Employment Related Lawsuits

Features - Risk & Liability

Like its cousin the slip-and-fall, these claims can be a slippery slope for snow and ice management contractors.

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August 24, 2017
Matthew Peterson
PHoto: Thinkstock

Inappropriate and uncomfortable discussions at work could result in a large law suits against a snow and ice management company. We live in an ever-increasing sensitive society in which an employment-related law suit is likely to land at your feet. The type of claim we are discussing is not a slip and fall, however the responsibility to maintain a “safe work environment” is required of you.

As a business leader, you make important personnel decisions every day. From hiring new labors or managers to assigning winter duties, each of your decisions affects an employee in a unique way. Although these actions are critical to running your snow and ice management operation, they also create a potential issue if not handled appropriately.

These cases are on the rise. In fact, discrimination claims have increased significantly in the last 20 years. According to data from the Equal Employment Opportunity Commission (EEOC), most claims are based on race, sex, age and disability. Many small businesses cannot afford to pay these costs and keep their company afloat.

Even if they are not warranted, an accusation for wrongful employment practices disrupts operations, damages your business’s reputation, hurts employee morale, and negatively impacts your bottom line. What’s worse, even if a business fosters a welcoming work environment and takes all the necessary precautions to safeguard its employees, it can still face an employment practices liability claim.

Two effective risk management strategies include solid human resources practices and employment practices liability (EPL) insurance coverage, a policy used to cover your risk due to the ever-changing legal and employment environment.

Employment-related lawsuits are more likely to occur and consume a business than a fire. This alone suggests that a company ill prepared with documentation or procedures could be at an even higher risk.

Forty one percent of employment claims are against employers with 100 or fewer employees. Snow removal contractors must be aware of these employment-related lawsuits and since this industry has solid and well-prepared documentation, it may be a matter of improving the process.

Improper termination or lack of documentation tools – such as written application used when interviewing and hiring – tend to be a big part of the problem. Keeping up-to-date employee manuals and communicating changes in writing to the employees. Having strict usage of company cell phones and cleaning up culture norms within the contracting industry will help. For many owners, leading the way by setting a good example with language use and setting limits with a company’s internet policy are examples of implementing immediate changes.

These employee lawsuits against snow and ice management employees can result six figure claims if a company has been found guilty of age discrimination, sexual harassment, disability discrimination, racial discrimination, and retaliation.

Have the conversation with your company attorney or insurance agent to identify a few ways to improve your chances of surviving an employment related lawsuit. Also, investigate the prospects of an EPLI insurance policy with 3rd party coverage, which would act as a safety net. As many Accredited Snow Contractors Association members already understand, the insurance policy is the last form of risk transfer. However, an insurance policy should be explored to help fund for defense or damages

Be careful when evaluating drivers and equipment operators, be clear on how to phrase requirements as your company could be at risk for age discrimination or procedures in verifying employment history. A recent case in NJ was settled for $100,000, when a company rejected an applicant after reviewing a background check for the would be employee. The suit alleged that the company used to perform the background check did not notify the applicant in writing of their rights, including the ability to contest certain findings.

Some people believe that these types of employment related law suits may not be enforced against smaller company’s however, the protections are still there for the employee and a company could still face the cost to defend the lawsuit which runs up to $20k on average.

Many claims involve race, color, religion, sex (including pregnancy), national origin, disability or genetic information. With respect to Equal Pay, it illegal to pay different wages to men and women if they perform equal work no matter how many employees a company has.

Discriminatory practices under the laws EEOC enforces also include constructive discharge or forcing an employee to resign by making the work environment so intolerable a reasonable person would not be able to stay.

Even if they are not warranted, an accusation for wrongful employment practices disrupts operations, damages your business’s reputation, hurts employee morale, and negatively impacts your bottom line.
Photo: PeopleImages

Important policy coverages should include the following considerations: Workplace Harassment, Retaliation, Failure to Promote, Demotion, Invasion of Privacy, Defamation, Family Medical Leave Act, and “Wrongful Termination” among other coverage triggers. Consider Third Party Discrimination law suits, for example, if the mail person makes an office employee feel uncomfortable when he or she asks them to dinner.

Ask your agent about how your insurance coverage treats Wrongful Employment Practices. Start to review your internal practices and talk to your managers how the company can improve on the culture. Even if your company doesn’t have a lot of interaction with the general public, you may still benefit from third-party EPLI coverage if your operations involve clients, suppliers or vendors.

Many policies include consulting an employment attorney when a policy is purchased. The insurance world will rate your company on the practices above along with the snow contracting employee types (i.e. full-time, part-time, independent contractors, temporary employees, lease employees, volunteers, and seasonal)

Matt Peterson is the owner of Mills Insurance Group LLC and Snow Removal Insurance Brokerage in Marlton, N.J. He serves on the ASCA’s Industry Standards Committee and is a frequent Snow Magazine contributor.