Do You Have a No Tolerance Policy?
In 2007, the Equal Employment Opportunity Commission (EEOC)
received 82,792 charges alleging discrimination and/or harassment related to
employment—an increase of 9% from 2006.1
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High Cost of Employment Liability
Former employee alleges discrimination and firing due
to religious conviction: $30,000 in damages and $60,000 in defense
costs.
Former employee alleges sexual harassment by manager:
$42,500 in damages and $91,500 in defense costs.
Employee alleges sexual discrimination: $5,000 in
damages and $26,000 in defense costs.
Note: Claims examples represent the type of situations
and costs that can occur. Potential costs of these types of claims
could exceed $1 million. |
Even though 59% of
filed charges were found to have “no reasonable cause,” monetary benefits
paid for claims resolved through the EEOC totaled $345 million in 2007. This
does not include settlements obtained through litigation in other courts nor
the considerable legal expenses and other hidden costs paid by employers.
Nor does it reflect the harm caused by an accusation of discrimination or
harassment, whether the charges are just or unfounded.2
Think about how a
discrimination or sexual harassment claim would be viewed in your community.
It can be devastating to your reputation and your bottom line. Even if no
damages are awarded, defense costs can often reach $100,000.
Employment Related
Practices Liability insurance can provide assistance with your defense—but
how can you prevent a claim in the first place? To help assess your
company’s situation, consider these important questions:
Does your company have a written “no tolerance” policy for
discrimination/ harassment?
Your employees need to understand the types of behavior that
will not be permitted in your workplace and the consequences for anyone who
commits such acts.
Is your “no tolerance” policy active or buried in a file?
An active discrimination/ harassment policy is crucial. Just
responding to incidents as they are reported will not be a defense. Your
policy should be written—acknowledged by each employee—promoted by upper
management, and communicated frequently. It should be part of your daily
operations.
Do your supervisors and employees understand the grievance
procedure?
Make sure your grievance procedure is appropriate for your
company and that it is communicated effectively. Include posters or signs,
up-to-date bulletins, and notification forms for new hires to sign. If
possible, provide a 24-hour hotline service and hold meetings on
discrimination/harassment topics annually.
Employees should have options for reporting grievances. A
policy requiring that an employee only report to an immediate supervisor is
not much help if the supervisor is the problem. Provide at least two names
or titles of persons to whom grievances may be reported. (If names are used
in your policy, be sure to update this portion of your policy when staff
changes occur.)
How well will your written documentation protect your
company if a claim occurs?
Suppose an employee terminated after 17 years with a company
sues, alleging wrongful termination and discrimination due to age. The
company fired the employee due to deteriorating work performance over the
last several years. Notice without opportunity to improve or change is
typically seen as unfair to the employee. Lack of documentation can be a
major problem and could increase the cost of employment practices claims.
Are you satisfied that employees will adhere to your “no
tolerance” policy?
Are you confident that your managers and supervisors have
received proper training and will keep good written records for you?
It is important to remember that an employer can be held
responsible for a supervisor’s conduct even if the employer is not notified
of the incident. If one of your supervisors fires or demotes an employee who
refuses the supervisor’s sexual advance or discriminates against the
employee, your business can be held liable without any defense. Owners or
top managers may not be excused simply because they had no knowledge of the
supervisor’s actions or even if they have tried to prevent such harassment.
Reviewing your company discrimination/harassment policy,
training and procedures is a good start. You also may want to consult
a qualified legal professional with your questions, as this area of law can
change rapidly.
