite receiving higher scores on the civil service promotional exam, minority and female candidates were promoted ahead of them.

Reason Four: Transgender Issues

Under federal law, employees are protected from discrimination on the basis of race, color, religion, sex, national origin, age, disability and genetic information. The EEOC has interpreted prohibitions against sex discrimination to include discrimination based on sexual orientation and gender identity. 

Multiple cases have shown that employers can be charged with discrimination for mishandling gender identity issues. For example, in separate cases, the EEOC has found that it is discrimination to restrict a transgender woman’s use of the women’s restroom, to intentionally misuse a transgender employee’s name and pronouns, and to fail to revise records after a change in gender identity.

Reason Five: The Generational Divide

On October 29, 2019, the New York Times published an article called ‘OK Boomer’ Marks the End of Friendly Generational Relations. The article is referring to the phrase “OK Boomer,” which younger generations have started using to dismiss criticisms made by Baby Boomers.

The article might be exaggerating a bit when it calls the situation war, but there’s no denying the existence of a generational divide. Increased generational tensions could lead to allegations of age-based discrimination, especially as many aging Baby Boomers are deciding to work past retirement age.

A Final Word

Even employers with squeaky-clean HR practices can be sued and paying for a legal defense can cost a lot. Don’t wait for it to happen to you. Talk to your BNC Insurance agent about an employment practices liability insurance policy today.

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