Employment Practices Liability

Very interesting information. I am sending you an article which I think speaks to the article about employee disputes etc. The concept and the coverage for employment related issues is becoming a hot trend in all industries and the spa industry is no exception.
Feel free to include in article in any of your publications or website.

Did you know???

• The most common basis for employment practices charges being filed with the Equal Employment Opportunity Commission (EEOC) are: race, sex, retaliation, disability and age.
• It is becoming more likely that you will have an employment related claim than a trip and fall claim.
• 10% of all employment related claims result in awards exceeding $1,000,000.
• 41% of all EPL claims are brought against small employers (10-15 employees)
• The average cost to defend an EPL claim is $125,000.
• Plaintiffs stand a 71% chance of winning a trial-jury verdict and the average verdict is $508,000.
• Recent decisions made it clear that an employer may be liable for sexual harassment of an employee, EVEN if the harassment is not reported and the claimant’s career is not harmed.

At a recent convention, I was approached by a spa owner who wanted to tell me about his experience. Unfortunately, he was being sued by a disgruntled employee who wanted out of a non-compete clause in her contract. When the spa owner refused, the employee sued him for sexual harassment. Her claim stated that she was subjected to offensive language by fellow employees (not necessarily the employer) at the lunch table and in the work environment. She also claimed she was forced to work on “naked bodies” while training with the entire staff at a body treatment class in France.

While this claim has not been settled yet, this employer shared that he has spent over $35,000 in attorney fees to defend the claim to this point and a tremendous amount of time answering depositions and dealing with government forms and questions. In addition, all other staff members have been involved in the process causing much disruption to the workings of the spa.

It is possible based on what this employer shared that the claim may be denied or dismissed for lack of evidence--but he has already spent over $35,000. The defense costs alone in these types of claims can be enormous, since defense typically requires extensive fact-finding investigations. In most states, defense costs can not be recovered, EVEN if the suit is dismissed.

I share this with all of you to make you aware of the types of claims we are seeing in the spa industry. Being a “touch” related industry: it is a perfect breeding ground for this type of claim. Simply having an employer/employee policy in place will not be enough to stop employment related lawsuits. There is no guarantee that one disgruntled employee will not harass or discriminate against another employee, thereby creating liability for the employer.
Employers must begin to think about adding this coverage to their existing insurance packages. Since many directors and officers are involved in the day to day activities of salons and spas, they can become the targets of this type of lawsuit. At a minimum, the coverage should address: sexual harassment, discrimination, wrongful termination, breach of contract, deprivations of a career opportunity and similar employment related “perils”.
The policy should also include coverage for “administrative hearings”, as many EPL situations manifest themselves through an EEOC hearing which can require defense expenses.

The unpredictability of defense costs alone of an EPL suit warrants consideration for such insurance. While many EPL suits may well result in acquittal and in spite of many employers denying any wrong doing, approximately 50% of all EPL suits have resulted in some recovery on behalf of the plaintif.

I suggest that you review your employee handbook, be sure it is current and that each employee has a copy. In addition, I would suggest that you discuss the matter of EPL Insurance with your insurance professional. The only clear defense in this environment is Employment Practices Liability Insurance, coupled with top-caliber employee education and loss prevention initiatives.

For additional information, please contact:
Mary Lynne Blaesser, CIC
Marine Agency Corp
191 Maplewood Ave.
Maplewood, NJ 07040
Phone: 800 763-4775 ext. 15
fax 973 763-1635 or
e-mail mlblaesser@marineagency.com