Recent economic, cultural, and legislative developments have left businesses increasingly vulnerable to employment-related litigation. The recession has led to massive layoffs and pay cuts, fostering the spread of discrimination claims. The Equal Employment Opportunities Commission reported a 15% year-to-year increase in filings from in 2008 – and the rate of increase has been growing throughout 2009. Experts see the trend intensifying this year, as the EEOC greenlights litigation based on claims filed during the past two years. Employment law attorney Paul Siegel expects a “tsunami of discharges and therefore claims and threatened claims [leading to] a renaissance of lawsuits.”
Recent accusations of affairs in the workplace by such high-profile personalities as David Letterman, and ESPN commentator Steve Phillips, have highlighted the prevalence of sexual harassment on the job – and the incentive for plaintiffs attorneys to file harassment litigation.
What’s more, two federal laws that took effect last year make it easier for disgruntled employees to sue employers. Under the Lily Ledbetter Fair Pay Restoration Act, discriminatory pay decisions occur with each pay period, making every paycheck a potential start point for a wage discrimination suit. The Americans with Disabilities Act Amendments Act of 2008 makes it more difficult for employers to define such terms as “reasonable accommodation,” “undue hardship,” and “essential job functions.”
To help cushion your business against the impact of discrimination-related litigation in this threatening environment, risk managers recommend these guidelines:
- Maintain, enforce, and update an effective anti-discrimination policy.
- Communicate this policy to all employees.
- Consult with outside counsel before making any significant employment-related decisions (such as pay cuts or layoffs).
- Carry comprehensive Employment Practices Liability Insurance (EPLI).
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