Employee staffing firms are a booming industry. From large companies to small, businesses rely upon staffing firms to fill their employee vacancies. It is imperative that staffing firms have employment practices liability insurance to protect themselves from potential lawsuits. As the National Labor Relations Board updates and changes hiring standards frequently, it’s important to know and understand your coverage.
Types of Coverage
Employment practices liability insurance protects against employee-related lawsuits. If your company hires, fires, evaluates, or supervises employees or contractors, you need this insurance. It covers employee claims such as:
- Workplace harassment
- Breach of contract or employee agreement
- Wrongful termination
- Sexual Harassment
These types of lawsuits are on the rise, and without insurance, a judgement against your company could be financially devastating.
In addition to having good employment practices liability insurance, implement a company protocol for hiring, disciplining, and firing employees. Get legal advice on best hiring practices and publish it in a company handbook. Train your employees on these practices and make sure they understand what is expected of them. Practice hiring and firing drills to inculcate your company plan. These steps will mitigate the frequency of lawsuits, but not stop them altogether. Make sure your business is prepared with an insurance policy that cover all contingencies.
Employment practices liability claims have been on the upswing for a long time and even the best of companies can end up being sued for issues such as wrongful termination, discrimination, or sexual harassment. Over the past 20 years, employment-related claims have risen 400%, with wrongful termination suits comprising over half. These types of lawsuits have become so common that most businesses will face one or more at some point in time, with the only questions relating to when, how much will it cost, and how much damage will it do to the company’s reputation.
Reasons for Increase in Lawsuits
In part, due to federal and state legislative efforts to ensure a more diverse workplace, the three original classes of employment lawsuits have expanded to include the following:
- Wrongful demotion
- Failure to hire
According to industry experts, the four most common types of employment practices claims are:
- Pregnancy discrimination claims
- Claims related to unpaid interns – are they employees or not?
- Allegations of illegal background checks
- Using or requesting genetic information from employees or applicants
The size of awards has escalated over time, too, along with the increase in the number of claims.
How You Can Protect Your Company
To reduce costs, smaller or private companies will sometimes forego purchasing insurance. This decision could lead to devastating consequences. Your single biggest line of defense is to carry adequate employment practices liability insurance.
We’ve broken down common risks that the staffing industry might face and provided a staffing insurance solution to reduce that risk in this staffing insurance infographic.