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Employment Practice Update

As 2012 concludes, one factor remains important but easy to overlook – employment lawsuits. Employment law is regulated by the Equal Employment Opportunity Commission (EEOC) who manages complaints by the public and investigates or prosecutes businesses who violate federal law. The results the EEOC had in 2012 should be noted as they may indicate a trend for what to expect in 2013. In 2012, new complaints received by the EEOC totaled 111,139 (down slightly from 112,499 in 2011), while resolutions remained just below 100,000 as it has been the previous two years. However, the dollars recovered by the EEOC were the highest ever – $44.2 Million through litigation and $365.4 million through administrative enforcement. This shows that the EEOC may be pursuing larger cases on average.

While no wrongful employment practice is acceptable, it is important to understand what the EEOC may be looking at more critically. With limited resources, each company must decide how and where to invest its capital in order to best protect its firm. Knowing what the EEOC is concentrating on may help determine where to spend the extra dollar making sure it is in compliance. Based on the types of cases in 2012, Calculated Risk Advisors recommends companies to look carefully at the following areas:

• Hiring Practices – Hiring decisions based on an applicant’s record of previous arrests made a global beverages brand disqualify an unfair amount of black workers from the hiring process. The company paid over $4 million dollars to settle the matter.
• Disability Discrimination – One large trucking company had a policy of automatically terminating the employment of anyone requiring more than 12 weeks of leave. The EEOC found this to be discriminating to those with disabilities and the trucking company is paying $4.8 million to settle the matter.
• Retaliation claims – Growing in frequency, these occur when an employee complains of an unfair or wrongful practice within a company and is then harassed due to their complaint. The EEOC is increasingly pursuing these actions.

A firm should remember to include the following employment-related risk management practices in its operations:

• Use of Disparate Impact Studies – when deciding on a policy to implement, consider if the impact will be skewed towards a particular group
• Release of Liability – Upon termination, obtain a signed release of liability from employees
• Out-placement services – Assist in finding terminated employees new employement
• Avoid Blanket Policies – Broad policies are being scrutinized by the EEOC. “any prior convictions” should not be a hiring philosophy and “maximum allowed leave time” should be flexible.

For further discussion on ways to protect your company from employment practices liability, contact Calculated Risk Advisors today.

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