Insureon Blog

Employment Practices Liability Issues for Employment Agencies

3. January 2014 09:30

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Under its Strategic Enforcement Plan (SEP), the U.S. Equal Employment Opportunity Commission (EEOC) recently launched a three-year campaign to crack down on employee discrimination – starting with discriminatory “class-based recruitment and hiring practices.”

The EEOC’s primary target? Employment agencies and other recruiting firms. Since 1997, employment agencies have been responsible for discrimination and other forms of harassment that their placements have faced on the job site. But now, the EEOC is more interested in the placement policies of the employment agencies themselves.

Several staffing agencies have already found themselves in the EEOC’s crosshairs. In October, a nationwide staffing firm agreed to settle with the EEOC for $920,000 in order to resolve allegations that its hiring practices historically failed to give certain job applicants opportunities based on their age, sex, race, color, national origin, or disability.

The next month, the EEOC filed a suit against an employment agency in California that alleged the company was discriminating against potential employees based on gender. And earlier in the year, a large Illinois-based staffing agency agreed to pay $100,000 after the EEOC alleged it violated the Americans with Disabilities Act (ADA).

Since the EEOC plans to scrutinize the business practices of employment agencies through 2016, it’s important that those who own and operate employment agencies understand what they can do to reduce the risk of an Employment Practices Liability lawsuit.

How Can Employment Agencies Protect Themselves From the EEOC and Employment Practices Liability Lawsuits?

If the EEOC alleges that your employment agency has discriminated against potential hires, the claim could easily end up costing your business millions of dollars. So how can owners of smaller employment agencies protect themselves? They can start by adding an Employment Practices Liability Insurance (EPLI) policy to any existing business insurance plan.

EPLI coverage is a type of Professional Liability / Errors and Omissions Insurance  policy that protects a business in the event that an employee or the EEOC claims that it has violated an employee’s civil rights. Potential violations include but are not limited to situations (intentional or not) involving…

EPLI coverage helps pay for the legal costs associated with such a claim – whether they’re settled out of court or not. EPLI is usually sold as a standalone policy, but it can also be sold as part of a package with other liability policies that a company might.

Small Employment Agencies: How to Prevent EPLI Claims Before They Happen

Insurance can protect your employment agency from the high costs of sensitive, discrimination-based lawsuits, but it cannot prevent them from happening. But unfortunately, many incidents that lead to EPLI cases are unintentional on the part of the staffing firm involved. Below are some tips to help you avoid the kind of mistakes and accidents that can trigger an Employment Practices Liability suit:

know your business risks


Errors & Omissions | Small Business Risk Management

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