employment laws

Employment Laws Every Employer Must Know

In the modern business world, the relationship between employer and employee is complex. A range of laws govern the rights and responsibilities of both parties; failure of employers to adhere to these laws can result in expensive regulatory penalties and the potential for legal claims by employees. As a risk management practice to supplement the protections of employment practices insurance, knowledge about certain employment laws is critical. In this guide, we will explore the essential employment laws that every employer must know to protect their interests.

A Patchwork of Local, State, and Federal Employment Laws

Being an employer of others is a challenging landscape. Employers must contend with a wide range of laws on the local, state, and federal levels. Many of these laws grant certain rights to employees or employers, and others mandate the responsibilities of each party regarding time worked, compensation, and other aspects. Applicable laws can be loosely organized into four major groups:

  • Hiring practices
  • Wage and hour rules
  • Harassment and discrimination in the workplace
  • Health and safety guidelines

Gaining a thorough working knowledge of these laws is in many ways a full-time job of its own, which is why human resources departments are utilized by large companies. This is a form of risk management, much in the same way that employment practices law helps to protect employers from the expenses associated with employee-based lawsuits and regulatory challenges. Smaller businesses must do their homework in order to prevent violation of employment laws; a single employment practices violation can negatively affect a small company’s business prospects and financial assets. 

The Family and Medical Leave Act

Of federal employment laws, the Family and Medical Leave Act (FMLA) is one of the most commonly misunderstood. Under the law, employers with 50 or more employees must provide eligible workers with up to 12 weeks of unpaid leave for certain family- or medical-related reasons. Those employers must also hold jobs for those affected by the leave, and those employees must continue to be covered by employer-sponsored healthcare insurance. Violations of the FMLA are common. It is up to employers to adhere to the regulations governing who is eligible and what coverage is extended for affected employees. To protect against abuse of the FMLA, employers must also carefully monitor leave requests and certifying medical/personal conditions. 

The Fair Labor Standards Act

Established for the first time in 1938, the Fair Labor Standards Act (FLSA) was originally created to protect workers against harsh and dangerous working conditions in U.S. manufacturing facilities. The basic law has been amended countless times since 1938 but remains as one of the most critical for employers to understand. The FLSA governs four areas:

  1. Limits on work hours per week
  2. Overtime requirements and compensation
  3. Child labor regulations
  4. National Minimum Wage standards

A single violation of the FLSA can result in a steep financial penalty for employers. In addition, employees harmed by a labor violation may seek legal recourse, potentially costing thousands or even millions in court costs, judgements, and settlements. As a way of protecting against these claims, employment practices insurance and diligence in adhering to the law are essential.

Occupational Safety and Health Act

The Occupational Safety and Health Administration sets workplace safety standards for American businesses. The agency was created in 1970 with the passage of the Occupational Safety and Health Act. Employers must meet minimum guidelines for safety standards, as those employers have a duty to provide reasonably safe workplaces for their employees. In addition, employers must conduct safety training for all employees under the law. 

Laws Against Discrimination

Discrimination in the workplace is illegal, thanks to the protections of several important federal laws and their state counterparts. Three anti-discrimination federal laws stand out in importance for employers. These are:

Civil Rights Act: Passed in 1964, making discrimination based on religion, gender, and race in the workplace illegal. This act stands as the foundation upon which hundreds of other federal, state, and local anti-discrimination laws are based. 

Pregnancy Discrimination Act: Passed in 1978 as an amendment to the Civil Rights Act. This act makes it illegal to discriminate against employees and job applicants based on their pregnancies or pregnancy-related conditions.

Age Discrimination in Employment Act:  Passed in 1967, the Age Discrimination in Employment Act (ADEA) makes it illegal to discriminate based on age in hiring, promotion, and firing of employees. Age discrimination in the workplace had become a serious issue prior to the passage of this act. While violations still occur, the ADEA provides powerful protection to workers. As employers, employment practices insurance and a keen understanding of the regulations in ADEA serve to protect against regulatory fines and legal claims.

No matter the size or type of company, it is imperative that employers gain an understanding of employment laws. Although employment practices insurance provides broad coverage against claims, risk management depends on preserving the rights of employees and adhering to the responsibilities set forth in federal, state, and local employment laws. 

About U.S. Risk

U.S. Risk, LLC. is a wholesale broker and specialty lines underwriting manager providing a wide range of specialty insurance products and services. Headquartered in Dallas, Texas and operating 16 domestic and international branches, U.S. Risk and its affiliates would like to help you access a world of new markets and products. For more information, contact us today at (800) 232-5830.

employment lawsuits

Common Employment Lawsuit Examples to Avoid

In the wake of the COVID-19 pandemic, concerns about employment practices liability have taken on a new urgency for companies across the country. As millions of Americans return to the workforce after being terminated or laid off during the pandemic and as the economy begins its slow recovery, a rise in employment-related lawsuits has alarmed the business world. Not all legal claims are related to hiring practices; in some cases, these lawsuits target employers who were forced to fire or furlough workers. To protect against employment practices liability risks, employers must gain an understanding of common claims to avoid during their recruitment and hiring practices. In this guide, we will explore common employment lawsuits and provide tips on mitigating employment practices liability risks. 

Economic Upheaval and Massive Job Losses

When the coronavirus pandemic first touched American shores, the reaction was swift. Almost overnight, local, state, and federal governments imposed strict lockdown orders. Businesses were shuttered within days and millions of people lost their jobs to termination or were laid off, furloughed, or temporarily reassigned at reduced wages. According to the Congressional Research Service, unemployment figures reached nearly 15%, an unprecedented figure.

While the pandemic still raises health and safety concerns, the economic recovery is underway, and many of the people who lost their jobs are returning to the workforce. As job markets open, so too do the issues of employment practices liability. Employers must be ready to avoid common legal claims, both from those seeking jobs as well as those who lost their jobs to COVID-19’s effects on the economy.

Example #1: Employment Discrimination/Wrongful Termination

Myriad state and federal laws prohibit discrimination in the workplace. Workers and those seeking employment have certain rights under these laws, and most employers follow the rules. Still, lawsuits based on workplace discrimination, retaliation, wrongful termination, and harassment are some of the most common legal challenges employers will face. This is especially true of smaller businesses that do not use a human resources department for hiring processes. Regardless of the size or type of company, it is critical that employers remain in compliance with workplace discrimination laws to avoid employment practices liability risks. 

Example #2: Non-Employment Discrimination

Business owners may face discrimination lawsuits from individuals who are not employees of the company. Lawsuits may be filed by vendors, customers, contractors, and others with a business connection to the company. Companies have a duty to provide their products and services without discrimination; in the face of legal claims against the business, most employment practices liability insurance policies offer protection against this type of lawsuit.

Example #3: Wage and Hour Violations

In addition to the federal minimum wage, laws at the federal, state, and local levels protect employees with regulations regarding hours worked, overtime pay, and compensation for work outside normal operating hours. In many cases, lawsuits claiming a violation of wage and hour laws are filed by those who believe their employer has misclassified the workers as independent contractors or exempt employees. Unfortunately, these lawsuits are not always covered by general liability policies and may be excluded from other insurance coverages such as directors and officers liability or employment practices liability insurance. To remain in compliance, employers must ensure fair compensation that meets regulatory standards.

Example #4: Civil Rights Violations

In the business community, lawsuits filed against businesses are classified as torts, or violations of certain civil rights. Claimants are usually third parties with some business connection to the company in question or may be employees or managers of a given company. Torts may be unintentional, as in claims of negligence, or may be intentional in nature when a specific civil right violation is claimed. Employment practices liability policies do not typically cover torts, but general liability policies may. 

Example #5: Contractual Issues

Contracts between parties are an everyday aspect of business, especially in certain sectors like manufacturing, construction, or those that employ temporary workforces. If the business fails to honor its contractual obligations, a breach of contract lawsuit may be filed. This is a common legal challenge for business owners, and employment practices liability policies or other liability insurance products typically do not cover the expenses associated with this type of lawsuit. Business owners have other protections available to them, including surety bonds. To manage the risks associated with contracts, businesses can:

  • Ensure clarity in contractual language.
  • Follow contracts as described.
  • Develop contracts in adherence with all applicable laws.
  • Conduct background research on any individual who the company may enter into contract with. 

Employment practices liability insurance is an important component of risk management for business owners. By becoming aware of common employment-related lawsuits and the tools needed to avoid them, business owners can continue to thrive despite a sharp rise in legal claims by jobseekers and those who may have been displaced from the workforce by the pandemic.  

About U.S. Risk

U.S. Risk, LLC. is a wholesale broker and specialty lines underwriting manager providing a wide range of specialty insurance products and services. Headquartered in Dallas, Texas and operating 16 domestic and international branches, U.S. Risk and its affiliates would like to help you access a world of new markets and products. For more information, contact us today at (800) 232-5830.

EPLI market

EPLI Market in 2021 Shows Increased Risks

It has been nearly a year since the first recorded COVID-19 case in the U.S. was announced, and the virus continues to take a devastating toll on the country. In addition to the obvious health impacts, the pandemic has had a tremendous effect on the economy, infiltrating nearly every sector. The insurance market is one arena that is beginning to experience the ripples of instability, uncertainty, and increased risks that fluctuating guidelines and rising infection and death rates have wrought.

While industries that were able to move their employees to remote work did so at the beginning of the pandemic, numerous employers were unable to do so due to the nature of the work. In addition, as restrictions lifted, some remote workers were sent back to the workplace. As a result, employers could see a significant increase in claims related to COVID-19. As such, the outlook for the  employment practices liability insurance (EPLI) market shows an increase in risks for 2021.

What Is EPLI?

One question that frequently gets asked is, “Is employment practices liability insurance the same as workers’ compensation?” It is not. EPLI coverage provides employers protection against claims that are filed for wrongful employer practices or acts. There are four major claim categories EPLI policies usually cover, though some policies may cover others:

  • Privacy rights
  • Negligence
  • Discrimination
  • Employment status

What Does COVID Have To Do With EPLI?

At first glance, it may not seem like any of these types of claims would have any relevance to the pandemic. However, there are several coronavirus-related claims that do have the potential to fall within the employment practices liability insurance coverage. One type of case, in particular, could fall within EPLI policy provisions.

While these policies typically don’t cover claims related to injuries or illnesses, they generally cover policy rights infringement cases. This is relevant because when someone in the workplace contracts COVID-19, contact tracing is conducted. During this process, other employees inevitably discover that a coworker has the virus. Thus, claims alleging unlawful disclosure of health information could result.

What Are the Risks for 2021?

EPLI insurance carriers may see a rise in the number of cases filed. In addition to potential increases in privacy rights claims, one other category of professional liability coverage likely to see increased risks for claims is director’s and officer’s liability insurance. The economic downfall from the pandemic is primed to continue and deepen in the new year. Small businesses in particular will face significant financial hardships, as they have so far.

Larger corporations often have surplus capital to withstand business interruptions while supporting employees, at least to some extent. The same is not true for small businesses. As such, it is quite likely that more D&O claims will be filed in 2021 due to increased litigation. Furthermore, it is entirely possible that courts will order higher payouts because of a widespread perception that companies should have been better prepared for the scenario the country is currently facing.

About U.S. Risk

U.S. Risk, LLC. is a wholesale broker and specialty lines underwriting manager providing a wide range of specialty insurance products and services. Headquartered in Dallas, Texas and operating 16 domestic and international branches, U.S. Risk and its affiliates would like to help you access a world of new markets and products. For more information, contact us today at (800) 232-5830.

EPLI lawsuits

EPLI Lawsuits on the Rise Due to COVID-19

The coronavirus pandemic of 2020 had both immediate and far-ranging effects on business management. Employers struggled to keep afloat while making critical changes in the way business operations were conducted. Some of these changes revolved around procedures and policies governing remote work options for employees. Others included the implementation of safety procedures, reduced hours, and cuts in payroll. Unfortunately, rapid evolution of the pandemic workplace has resulted in a sharp increase in employment practices liability insurance (EPLI) lawsuits. Employers need to gain an understanding of the factors behind these legal challenges, helping them to manage the risks that employment practices liability insurance is designed to cover.

A Spate of Employee Lawsuits in the Wake of the Pandemic

As the pandemic spread across the United States, state lockdown orders and social distancing recommendations meant that employers had to make exceedingly difficult decisions. Many businesses were forced to curtail operations altogether, while others were able to reduce hours and workforces to make ends meet. So-called “essential” businesses such as gas stations, grocery stores, and pharmacies could remain in operation, but the spread of the coronavirus in cities across the country put employees at risk.

COVID-19 took its toll on essential workers, with thousands reporting illness and still others dying from complications of the infection. The first EPLI lawsuit filed in the U.S. occurred on March 25, 2020. The estate of a deceased Walmart employee sued the retailer, alleging managers knew that several of their employees and customers were infected with COVID-19. Negligence on the part of the store and its managers were alleged to include:

  • Failure to adopt and promote social distancing/quarantine guidelines mandated by state and federal authorities.
  • Failure to adequately clean and sterilize store areas to prevent the spread of infection.
  • Failure to provide personal protective equipment (PPE) to the deceased employee and others in the store.
  • Failure to develop a response plan for infections.
  • Failure to provide warnings to employees who may have been exposed to COVID-infected individuals.

A Looming EPLI Crisis?

After the Walmart negligence lawsuit was submitted to courts, other employee lawsuits followed. In Texas, the family of a deceased meatpacking employee sued the company for negligence, alleging that the employee had been told to report to work despite exhibiting symptoms of COVID-19 under threat of dismissal. In that lawsuit, filed in April 2020, other employees claimed that the meatpacking company took no precautions against the spread of infection, potentially putting plant workers at risk of illness or death.

Since then, dozens of similar lawsuits were filed, putting strains on even the most comprehensive employment practices liability insurance. As the pandemic continues, business analysts expect hundreds, if not thousands, of legal claims against employers for failing to take precautions against the spread of COVID-19. The defense costs of lawsuits alone can negatively harm business assets; paying claims or settlements for failing to protect employees may bankrupt employers who have struggled throughout the pandemic. EPLI coverage may protect many employers, but even this insurance protection may not be enough to withstand repeated legal claims.

Managing COVID Risks in the Workplace

Employment practices liability insurance (EPLI) is one of the cornerstones of a robust risk management program for employers. Protecting the business and its employees supplements the coverage afforded by this valuable insurance. Employers facing legal claims against their employment practices must do more to prevent the spread of COVID-19 in the workplace. Business owners must also evaluate their existing insurance coverages, pinpointing exclusions and coverage gaps that may come back to haunt them if employees were to become infected.

The pandemic has created significant challenges; smart business owners took the steps needed to prevent infections from harming business operations, while others may have unnecessarily put their workers at risk of illness or death. By adopting stringent risk management practices, including following the guidelines of infectious disease agencies and state/federal officials, employers may weather the challenges imposed by COVID019 while helping to keep their workers safe.

About U.S. Risk

U.S. Risk, LLC. is a wholesale broker and specialty lines underwriting manager providing a wide range of specialty insurance products and services. Headquartered in Dallas, Texas and operating 16 domestic and international branches, U.S. Risk and its affiliates would like to help you access a world of new markets and products. For more information, contact us today at (800) 232-5830.