Running a business is hard enough without worrying about liability and litigation related to discrimination claims. Even the most careful business owners may encounter this issue at one time or another.
"As with most human resources issues, avoiding the problem is always better than dealing with the repercussions once something happens," says David Peasall, SPHR, director of human resources at FrankCrum, a national professional employer organization. "However, we recommend that employers look into Employment Practices Liability Insurance (EPLI) to protect them from claims filed for wrongful acts in the employment process."
Peasall references some reasons why this issue is important for just about any business owner. In a five-year overview of statistics from fiscal year 2009 to 2013, the U.S. Equal Opportunity Commission reported 486,285 individual discrimination charges filed. Although this is a duplicated count, as those filing often claim multiple types of discrimination, the most prevalent complaints are Title VII retaliation (Title VII of the Civil Rights Act), race, sex, disability and age discrimination.
Advance preparation is always the best defense for the business owner or manager. Regardless of the type of discrimination claim, knowing the elements of a claim and what can lead to a claim can go a long way toward preventing them.
Peasall notes that although most discrimination claims spring from terminations, they can also arise from the hiring process or other adverse actions affecting employees. Following are best practices he identifies for employers:
- Be aware of EEOC rulings related to hiring, particularly on the use of credit reports, credit history or criminal background, as well as types of screening and selection tools. The EEOC has found that some of these tools may create a discriminatory impact based on race and national origin if decisions do not reflect job relevance or business necessity.
- Post the corporate EEO statement and distribute the company's written anti-discrimination policy. Have all employees and managers sign copies that outline the policy and address complaint procedures.
- Institute anti-discrimination policies and procedures, including training, employee manuals, reporting and social media policies.
- Develop corrective action processes that focus on resolving problems and establishing a successful relationship with employees, rather than creating an adversarial relationship.
- Document issues through a process that defines the issue (usually related to conduct, performance or attendance), communicates concerns and expectations for improved performance to the employee, describes the proposed corrective action and makes clear the consequences if the issues are not corrected. Early intervention is more likely to eliminate the type of misunderstanding that might later lead to a claim.
- Is it really employment "at will?" Many employers in the 49 states that are considered "at will employment" states believe they are not required to have a reason for terminating an employee. However, it's always prudent to document the issues and have a solid reason for termination.
- Investigate and never retaliate. Often the "heat level" of a claim rises because the employer did not take it seriously enough to investigate it. And to make it worse, retaliatory actions may have been taken against the employee filing the complaint.
"In the long run, being prepared is always better than being surprised," says Peasall. "Understanding what might create a situation that leads to a complaint and then putting the proper procedures in place to avoid the situation is the best route for any employer."
About FrankCrum: Founded in 1981, FrankCrum is a pioneer in the Professional Employer Organization industry, providing outsourced human resources, payroll, employee benefits, risk management and workers' compensation. The company supports more than 3,000 businesses nationwide that collectively employ more than 50,000 people. The FrankCrum family of companies includes FrankCrum, FrankCrum Staffing and Frank Winston Crum Insurance, each focused on the business success of small and medium-size employers. For more information, go to www.frankcrum.com.