Employers have a legal and ethical responsibility to keep the workplace environment free from harassment. Think of it as a “no jerks or creeps allowed” policy.
Federal and state laws obligate them to do so, and adhering to this duty not only ensures compliance but also protects employees, improves morale, and boosts productivity. Plus, a harassment-free workplace means fewer awkward water cooler conversations and more high-fives. A harassment-free workplace also safeguards the company’s reputation and minimizes the chances of facing costly lawsuits. Because let’s face it, no employer wants to be the company known for its harassment issues, nor do they want to face costly lawsuits.
I’ve seen my fair share of lawsuits involving harassment. Over the three decades I’ve been in the insurance industry, I’ve noticed that many business owners are quick to insure their property, autos, workers’ compensation, general liability, product liability, and all those extra coverages and endorsements thrown into a P&C policy. But when it comes to purchasing an Employer Practice Liability (EPL) insurance policy, some tend to roll the dice because they have never had such a costly claim. To better understand the exposure, business owners need to grasp this risk better and understand the litigious society we live in today.
According to the Equal Employment Opportunity Commission (EEOC), harassment is a form of employment discrimination prohibited under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA). Harassment typically involves unwelcome conduct that is based on a protected class (e.g., race, color, religion, sex, national origin, older age, disability, or genetic information), but it can also be based on other characteristics such as educational background or socioeconomic status.
Harassment occurs when offensive conduct becomes a condition of employment or creates an intimidating, hostile, or abusive work environment. It includes slurs, offensive jokes, physical assaults, threats, intimidation, mockery, and interference with work performance. Harassment can be sexual in nature or occur online through cyberbullying or visual media.
Furthermore, harassment can be carried out by a supervisor, co-worker, agent of the employer, or nonemployee such as vendor or customer. A victim does not have to be the person harassed but can be anyone affected by the offensive conduct. Some states may have additional laws regarding harassment.
Now, let’s talk more about employment liability coverage. This type of insurance is crucial for businesses as it protects them from claims made by employees alleging discrimination, wrongful termination, harassment, and other employment-related issues.
Keven Moore works in risk management services. He has a bachelor’s degree from the University of Kentucky, a master’s from Eastern Kentucky University and 25-plus years of experience in the safety and insurance profession. He is also an expert witness. He lives in Lexington with his family and works out of both Lexington and Northern Kentucky. Keven can be reached at kmoore@higusa.comIn the past three years, employment practices liability claims have shown notable trends. Retaliation claims have been on the rise, with more than half of EEOC claims in 2020 involving retaliation. Sexual harassment claims represented roughly 31.7% of all EEOC claims filed. The average cost of employment-related claims continue to increase yearly, along with the time it takes to resolve them.
Additionally, discrimination claims based on protected classes, wrongful termination, and failure to promote or hire have become more common.
According to recent statistics, approximately 10% of small businesses face employment liability claims each year, and the average cost to defend and settle these claims is around $160,000. To keep the costs down for such coverages today, most of these policies come with a large deductibles that business owners have to absorb when faced with a claim.
The median award for harassment claims can vary significantly based on the specifics of each case. According to available data, the median award for employment practices liability claims, which includes harassment claims, was approximately $325,000 [1]. For sexual harassment cases specifically, the average settlement for those who took their case to court was more than $217,000.
To counter this growing trend, employers can implement several measures to prevent harassment from occurring in the workplace. These actions can also improve employee morale and productivity, as well as strengthen employee relationships. Strategies to consider include the following:
• Develop a Comprehensive Anti-harassment Policy – Employers should have a clear anti-harassment policy in the employee handbook that applies to all employees. It should define prohibited behaviors, include reporting and investigation procedures, and emphasize that employees will not be punished for reporting issues or participating in investigations 1.
• Promote a Zero-tolerance Approach – Implement a zero-tolerance harassment policy, clearly stating that any form of harassment is unacceptable and outlining consequences for violations. This reinforces the company’s commitment to preventing harassment and holding violators accountable.
• Hold Mandatory Training and Provide Ongoing Education – Employers should provide tailored training sessions on harassment, covering company policies, acceptable conduct, and reporting procedures. Interactive methods like role-playing and case studies enhance engagement. Managers need specialized training to handle complaints effectively. Ongoing education and periodic refresher courses are essential to reinforce the importance of the topic.
• Foster A Positive Workplace Culture – Business leaders can prevent harassment by fostering a respectful workplace culture, modeling appropriate behavior, creating safe reporting mechanisms, encouraging open communication, and ensuring no retaliation for filing complaints or participating in investigations 1.
• Address All Harassment Complaints Promptly And Thoroughly – Investigate all harassment complaints promptly and thoroughly. Ensure impartiality, confidentiality, and victim protection. Keep complainants informed, utilize independent investigators, and take immediate corrective actions when harassment is proven 1.
Harassment is a serious issue, and employers have an obligation to ensure their workplace is free of it. By taking action to prevent harassment from occurring, employers can protect their employees and their company’s reputation. Implementing risk management strategies and securing employment practices liability insurance can help mitigate these risks and provide peace of mind to employers.