Well-meaning leaders who are busy with the everyday operation of their business are not aware that the most vulnerable employees, who may be aware of misconduct, may not feel safe in reporting problems. Even leaders who would unquestionably “do the right thing” if misconduct was reported to them often are surprised to find out when something bad happens that one or more of their rank-and-file employees was aware of but did not feel comfortable reporting the issue.
Internal personnel (such as HR professionals) and outside legal counsel, no matter how good they are, often cannot protect the business adequately because they are viewed as biased by those who are subjected to or know of misconduct.
At an alarming rate, former and current employees sue employers for harassment, discrimination, retaliation, wrongful termination, constructive discharge, failure to promote and wrongful demotion. Most employee-driven lawsuits demand tens-of-thousands of dollars for damages, and the costs to defend these claims quickly skyrocket.Lawsuits filed against an employer are fodder for the media, as the implication is that the employer failed to protect their most valuable resource – its employees. Productivity and morale also is damaged when an employer is forced to defend allegations of workplace misconduct or inequities.
Employees often file and win lawsuits without complaining to the employer first. After quitting, an employee may allege the “real reason” for the departure is the hostile work environment or other form of misconduct he or she was subjected to. After termination, an employee may claim that performance declined because of unlawful or unfair work practices.
Former employees often can demonstrate that the employer did not have the policies and training that created sufficient protection and trust so that problems could be reported during the working relationship. In litigation, internal leaders must overcome charges of bias when trying to defend the policies and procedures they put in place for internal reporting, investigation and resolution processes.
Employers typically make the mistake of thinking they adequately protect their employees by publishing policies and reporting procedures. All employers think they have an “open door” policy for employees to report workplace misconduct or problems. The “open door,” however, is not as open as employers may believe.
After having prior EPL insurance claims, employers must demonstrate that improvements have been made to reduce the likelihood of future claims. Proof of independent review and implementation of enhanced personnel policies and practices may be required to obtain or renew insurance coverage.
EPL insurance premiums likely will increase even if past claimants were unsuccessful in litigation, because the employer was unable to deal with matters in-house rather than at the courthouse. At a minimum, showing improvements to EPL risk management programs will be necessary to keep the costs of insurance premiums from increasing dramatically.