Managing Wage and Hour and Employment Practices Risks
Employers can manage growing employment practices and wage-and-hour risks through a combination of risk management and compliance efforts and insurance purchasing, according to speakers on Marsh’s The New Reality of Risk® webcast.
Employment practices and wage and hour litigation and claims have increased dramatically in the last several years, covering a range of wrongful acts by employers, from discrimination and sexual harassment to wrongful termination and employee misclassification. And the already challenging litigation environment is becoming even worse for employers as new worker-friendly laws are introduced and settlement values climb.
Among the challenging facing employers today are:
- Discrimination claims. Although discrimination on the basis of sexual orientation and gender identity is not expressly prohibited by the Civil Rights Act of 1964, the Equal Employment Opportunity Commission and other regulators are investigating such charges, said Kelly Thoerig, Employment Practices Liability Coverage Leader in Marsh’s FINPRO Practice.
- Litigation and regulations. Regulators and litigants are also targeting businesses for claims of discrimination against disabled individuals, and employers remain under pressure from activist investors and others to achieve pay equality.
- Misclassification of workers. The National Labor Relations Board recently expanded its definition of “joint employer,” while the sharing economy is blurring the lines between employees and independent contractors, said Wendy Mellk, a principal at Jackson Lewis. Both of these trends are creating significant exposures for employers, including those related to the misclassification of workers.
- Global employment practices risk. Although the litigation and claims environment internationally is not as active as that of the US, employers face a diverse mix of claims alleging wrongful employment acts, said Ann Longmore, Multinational leader in Marsh’s FINPRO Practice.These claims are often complicated by the fact that employees are increasingly working in multiple countries with differing views on acceptable workplace behavior.
Employers can mitigate many of these risks through compliance and risk management steps. For example, to minimize risks surrounding joint employment, businesses and their contractors should ensure a clear understanding between parties of how their relationship will work. For example, all parties should understand who will be responsible for supervision, training and safety, and employment decisions.
Employers should also consider their insurance options. Employment practices liability (EPL) insurance, for example, generally protects employers from current employees’, former employees’, and applicants’ claims of wrongful acts employment practices. Wage-and-hour risks are excluded from coverage under EPL policies, but can be covered through separate wage-and-hour insurance policies.