Employers Take Proactive Approach Against Employee Lawsuits (11/24)

Employers Take Proactive Approach Against Employee Lawsuits

Experts say that despite employer efforts, the number of workplace lawsuits continues to grow. Recent studies show more than 40,000 employment suits are filed each year, with sexual harassment claims doubling since 1991. "Our society, in general, has become more litigious," says Rita Risser, attorney and president of Fair Measures Legal Training for Managers. She notes employees have more rights than ever before due to a series of new laws approved during the last decade.

A new survey of human resource (HR) professionals reveals employers are beginning to take a more proactive approach toward education and prevention. The study, co-sponsored by Ohio-based Assurex International, the nation's third-largest commercial insurance broker, the University of Miami and the American Mediation Institute, found that 86 percent of U.S. companies have created written HR policy manuals; 63 percent have implemented training programs for managers and supervisors; 57 percent have developed employee grievance policies; 51 percent have hired HR managers or consultants; and 48 percent have purchased Employment Practices Liability Insurance (EPLI), protecting them against workers claiming discrimination or wrongful termination based on race, sex or disability.

"Employers understand that treating employees 'like family' no longer helps deter wrongful termination or discrimination lawsuits," says Thomas W. Harvey, Assurex president and CEO. Harvey notes that only 11 percent of survey respondents cited "keeping employees happy" as a viable preventive measure within their companies. "Savvy employers work to prevent problems and resolve disputes before lawsuits are enacted and charges are filed with government agencies," he says.

Ninety-two percent of survey participants identified an open-door policy as an effective alternative dispute-resolution method. Other popular responses include fact-finding (65 percent), formal or informal mediation (50 percent), peer review (34 percent) and formal or informal arbitration (33 percent).

"Employment practices liability insurance is a must-have for today's workplace," insists Harvey. "The cost of EPLI coverage - considerably less expensive than drawn-out litigation - can be further reduced by informed employers working closely with insurance brokers to manage risk aggressively. A hard look at hiring and firing procedures, training practices and grievance policies can help lower EPLI risks and secure better, more cost-effective underwriting," he adds.

Risser disagrees, explaining that the small business owner can take a proactive stance to protect himself against employee workplace lawsuits primarily by hiring the right people. "Be willing to wait until you find someone who says they have a good track record with former employers, then call those employers to make sure. Second, know what your employees' legal rights are, and be scrupulous in following the law," she stresses. Risser also suggests treating employees with respect. "Go beyond the legal requirements and be fair with everyone. In my experience as an employer, employees will give you the benefit of the doubt if they know you care about them," she says. "Although you can buy insurance … it's cheaper just to do the right thing."