August 13, 2020
Protect against employment-related lawsuits now
In recent years, lawsuits against motor carriers have not only increased in frequency but also in bite. This should come as no surprise as headlines blaring multi-million dollar settlements have become newsflashes almost weekly.
Research by the American Transportation Research Institute (ATRI) recently shed light on lawsuits resulting from “nuclear verdicts.” It reported that from 2012 to 2019, there were 265 cases with verdicts over $1 million, representing an increase of 335%. Additionally, the number of verdicts between $1 million and $2 million increased by 300% in the same period.
Nuclear verdicts are mostly the result of truck-related accidents and injuries. But even an impeccable safety record can’t save you the trouble of a costly courtroom clash. Often, lawsuits are filed in response to wrongful employment practices.
The act of subjugating or simply failing to protect an employee from workplace harassment, discrimination or deprivation of career opportunities can result in a hefty lawsuit against your company. The questions remain: Are you financially prepared to protect against a potentially damaging lawsuit? And, to curb these behaviors, is your company striving to promote a culture of tolerance and equality throughout its ranks?
Research shows that three out of five employers will be sued by a prospective, current or former employee while they’re in business. Jamie Cannon, Reliance Partners’ Vice President of Third-party Logistics (3PL), knows what motor carriers are up against. She urges trucking companies to consider the consequences of a staggering lawsuit and strongly suggests motor carriers squelch any and all toxic behaviors from their workplaces, especially in today’s volatile social environment.
“Employment practices liability claims have gone up in recent years,” Cannon said. “The scope of workplace actions and behaviors deemed eligible to file suit against has widened.”
Not every suit against an employer is credible, but that doesn’t mean that a successful defendant company can get off the hook free of charge. The burden of defending oneself, regardless of whether the claim is credible or not, is arduous and costly. However, equipping your company with the proper insurance coverage can help soften the blow.
Employment practices liability coverage (EPLI) protects against wrongful termination, discrimination or sexual harassment suits from current, prospective or former employees. This coverage is applicable to directors, officers and employees, and can sometimes extend to third- party liabilities, according to Reliance Partners.
The financial penalties resulting from employment-related lawsuits can be severe. For instance, in 2019, United Parcel Service (UPS) agreed to a $2.25 million settlement to avoid a pregnancy discrimination lawsuit.
According to the U.S. Equal Employment Opportunity Commission (EEOC), it wasn’t until 2015 that UPS changed its policy to extend light-duty assignments to pregnant employees. Prior to the policy change, light-duty work was only reserved for employees who had been injured on the job, as well as workers with certain driving restrictions and disabilities. A company driver alleged that not providing light-duty assignments violated the Pregnancy Discrimination Act (PDA).
This follows yet another lawsuit aimed at UPS within the year as 19 employees at an Ohio distribution center sued the parcel carrier for allegedly fostering a “racially hostile work environment.” As reported earlier by FreightWaves, the lawsuit calls for compensatory damages exceeding $25,000, legal fees and an undetermined amount of punitive damages for the plaintiffs who attest they were the target of racial harassment from white co-workers and supervisors.
Any company can be targeted by an employment-related lawsuit; don’t think that because your motor carrier is small or lacks a formal office setting that the need for EPLI diminishes. Cannon noted that even if you employ just a handful of employees, your company is at risk.
EPLI also protects employers from wrongful practices such as employment-related libel and slander, wrongful failure to employ or promote, and wrongful discipline, among other actions.
But as Cannon pointed out, the best protection a company can employ doesn’t come in the form of an insurance policy, but rather how the motor carrier handles its issues internally.
“One of the biggest factors is how the company internally handles an issue before it leads to a claim,” Cannon said. “Do they have procedures in place to handle complaints of harassment?”
Cannon added that a company’s internal procedures contribute significantly to the outcome of a claim. Investing a larger percentage of time and effort in reevaluating employee training, establishing zero-tolerance for workplace discrimination, and remaining committed to fostering a culture of inclusion is a sure way to insulate your company from a crippling lawsuit.
“If there are well-written procedures in place and management is trained on how to handle the situation then it is less likely to lead to a loss,” Cannon said.
Reach out to Reliance Partners for more information on employment practices liability insurance and how it can protect your business from alleged wrongful employment practices accusations.