Any organization with employees is vulnerable to claims of wrongful employment practices, which can result in costly litigation, reputational harm and financial losses. Employment practices liability claims can occur when a current, former or prospective employee believes their workplace rights have been violated. Examples include discrimination based on a protected class, sexual harassment, wrongful termination or demotion, failure to promote or hire, infliction of emotional distress, retaliation for protected conduct and breach of an employment contract.
Employers can implement several measures to proactively address exposures that may lead to employment practices liability claims. These actions can also improve employee morale and productivity and strengthen employee relationships. Strategies to consider include:
- Develop and maintain an employee handbook with thorough policies and procedures that define and address issues that can lead to employment practices liability claims. The handbook should be readily available, reviewed by the HR department and in-house counsel, and outline the organization’s standards of conduct, explaining the disciplinary measures employers will take if those standards are not met.
- Provide regular training on expectations for appropriate workplace conduct, applicable laws and workplace policies. These sessions should also detail how to report issues and emphasize that all allegations will be investigated and taken seriously. Employers should make sure the content, format and frequency of the training meet any specific requirements mandated by legislation, such as workplace harassment and violence prevention laws. New hires should receive this information during their orientation or onboarding program.
- Implement best practices to prevent discrimination during recruitment, such as posting job descriptions that identify essential job functions and comply with all applicable federal and provincial laws, including those related to employment equity, human rights, and workplace safety. Hiring managers should be trained in proper interviewing and hiring techniques and ensure background checks are conducted but not impermissibly utilized.
- Use best practices during the employment relationship by modelling appropriate behaviour and ensuring all workplace policies are enforced (e.g., zero-tolerance policies regarding discrimination and harassment). Employers should also conduct regular performance evaluations where feedback is provided and employees feel comfortable bringing forward complaints.
- Investigate all allegations of misconduct and take them seriously. Policies should prevent retaliation against employees for reporting misconduct, protect the potential victims of harassment and provide resources to victims. Organizations should also rely on outside counsel when necessary. When unlawful discrimination, harassment or inappropriate conduct is found, appropriate corrective action, including disciplinary action, should be taken without delay.
- Create, maintain and securely store documentation related to employment practices and investigations of wrongdoing while complying with applicable Canadian privacy laws, such as the Personal Information Protection and Electronic Documents Act (PIPEDA).
Securing Employment Practices Liability Insurance (EPLI)
Even with robust preventive measures in place, employers may still face employment practices liability claims. EPLI is a specialized policy that can cover the costs associated with these claims and help fill in coverage gaps left by other insurance policies (e.g., general liability insurance). Obtaining EPLI can mitigate an organization’s risks and be an important part of its overall risk management plan.
At CMB Insurance Brokers, we can help you manage all your business risks, including employment practice liabilities. Contact us today to learn more about how we can assist you in setting up the right business insurance coverage to handle EPL claims. Call 780.424.2727 or click here to get a quote.