Business Owners Beware!
Employment-Related Litigation will be BIG Business for Employment Practice Lawyers in 2009 and Beyond…..
According to the EEOC, Employment Practice related claims were up 15% from 2007 to 2008. Those numbers are expected to increase further in 2009 and beyond. There are several factors that are causing this. Part of it is attributed to the overall decline in the economy and the increase in the national unemployment figures. The other part is due to changes being made under the new administration.
As the economy deteriorates causing more layoffs and the shuttering of many businesses, many employees who are now out of work are looking for other ways to make ends meet. This includes retaining attorneys who litigate (sometimes questionable) employment-related claims on a “contingency” or “percentage of award” fee basis.
Having an aging workforce across the country doesn’t help matters either. Many “baby boomers” are nearing retirement age and many have seen their savings vanish as the stock market has tanked over the last two years.
Already, the new Administration is also sending very strong signals that employment and labor laws will be enforced much more aggressively than in years past. Wage and hour laws and equal pay are high on the list of a very pro-union administration. Laws are being tweaked to allow more class action lawsuits. Business owners need to take notice that “there’s a new sheriff in town!”
Significant changes are about to occur at the Federal level on several fronts: Labor Relations, Equal Employment Opportunity; Wage and Hour; Immigration; and at The Supreme Court.
What Should You Do?
As an employer, you’re now asking yourself; “What should I do?” The answer is twofold: First, become informed. Learn more about the changes that are being planned. Contact your legislators and contribute your voices to the process. Become involved or suffer the consequences. Being part of the process helps to find solutions that work for all parties involved.
Second, ensure that your company’s employment practices and company policies have been reviewed by a competent professional and comply with the current laws. Then ensure that your company enforces and follows those laws to the letter.
It’s also prudent to make sure that you have an Employment Practices Liability (EPL) policy to help you in the event that you are sued. Proper risk transfer is essential unless you’re willing to gamble your company’s future in the event of a loss. A good insurance broker can guide you through these issues, help to educate you and assist you in formulating sound employment practices and policies.
Why Should I Consider Buying EPL Coverage?
In California (especially,) the adage isn’t “if” you’re going to be sued for an EPL claim, but “when.” Many small and even many mid-size companies don’t have the benefit of having HR personnel to keep them abreast of every employment law and those laws are constantly changing. California has some of the broadest labor and employment laws in the nation.
Not only does California lead the nation in the number of employment-related allegations leveled at employers, but half of all lawsuits filed against employers are employment-related. It’s no wonder that California coincidently also has the greatest number of lawyers in any state.
In 1998, the median award for an EPL claim was $75,000. Today, that number is over $250,000! Just defending such a claim, frivolous or not, can often run into the hundreds of thousands of dollars. Prudent business owners recognize that going “bare” is having “exposure” that isn’t wise! At this time, premiums are fairly reasonable so cost shouldn’t be an issue. Deductibles are also at all time lows for most risks.
An attorney who specializes in EPL Law was interviewed recently. He couldn’t have put it better when discussing employment related practice litigation; he said that, “the only people who win (in employment litigation) are the lawyers!” Don’t let this issue catch you off-guard and uninsured.
What Does EPL Cover?
Employment Practices Liability (EPL) covers defense and indemnity costs for claims that typically are not included in a standard General Liability policy. Claims for issues such as:
- Harrassment
- Wrongful Termination
- Discrimination
- Equal Employment
- Wage and Hour violations
- etc.
Generally speaking, employers have EPL exposures any time that they:
- Interview
- Hire
- Do Not Hire
- Employ
- Do Not Employ
- Promote
- Do Not Promote
- Disipline
- Pay
- Terminate
It’s also possible to have “Third Party” claims for actions brought as a result of alleged discrimination and/or harassment of “third parties” or “non-employees” by your own employees.