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Employment Practices Liability

July 2006

Risk Management Strategies and State Laws

Summary: Employment practices liability claims arise when employees and former employees file action against their employers for unlawful hiring, firing, and other employment practices. This article outlines strategies risk managers can use to prevent employment practices liability claims and state laws regarding protected categories, when complaints must be filed, and what types of compensation successful claimants are awarded.

Topics covered:

Introduction

Monitor hiring practices

Workplace practices and procedures

Protected categories

Time limit for filing complaint

Awards for employment discrimination claims

 

Introduction

Employment practices claims, for the most part, are undertaken for one of two reasons. The first, obviously, is the potential dollar award; the second is emotional—the employee’s feeling of having been unjustly used. No matter what the reason, though, employment practices claims are costly, not only in dollars, but in lost hours spent in reviewing files and interviewing witnesses. Foresight in implementation of appropriate practices and procedures will enable the prudent firm to avoid many potential pitfalls.

The majority of claims against firms are made by former employees and arise from a variety of reasons. Wrongful termination cases often result from corporate downsizing, with age discrimination as the unfortunate by-product (protection under the Age Discrimination in Employment Act begins at age forty, with no upward cap). Former employees may contend that their rights under the Family and Medical Leave Act or the Americans with Disabilities Act (ADA) were not addressed in the workplace and that the resulting intolerable situation forced their resignations.

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