Employee Lawsuits Against Employers on the Rise

No employer, however big or small, is immune to the potential threat of litigation from an employee. The trend of employees suing the organizations they work for is on the rise and showing no sign of abating any time soon. In 2020 alone, there were 1,548 U.S. court rulings on workplace-related litigation.

According to the Workplace Class Action Litigation Report, this set a new record and does not even include the thousands of such cases that were settled outside of court.

How Does Employment Practices Liability Insurance Help?

This type of insurance is intended to protect employers against the financial losses associated with wrongful employment practices liability claims. It is structured to absorb court and settlement expenses, which can be high depending on the extent of the claim (it is not uncommon for employees to claim more than one grievance as part of a lawsuit).

What Types of Lawsuits are Covered?

Employment Practices coverage includes protection against many claims not included under your general business liability plan, which typically only covers lawsuits filed by clients or customers. It will cover the costs of defending a lawsuit in court as well as any expenses associated with judgments and settlements.

Examples of the most common lawsuits filed against employers include:

• Wrongful termination
• Sexual harassment
• Discrimination based on race, gender, or age
• Breach of the employment contract
• Failure to promote
• Wrongful discipline
• Infliction of emotional damage
• Mismanagement of benefit plans
• Failure to provide accessibility or accommodation

Why Every Employer Needs Employment Practices Coverage

It is not just large corporations that face these types of lawsuits. Small businesses and not-for-profits also need to have internal liability controls in place, because they have the most to lose if faced with the financial hardship of an employee legal battle. Being covered against all forms of liability from all potential sources needs to be a focus of your organization’s risk management game plan.

The Cost of this Insurance Policy

Coverage pricing can vary widely depending on the type of business being insured and the number of employees the organization has. Of course, a small business will pay much less for this type of coverage than a large corporation would. Your insurance provider will also look at various risk factors – for example, has your organization faced employment practices lawsuits in the past.

How to Avoid Employee Litigation

Ideally, employers want to prevent these lawsuits in the first place. Insurance is not meant to replace sound employment practices, such as management conflict resolution training, effective hiring and screening programs, and comprehensive workplace policies. Of course, even organizations with the best human resources practices can still face litigation, which is why being insured is key.

If you’d like more information on liability insurance to protect your business and its assets, contact us today at ISU Armac.