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Your Employee Matters


By June 1, 2009No Comments

According to data from the Bureau of Labor Statistics, the Department of Labor, Jury Verdict Research, and other sources, here’s the current state of employment practices liability exposures:

1. More claims have been filed. As unemployment rates hover around 10%, you can expect close to twice the claims being filed as when the rate stood at 5%. Many people will view the law as an “out,” whether it’s to protect an existing job by filing a frivolous complaint or rethinking their employment situation a few months after they’ve been trying to get a new job.
2. Jury verdicts are increasing. According to Jury Verdict Research, the verdict figure averages roughly $270,000, an all-time high. We expect this trend to continue. Remember, damage awards go up as people find it harder to return to work.
3. The percentage of the employee win rate is up. Traditionally, employees would win roughly 60% to 65% of the cases that went to trial. Approximately 40% of those verdicts are either overturned or reduced on appeal. According to JVR, the employee win rate has jumped to approximately 70%. We would expect that as the courts get more familiar with employment law, the percentage of cases thrown out or reduced on appeal actually diminishes.

There you have it — a triple header of risk. More claims, more expensive claims, and an increasing plaintiff win rate. Imagine your company getting hit with one of these verdicts during these tough times! If it’s one of those $1 million + verdicts, some companies might as well close their doors. Here’s what we’d recommend:

  • Get Employment Practices Liability insurance (EPLI). Despite the rise in exposure, the EPLI market remains soft. Better to buy this coverage now before the underwriting criteria and rates stiffen.
  • Audit your personnel practices. Get your HR act together when it comes to hiring people the right way, preventing harassment and discrimination, and managing leave and disability claims.
  • Update your policies and handbook, and let everybody know about it. If you can show an EPL carrier that you have your compliance act together, you might be able to get a reduction on your insurance rate.
  • Train your managers. All managers should know the basics of discrimination and harassment prevention. Depending on the size of your company, managers should also get ADA (15) and FMLA (50) training.
  • Train your employees. All employees should know the basics of harassment and discrimination prevention, as well as how to file a complaint. They should also know how to request disability accommodation or FMLA leave.
  • Conduct a survey. Make sure that employees understand what’s required of them and find out if any problems are brewing. We encourage HR That Works members to use the Employee Compliance Survey to help eliminate claims.
  • Ask for help if you’re not sure. These laws are complicated and carry huge risks. Smart companies pick up the phone and speak to an employment law expert to make sure that they get their acts straight. Again, we encourage HR That Works members to use the Hotline Service.

We’re the first to acknowledge that you can’t run your business if you’re always worried about getting sued. We also know it’s foolish to take unnecessary risks where the stakes are this high. Follow these steps and you’ll reduce the cost of your EPLI premiums, while avoiding wasted time, expense, and drama in the process.