Any type of industry or business that involves hiring employees can be a potential target for an EPLI claim. Employee Practices Liability Insurance, or commonly referred to as EPLI, is a type of liability insurance that aims to cover for associated defense expenses and damages resulting from wrongful deeds throughout the duration of employment. These acts include wrongful termination, sexual harassment, retaliation, and discrimination. Staffing agency EPLIclaims can be emotionally and financially draining for any staffing company. Additionally, these lawsuits can also lower company morale. This is why steps should be proactively taken to keep EPLI claims at bay.
What Are The Common EPLI Claims Staffing Firms Should Avoid
With the increasing trend for EPLI claims, the Employment Opportunity Commission or (EEOC) has reported receiving about 200,000 cases every year. These claims don’t just occur periodically, they are more of an inconvenience to your client’s staffing firms. To prevent such claims, here are the most common EPLI claims that companies are facing at present.
Failure to employ or promote
One of the most common allegations filed under the EPLI is the failure to employ or promote for the protected classes. Protected classes are identified and are enumerated in the Americans With Disabilities Act or ADA. The list includes blindness, deafness, and epilepsy to name a few. If a promotion or employment did not push through because of an ADA-related condition, a claim may be filed for such.
Unfavorable treatment throughout the duration of employment because of skin color, gender preference, religion, nationality, or age falls under discrimination. There are various ways that employment discrimination can occur. An example of which may be pay disparities amongst equally qualified employees of the same position or prohibiting the use of certain facilities for a particular group.
Another common EPLI claim that has shown an increase over recent years is sexual harassment. With the help of campaigns such as the Me Too Movement, there has been a significant rise in the number of sexual harassment cases. Sexual harassment in the workplace can be physical, verbal, or both. These can include name-calling, sexual jokes, touching, or any other forms of unwelcome bodily contact.
Retaliation has also revealed an increase in claims and is now labeled as another common EPLI claim. This happens when an employee is punished for filing a report alleging wrongful acts resulting in salary cuts, demotion, sudden job reassignment, or withholding of mentoring privileges and training opportunities. Prevalence of retaliation in the workplace would result in more unreported cases of discrimination.
Employee misclassification is also a common claim under EPLI. There are varying reasons for employee classification. However, if the job requires the same duties to be performed, the same compensation should also be provided regardless of the classification.
Disciplinary measures should not be used as punishment for employees. These are designed as a way to achieve performance improvement. There should always be an appropriate assessment and sufficient reason for any disciplinary action.
Wrongful Termination of Employment
Any act of employment termination done in breach of the federal, state, or local laws is considered as wrongful termination. This is also a frequent claim recorded under EPLI. Scenarios such as being terminated before the expiration date indicated on the employment contract can be grounds for filing a wrongful termination claim. In addition to that, termination without undergoing the proper procedure of receiving corrective actions or warnings can also be a reason for an EPLI claim. Aside from alleged wrongful termination, these scenarios can also include breach of contract, discrimination, and retaliation claims.
From the moment that a staffing firm starts the pre-hiring steps up until the execution of the exit interview, there is the potential risk of encountering an EPLI claim. Facing such claims can be time-consuming, draining, and costly since laws regarding employment are complicated and may vary depending on the jurisdiction. Establishing a reliable employee guideline, reviewing potential risk exposures, and creating an effective system for the record-keeping employment-related issues are just some of the steps that a company can implement. With the increase in the number of reported cases as observed in the past years, it is best for staffing firms to undertake these preventive measures to avoid potential claims.
About World Wide Specialty Programs
For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage, we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.