Employment-related claims can arise out of routine workplace decisions. An unsuccessful applicant may challenge a hiring decision, a dismissed employee may allege their termination was unlawful or a pattern of workplace conduct may escalate into a harassment complaint. These and other incidents can result in costly litigation, placing significant strain on impacted businesses. Defense costs alone can reach six figures, and settlements or jury awards can go significantly higher.

Fortunately, organizations can reduce their exposure by understanding how employment practices liability insurance (EPLI) claims commonly arise and implementing effective risk mitigation measures in response. This article highlights five common sources of EPLI claims.

Discrimination is one of the most frequent sources of EPLI claims and can arise from many parts of the employment relationship, including hiring, compensation, work assignments, performance management decisions and termination. Claims typically allege that an employee or job candidate was treated unfavorably because of their membership in a protected class under state or federal law, such as race, sex, age, disability, religion or national origin. Consider the following risk-mitigation measures:

Failure-to-hire and failure-to-promote claims can arise when hiring or promotion decisions rely on subjective criteria or lack documentation. Claims allege that a hiring or promotion decision was made based on illegal discrimination rather than job-related qualifications. Consider these risk-mitigation measures:

Wrongful termination claims are among the most frequently litigated employment practices liability disputes. They can arise when a current or former employee alleges that their dismissal was unlawful, discriminatory, retaliatory or otherwise improper. Implementing the following risk mitigation measures may be advisable:

Harassment claims typically involve allegations of unwelcome conduct or a hostile work environment. Sexual harassment is among the most commonly alleged forms, but claims can also involve race, age, disability and other protected categories. Consider these risk-mitigation measures:

Retaliation often accompanies other employment-related claims. These claims typically allege that an employee was subjected to adverse treatment after reporting discrimination, harassment or other workplace concerns, assisting with a workplace investigation or engaging in another protected activity. Consider the following risk-mitigation measures:

Commercial property insurance claims can arise from a variety of incidents, many of which can damage assets, disrupt operations and hinder profitability. Fortunately, strong risk management practices, proactive maintenance and regular property inspections can help reduce both the likelihood and severity of losses.

EPL claims can arise even in well-managed workplaces, and the cost of defending against them can be high. Fortunately, consistent policies, thorough documentation and regular workforce training can reduce the likelihood and impact of claims while demonstrating due diligence.

EPLI also plays an important role in protecting organizations from claims. This insurance covers defense costs, paying for attorneys and court fees. If a claim results in a settlement or a court award, the policy can cover those payouts, protecting the organization’s cash flow and assets. Additionally, many EPLI policies also provide organizations with HR risk management support services, such as access to employment law hotlines, policy templates and training resources that help businesses reduce their exposure before a claim happens.

For more risk management guidance or to discuss EPLI, contact The MJ Companies today.