Most employers don't set out to create a workplace where employees feel mistreated or unfairly treated. But even businesses with good intentions can find themselves facing allegations of discrimination, harassment, or wrongful termination.
These employment practices liability (EPL) claims can be complicated, expensive, and damaging to a company's reputation. And the financial consequences aren't always the only concern. Workplace disputes can affect employee morale, trust in management, and the overall work environment.
The good news is that employers can take practical steps to reduce their exposure. Many of them come down to something fairly straightforward: setting clear expectations, treating people consistently, and addressing problems before they grow.
Here are five practices worth paying attention to.
1. Make Your Employee Handbook More Than a Formality
An employee handbook shouldn't be something employees sign during orientation and never look at again. It should be a useful reference for how the business operates and what employees can expect from their employer.
A comprehensive handbook should clearly communicate zero-tolerance policies for discrimination, harassment, and retaliation. It should also explain behavioral expectations, disciplinary procedures, and the standards everyone is expected to follow.
Because workplace requirements and employment laws can change, employers should review their handbooks regularly and make sure employees acknowledge receiving and understanding them.
Of course, the handbook only works if management follows it, too. Policies mean very little when they're enforced inconsistently.
2. Keep Training Going Beyond the First Week
Most businesses provide some form of training when employees are hired. But workplace expectations shouldn't be covered once during onboarding and then forgotten.
Ongoing training helps employees understand company policies, their legal obligations, and what respectful workplace behavior looks like in everyday situations. This includes mandatory harassment prevention training, as well as diversity and inclusion education.
Training should also apply to managers and supervisors, who often have to recognize problems, respond to complaints, and make decisions that affect employees.
The goal isn't simply to complete a required training session. It's to make sure employees and managers understand what's expected of them and know how to respond when something isn't right.
3. Take the Guesswork Out of Employment Decisions
Hiring, promotions, disciplinary actions, and terminations can all become sources of disputes when employees believe decisions were unfair or discriminatory.
Employers can help reduce that risk by establishing consistent procedures and relying on objective criteria rather than personal preferences or assumptions.
That starts with recruitment. Job descriptions should comply with applicable employment laws, and hiring managers should understand appropriate interviewing techniques and background check procedures.
The same attention to fairness should continue throughout an employee's time with the company. Clear, consistent standards help employers make defensible decisions and give employees greater confidence in the process.
4. Create a Workplace Where People Feel Comfortable Speaking Up
An employee may notice inappropriate behavior long before management becomes aware of it. Whether the issue gets addressed often depends on how comfortable that employee feels raising a concern.
That's one reason workplace culture matters so much.
Owners, executives, and managers set the tone through their own behavior. They need to model appropriate conduct, follow the standards outlined in the employee handbook, and address problematic practices consistently.
Employees should also have clear ways to report concerns and feel confident they can do so without fear of retaliation.
A supportive environment doesn't mean disagreements or problems will never happen. It means employees know their concerns will be taken seriously and handled appropriately.
5. Document What Happens, Especially When Problems Arise
Good documentation may not be anyone's favorite administrative task, but it can become extremely important when an employment decision or workplace complaint is questioned.
Employers should maintain appropriate records of employment practices, including personnel decisions, disciplinary actions, complaints, and investigations, while complying with applicable data privacy laws.
When allegations of wrongful employment practices arise, employers should investigate them thoroughly and document the steps taken, findings, and any corrective actions.
Depending on the circumstances, involving outside legal counsel may be appropriate, particularly when investigating serious allegations or determining how to respond.
Accurate records help demonstrate that concerns were addressed and decisions were made through a consistent, considered process.
Even Good Employers Can Face Claims
Following these practices can help reduce employment-related risks, but no business can eliminate the possibility of a claim entirely.
An employee may still allege discrimination, harassment, wrongful termination, or another harmful employment practice, even when the employer believes it acted appropriately.
That's where Employment Practices Liability (EPL) insurance becomes important. EPL coverage can help protect businesses from certain financial losses associated with covered employment-related allegations, including eligible legal defense expenses and litigation costs, subject to policy terms and exclusions.
For businesses of any size, even one employment lawsuit can create a significant financial burden.
The best approach combines sound employment practices, consistent management, careful documentation, and insurance coverage suited to the organization's needs.
A positive workplace is good for employees and good for business. And making the effort to build one can also help protect everything an employer has worked to create.
Kathleen Hughes is a Risk Communications Strategist at DiNicola Insurance Services. Kathleen is licensed in Property & Casualty, Life, and Accident & Health insurance and holds the Certified Restaurant Risk Professional (CRRP) and Certified Workers' Compensation Specialist (CWCS) designations.