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Why are employment related lawsuits on the rise?

Employment-related lawsuits are a growing concern for employers of all sizes, including home-based businesses. Reliance Insurance Agencies, Ltd. can help you manage all your business risks, including employment practices. The pandemic has created more situations that can lead to an employment related lawsuit such as discrimination, workplace safety, whistleblower claims, employee leave and benefit claims.

Avoid a lawsuit

As costs for litigation and damage awards climb, experts predict that employment liability will only become more complex. As a result, it is critical for business owners to understand their exposures and options for managing risks. Even if you win a claim against an employee, the process is costly and can tarnish the reputation of a company. There are a variety of ways to decrease the probability of being sued.

1. Establish a set of standards: document and update regularly. Utilize your local governing bodies for resources.

2. Train employees – specifically managers who have direct reports. Ensure everyone understands the guidelines and how to handle sticky situations. Don’t be shy to bring in a HR consultant or legal representative to help establish protocols. It is imperative to have training against harassment in the workplace.

3. Obtain insurance – insurance can help cover the cost to defend allegations.

Employment-related lawsuits

Employment practices liability insurance

Employment practices liability (EPL) insurance is a policy used to cover your risks due to some of the most common employment-related lawsuits, including the following:

  • Wrongful termination: The discharge of an employee for invalid reasons.
  • Discrimination: The denial of equal treatment to employees who are members of a protected class.
  • Sexual harassment: Subjecting an employee to unwelcome sexual advances, obscene or offensive remarks, or the failure to stop such behaviour.

EPL works to provide the necessary resources to defend your company against a lawsuit or to pay for a claim. To best understand how to cover your EPL risks, it’s important to know the potential sources:

  • Recruitment practices
  • Annual conduct reviews
  • Employment applications
  • Enforcing performance policies
  • Employment offers
  • Termination
  • Employee orientation process
  • Improper documentation of the items listed above
Employment-related lawsuits

Document solid employment practices and policies

Evidence of desirable employment practices and policies may be required for an EPL policy, and will certainly help defend against a suit (even for a small, home-based business with only a few employees). In Canada and BC specifically, there are laws that set standards for payment, compensation and working conditions in most workplaces. But the underwriter may require a copy of the following policies to show that you are taking steps to reduce your risks:

  • Sexual harassment
  • Disability and accommodations
  • Equal opportunity
  • Employee discipline
  • Termination
  • Performance evaluations
  • Internet usage/employee privacy
  • Leaves of Absence
  • Internal job postings
  • Hiring and interviewing
  • Discrimination
  • Resolution/arbitration

As an employer, you can protect yourself by understanding clearly the provincial labour laws where your business operates. If you do not have an HR position it is advisable to use an outside HR expert to help you set up a solid HR policy to reduce your risks.




Employment practices liability
Employment practices liability – Loss Control Questionnaire


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