Signs that an employee is going to sue

All week we’ve been discussing workplace harassment and discrimination. You’ve read about employment practices issues related to everything from hiring to firing. But just how likely is it that your business could be sued – especially when you’re taking the steps to maintain a safe, tolerant work environment?

According to the Equal Employment Opportunity Commission’s Enforcement & Litigation Statistics, 93,727 employment practices charges were filed in fiscal year 2013 alone. That figure is a somber reminder that employers are sued even when they are trying their best to follow the law.

Fortunately, there are ways to resolve employment issues before they turn into full-fledged lawsuits. But first, you need to be able to recognize the warning signs of impending legal trouble.

Workplace harassment and discrimination lawsuits rarely crop up out of the blue. There is usually a fair bit of warning because it takes time for employees to build their cases. After all, the burden of proof is on the employee, and it can be difficult to prove a workplace discrimination or harassment case.

That sounds bleak – but there is good news. Employers usually have ample opportunity to identify and resolve the issue before it becomes a lawsuit.

An employee raises concerns with a supervisor. Obviously, employees don’t enjoy feeling unsafe or discriminated against at work, so they may bring their concerns to their supervisor. The thing is, the supervisor may or may not be you. That’s why it’s so important to educate your employees about employment laws.

For instance, supervisors should also be aware of their obligation to report inappropriate behavior that they observe firsthand (even without a report from the victim) or secondhand. All employees should know how to identify harassment or discrimination and how to report the offense.

Be sure employees in non-management roles are aware that they won’t be retaliated against when they report an incident, which may give them incentive to bring up workplace issues before they become lawsuits.

For more tips on fostering a safe work environment, check out “The small business guide to avoiding discrimination and harassment in the workplace.”

An employee files a claim with the EEOC. Before employees can independently take their employer to court, they must file a formal complaint with the Equal Employment Opportunity Commission (EEOC).

The EEOC will then contact your business and explain how you should proceed. It might dismiss the charge, investigate, or tell you to try to settle the dispute. The EEOC even has a free mediation program to assist with this.

A fired employee refuses severance. Most businesses aren’t legally required to give employees severance when they fire them, but it can be a nice parting gesture. Severance usually involves a sum of money, but it doesn’t have to. For example, it might make more financial sense for a small business to allow fired employees to keep a company computer or stay on the business’s healthcare plan for a few months.

But if an employee ever refuses this compensation, they might be planning to sue for wrongful termination. That’s because severance packages usually require an employee to sign a waiver that says they won’t sue in exchange for the compensation. (If you don’t use a waiver like this, you should!)

But what happens when you take all the steps to resolve an issue and the lawsuit happens anyway? Hopefully your business carries employment practices liability insurance (EPLI).

EPLI is special coverage you can add to your errors and omissions insurance policy. It protects you from the high cost of employment lawsuits by helping pay for expenses such as attorney’s fees, judgments, and settlements.

Complete Insureon’s easy online application today to compare insurance quotes from top-rated U.S. carriers. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.