Employment Practices Liability
There are numerous state and Federal Laws about the workplace, governing anything from payment of overtime to dealing with sexual harassment. Whether Federal Laws apply depends upon the number of employees (typically 15 is the dividing line). Individual states must enact laws that are at least equal to the Federal laws, but they may also be more stringent.
Many states operate under the "employment at will" concept, where either the employer or the employee may, without reason, terminate employment at any time. In its pure form, employment can be terminated for a good reason, a bad reason or no reason. However, this concept is being eroded by laws governing termination reasons as well as employment conditions.
Hiring and firing practices have become legal minefields that have spurred the development of Employment Practices Liability Insurance (EPLI). It is important that a business has clear policies that are applied consistently to each employee and that directly relate to their job. The best defense against employment practice claims is knowing the law in your state and then having policies and procedures that meet the legal standards. For example, is it legal to terminate:
Don’t think that the answer is simply "yes." A business’ action may depend upon circumstances such as whether an employee’s duties involve driving a company vehicle, or directly involves customers and if the company can prove that such behavior fails to meet the applicable job standards.
One key issue is having access to legal counsel that has expertise in this special area of the law. Another key issue is documenting the essential job functions and establishing measurable standards for each position. Use of regular performance reviews and applying the standards equally to each employee is a smart employment practice. The best defense against employment practice claims is to know the law in your state and then having policies and procedures that meet or exceed its legal standards.
The U.S. Department of Labor offers a Small Business Handbook from their Website athttp://www.dol.gov/asp/public/programs/handbook/main.htm. The U.S. Equal Employment Opportunity Commission also offers numerous publications addressing different employment laws from their Website at http://www.eeoc.gov. Contacting an insurance agent regarding Employment Practices Liability Insurance is another avenue to explore. Policies and premiums for this type of coverage vary tremendously among insurers. Many companies offering the coverage also offer assistance in writing policy and procedure manuals and other ways to reduce the potential for claims involving sexual harassment, wrongful termination or discrimination. No business is immune from these claims.
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