Strategies for Employment Practices Risk Mitigation

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Edited November 30th, 2023 by Kyle Langan

Accommodation and avoidance of adversarial relationships

In the event of a complaint filed against an employer alleging wrongful termination, what are employers’ options to finance this loss? The matter may resolve at mediation, where a settlement is negotiated.  Still, wrongful termination is difficult to resolve in low financial ranges, with many above $120,000.  Improper documentation can act as a hazard for employers. A contemporaneous method of documentation and compliance, along with adversarial avoidance are best practices for employment practices risk mitigation. Accommodation is a key strength for avoiding litigated claims, for which the “average jury award is about $250,000; if a case settles, the judgment averages $75,000. And the cost of defense averages about $120,000 per claim. If a business loses its case, it must also pay for the claimant’s legal fees – averaging $200,000” (the Hartford). Luckily, Employment Practices Liability Insurance exists for employers to strategically transfer this risk to an insurance carrier.

Scenarios:

  • Elk Grove, California: Chevy dealership settled a religious discrimination lawsuit against an employee. The dealership failed to accommodate the employee, who was instead harassed, disciplined, and discharged. The settlement = $158,000 loss for the employer (US EEOC, 2013).
  • Tulsa, Oklahoma: a woman won an age discrimination dispute after she was fired, and the CEO characterized her as old and ugly. The settlement = $140,000 loss for the employer (US EEOC, 2013).

If an event caused a suit like one of these to arrive, how would a company finance it? What are the best ways to avoid them arriving in the first place? For help, the author can be reached at kylel@conreyins.com.

References

EPL Insurance: Risks and Exposures scenarios | the Hartford. (n.d.). https://www.thehartford.com/business-insurance/strategy/epli/risks-exposures-scenarios

Kanbar property management to pay $140,000 to settle Eeoc Age Discrimination Lawsuit. US EEOC. (2013, September 6). https://www.eeoc.gov/newsroom/kanbar-property-management-pay-140000-settle-eeoc-age-discrimination-lawsuit

Maita Chevrolet settles EEOC Religious Discrimination Suit. US EEOC. (2013, September 27). https://www.eeoc.gov/newsroom/maita-chevrolet-settles-eeoc-religious-discrimination-suit