4 Ways Restaurants Can Reduce Rising Employment Liability Claims

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The number of complaints and lawsuits over sexual harassment, discrimination and wrongful termination are rising, and the hospitality industry sees more claims than other industries. Adopting best practices can reduce the risk.

Employees are returning to the workplace — and complaints over harassment, discrimination and retaliation have followed. The U.S. Equal Employment Opportunity has been ramping up its enforcement efforts, with 2021 ending in a surge of employment discrimination lawsuits.

These complaints can lead to substantial charges and penalties from the EEOC, which receives more complaints from the restaurant industry than any other.2 In 2021, U.S. employers paid more than $535 million to alleged discrimination victims.

A track record of employee complaints also may affect the cost and endorsements in an organization’s employment practices liability insurance (EPLI) — a coverage where premiums are already predicted to rise 10% to 25% in 2022.

Due to its high turnover and stressful working conditions, hospitality is considered especially vulnerable to EPLI claims. In an industry already financially stressed from the COVID-19 pandemic and a widespread worker shortage, curbing EPLI and other employment liability claims in hospitality has become essential.

Best practices guard against rising employment liability claims in hospitality

Following best practices is the most effective defense against costly EPLI claims and potential EEOC actions and fines. Here are four ways to prevent claims:

Open lines of communication. When communications break down, EPLI claims tend to mount. Employees need to know how to report inappropriate and discriminatory behavior and acts. When employees feel heard through a swift and thoughtful response to complaints, it lessens the likelihood of a future claim.

Formalize policies and procedures. Expectations for how employees are to be treated should be in writing, preferably in an employee handbook. Ideally, policies should be revisited annually to reflect any legal and regulatory changes and must spell out workers’ rights and recourses. Important aspects of these policies include reporting protocols, which formalize how employees can lodge a complaint, report inappropriate behavior and the avenues to do so, as well as investigation procedures that detail who performs investigations, how they are conducted and when they are typically completed.

Document everything. Every employee complaint or request should be documented in writing. In the event of litigation, written policies and documentation are critical to the employer’s defense. Maintain a separate investigation file that includes all written correspondence and ensure verbal communications are summarized in emails to the employee.

All investigations should include a written conclusion, whether the allegations had merit or not.

Training counts. Employees need clear instruction on what constitutes harassment, discrimination or retaliation; managers need training on handling complaints. One area where training often falls short is on disability discrimination. Managers and supervisors need to understand what questions are permissible under applicable law and the requirements for providing reasonable accommodations to employees with a disability.

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