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Liability Risk Review

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Liability Risk Review for March 2013

Managing Employment Liability Claims Part One

Employment Practices Liability (EPL) claims are a leading loss driver for all employers. Schools and colleges are no exception. Despite good faith efforts by administrators, boards and staff, this continues to be a significant exposure.

The U.S. Equal Employment Opportunity Commission (EEOC) reports the number and types of complaints it receives from employees across the country. The EEOC is the federal agency charged with enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit (for example, testifying as a witness for a co-employee). This is known as retaliation. Most states have human rights laws that enhance federal laws; those that do not rely on federal laws to protect workers against illegal discrimination and harassment.

There has been a steady increase in EEOC complaints since 2006, with reported complaints increasing 32 percent from 75,428 in 2005 to 99,412 in 2012. During the same period of time, monetary damages secured by the EEOC increased at about the same rate, from $271.6 million in 2005 to $365.4 million in 2012; a record high for the agency. The categories with the largest number of complaints were: retaliation, race, sex, disability and age.

Wright Specialty’s loss experience with employment practices liability is similar to the EEOC’s national trends. Discrimination and wrongful termination claims based on race, age, gender and disability are the leading causes cited.

Why the increase? 

Different reasons are cited for the upward trend in EPL claims:

• Layoffs increase the likelihood of wrongful termination claims.

• Loss of overtime, wage issues or other negative changes in employment may be done in a real or perceived discriminatory manner; 

• Threats of reductions in force may cause some employees to file unmeritorious charges to try to keep their jobs or get compensation;

• Increased awareness by many employees of their rights under different laws;

• The “graying” of the workforce leads to more employees coming under the protection of the Age Discrimination in Employment Act (ADEA).

Exposures for Educational Institutions

While Wright Specialty’s Educators’ Legal Liability policy is broadly written, it does not cover every exposure related to EPL, such as fines and penalties. In addition, deductibles are paid by the policyholder.

Besides financial issues, litigation based on employment liability is time consuming for the institution, requiring staff time to produce employment records, institutional policies, testify at depositions and trials, and comply with court orders regarding discovery of electronically stored information, such as emails, electronic files, texts, etc.

An institution’s reputation is also at risk. Negative publicity, claims alleging discriminatory practices and indifference or negligence on the part of administrators can result in reduction enrollment and donations, poor morale, defeated budgets and recruitment failures.

Risk Management Program to Prevent Workplace Harassment and Discrimination Claims

There is no one, singular risk management program that fits all institutions. Each institution has its own unique risk profile based on its local environment, management, staff, customs and circumstances. However, meaningful risk management programs address workplace-based harassment and discrimination as they exist through the employment process:

1. At the start:  Fair and legal interviewing

2. Stating the Rules:  Practical, up-to-date  anti-harassment and discrimination policies

3. When a Complaint is Made:  Workable complaint procedures, fair investigation protocol

4. Reinforcing the rules:  Anti-harassment and discrimination training for staff

5. Ensuring a fair workplace:  Anti-retaliation measures

To help our policyholders control this exposure, Wright Specialty Insurance is launching a series of articles and webinars on employment liability. This edition of Liability Risk Review will cover ways to ensure a work environment where all employees can perform their duties without being subject to harassment or discrimination. The next issue will cover legal liability exposures arising during the interview process.

Fair and Equal Work Environment

Regardless of how well designed a risk management program may be, success is doubtful if it is being implemented in a workplace that does not support an open, fair environment. As with other workplace issues, management — educational administrators (such as superintendents, heads and presidents) and board members — must set the right tone. Some points to consider:

What is your organizational culture?

Organizational culture is the way in which employees think, perform, act and perceive their workplace as a whole. Culture develops among employees as the customs, practices and social behavior of the group. It is demonstrated through the organization’s vocabulary, stories, traditions, structure, processes and communication networks or systems. If the organizational culture of your institution permits harassment, discrimination or workplace-bullying — through neglect, a laissez-faire style of management, ignoring bad behavior, institutional habit or tradition — no group of policies, programs or training will compel change. How do you measure this? Review past incidents, complaints (both internal and regulatory) and employment-based litigation. Ask employees. Check the “grapevine.” Competent managers also have a sense of what is taking place within the organization. See what is being mentioned during employee exit interviews.

Making changes.

Making changes is much easier said than done, unless your institution is small and teaching is done in one or two locations. Consider the following:

1. Set the right tone. Employees look “up” in the organization for leadership. Administrators or board members, who tolerate, ignore or actually engage in unwanted behavior, set a terrible example. They also generate significant reputation risk.

2. Investigate complaints quickly and thoroughly. If action is needed, it can be implemented quickly. Prompt action sends a message that the school or college takes employee complaints seriously.

3. Look into departments or units with a history of problematic behavior. Monitor them regularly.

4. Don’t tolerate workplace bullying. Although it may not be illegal per se, it sets a poor example, and if escalated, it can develop into illegal harassment.

5. Make sure front-line managers are trained and are complying with policies and procedures. These employees are typically the first supervisors to recognize a problem.

6. Enforce acceptable use polices (AUPs). Policies should indicate that all employer-provided devices (e.g., PCs, laptops, tablets, smartphones and networks) are the employer’s property; they can only be used for school or college business, and employee use of such property for criminal activity must be strictly prohibited. If personal use is allowed, the parameters for such use must be clearly explained.   

7. Enforce social media policies. Employees using institution-sponsored social media and equipment to harass other employees or members of the community present a clear risk to the school or college as the employer. Employees using social media outside of the workplace may post harassing and discriminatory comments or cyber-stalk others. This may pose risk to the institution as well. Social media policies must unambiguously indicate what is and what is not permitted. First amendment (free speak) issues can be addressed with language provided by counsel. In both AUP and social media policies, indicate that employees have no reasonable expectation of privacy when using employer-provided devices or using personal devices on employer provided systems and networks.    

8. Establish protocols to monitor emails, texts, and website activity on employer-provided networks and IT equipment.

 

The information about preventing workplace bullying was taken, in part, from:  7 Steps to a Bully-Free Workplace- How to deliver a culture of civility to your organization. This document is at: http://noworkplacebullies.com/yahoo_site_admin/assets/docs/7_Steps_to_a_Bully-Free_Workplace___Whitepaper.23222944.pdf

Additional reference material about employment liability can be found on the Wright Insurance Group website at: http://www.wrmamerica.com/producers/resourcecenter/faq.htm