According to ABC News, there's a potential class-action discrimination lawsuit brewing against CVS, and the details are pretty shocking. The report states four former employees allege that in several New York City stores…
- Employees were encouraged to racially profile African-American and Hispanic shoppers.
- The management used racial slurs to deride both shoppers and employees.
- The management wouldn't allow African Americans in the office.
- The management retaliated against employees who complained about the discrimination they faced.
The lawsuit states employees who complained about discriminatory procedures were swiftly greeted with fabricated performance criticisms and increased scrutiny. The plaintiffs believe the problem isn't isolated to a single store, but rather that the entire CVS loss prevention program is predicated on discriminatory and offensive practices.
CVS has 30 days to respond to the lawsuit, but the report states the company vehemently denies the allegations. Meanwhile, the four plaintiffs have requested unspecified punitive damages and want CVS to stop its illegal policies.
While most people never intend to come across as racist or discriminatory, misunderstandings happen all the time. Let's review what other situations can trigger these lawsuits and how Employment Practices Liability Insurance can be your saving grace.
Discrimination: Easier to Commit than You'd Think
As you may know, the Equal Employment Opportunity Commission enforces laws that outlaw discrimination against employees on the basis of:
- Sex or pregnancy status.
- Medical history.
These laws also prohibit…
- Unequal compensation for equal work.
- Workplace harassment (sexual or otherwise).
- Retaliation against employees who report discriminatory practices.
Read "Hiring an Employee? Know What Can Go Wrong" to learn more about these laws.
Anti-discrimination laws cover a lot of ground and a lot of people, which casts a wide net as far as your liabilities go. For example, say you want to hire someone to work in your bakery. You interview a 50-year-old woman with extensive decorating experience who is a very promising candidate, but you are wowed by an innovative twenty-something who pitches an idea for a brand-new dessert that could make the cronut craze look like child's play. You decide to hitch your wagon to his rising star.
The woman is not impressed with your hiring decision and alleges you chose the young applicant with less experience simply because you considered her to be "too old." Though that couldn't be further from the truth, you're hit with a lawsuit all the same.
The thing about discrimination lawsuits is that they are difficult to prove. Often, the argument boils down to who said what, and without context or documentation, it can be hard to adequately defend your decisions. That's why discrimination lawsuits, though rare, are among the costliest lawsuits a business can face.
Thank Goodness for Employment Practices Liability Insurance
Employment Practices Liability Insurance may provide coverage for legal expenses when a potential, current, or former employee alleges your business (or its managers)…
- Mismanaged employee benefits.
- Sexually harassed employees.
- Wrongfully terminated employees.
- Wrongfully disciplined or demoted an employee.
- Committed slander or libel.
- Discriminated against employees based on age, gender, religion, race, or other factors.
- Breached an employment contract.
- Invaded employees' privacy.
- Caused emotional or mental distress.
- Made negligent decisions related to hiring, promotions, or compensation.
Learn more about the coverage in the post "What Is Employment Practices Liability Insurance (EPLI)?"
If you're shaking your head and thinking, "Surely I don't need this policy. I only have an assistant!" Well, friend, we hope you're right. But if you ever need to let that assistant go, you better hope they leave on amicable terms.
Realistically, most small businesses may not purchase EPLI when they hire their first employee, but if they expand and need to hire several staff members, it might be a good investment. Regardless of the number of employees you have, you may want to consult with a lawyer about how to manage possible discrimination exposures.
You can find out more about the cost of EPLI in our 2014 Business Insurance Cost Analysis.