As 2013 begins, it is important to consider your firm’s practice from each angle. One factor that is consistently near the top of the list of important – but easy to overlook – risk exposures. This risk is employment practices lawsuits. The Equal Employment Opportunity Commission (EEOC) manages, investigates and prosecutes employment related complaints regarding federal law. The EEOC reported its 2012 findings and the results may indicate trends for what to expect for this year. New complaints in 2012 totaled 111,139 (down slightly from 112,499 in 2011), while resolutions remained just below 100,000 as it has been the previous two years. However, the dollars recovered by the EEOC were the highest ever – $44.2 Million through litigation and $365.4 million through administrative enforcement. This shows that the EEOC may be pursuing larger cases on average and pursuing cases to closure at a more efficient rate.
It is clearly proper for a firm to have no wrongful employment practices. However, with limited resources, it is important to understand what the EEOC may be looking at more critically. With this information, a firm can better decide how and where to invest its capital in order to best protect its firm. Knowing where the EEOC is focusing its efforts can help determine where to spend the additional dollar making sure the firm is in compliance. Based on the notable cases of 2012, Calculated Risk Advisors recommends firms pay special attention to the following areas:
• Hiring Practices – A global beverage company was using previous arrest record if their hiring decision matrix. The EEOC found that this disqualified a large amount of black workers from the hiring process. To settle the issue, the company paid over $4 million dollars.
• Disability Discrimination – An HR practice held by a large trucking company stated that any employee requiring more than 12 weeks of leave would be automatically terminated. After investigation, the EEOC found this rigid rule to discriminate those with disabilities. The trucking company agree to pay $4.8 million to settle the matter.
• Retaliation claims – This occurs when an employee experiences unfair or wrongful practice after filing a complaint within a company. The EEOC is increasingly pursuing these actions.
In order to prevent claims of these types, a firm should include the following employment-related risk management practices in its operations:
• Disparate Impact Studies – Before the implementation of a company policy, perform a study to determine with the policy will impact a certain type of employee greater than the others.
• Release of Liability – Obtain a signed release of liability from an employee who is let go.
• Out-placement services – Provide access to services that assist terminated employees find new employment.
• Avoid Blanket Policies – The EEOC is suspicious of sweeping or broad employment policies and are investigating. Terms such as “any”, “always”, “without excuse” should be avoided.
For further discussion on ways to protect your company from employment practices liability, contact Calculated Risk Advisors today.
