Employees: Your source of revenue and potential claims

If you are a growing company or an established company, at some point in your business cycle you will likely have to deal with employee relations.  As part of your risk management strategy, you should consider including an employee manual outlining responsibilities and duties of the management and of the employee. When managing your employee risk, we often don’t consider things like wrongful dismissal and discrimination because we think the person is part of the team and understands the company and the people. Your commercial general liability insurance policy doesn’t cover claims of this nature – rather you need Employment Practices Liability. Take a look at a few scenarios when this type of policy comes into play…

Ms. Jones, the only female employee at Friendly Motors Dealership, had difficulties at work. The other staff at Friendly Motors, ten men, often engaged in “locker room” talk, which Ms. Jones found offensive. In addition, she believed that less-qualified staff were promoted ahead of her, which she attributed to a policy of discrimination against
women in the workplace.
She felt that the atmosphere at Friendly Motors made it impossible for her to perform her job as frequent complaints to management went unanswered and that she felt she would never be promoted ahead of a male colleague no matter how qualified she may be. Ms. Jones commenced a lawsuit against the directors of Friendly Motors, alleging wrongful failure to promote her and failure to address the workplace harassment at Friendly Motors.
The directors thought she was wrong and was treated fairly not  harassed at all… They decided to defend the action because they had coverage for Employment practices on their Directors and Officer’s Insurance policy.
Whether or not Ms Jones was correct or the company was correct doesn’t matter. The point is that a claim was made and these claims cost money to defend and settle. How will you pay for it? How will your corporation pay for it?
You are running a business and need to ensure the right protection to suit the risk. It is very easy to keep chugging away at the business and to pretend that everything will take care of itself. The business is made up of employees, with emotions, opinions, feeling and rights – take care to protect it!
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