Three Cases Demonstrate Why Your Business Needs to Protect Against Employee Lawsuits

Many business owners sincerely try to treat their employees with respect and dignity. They expect employee lawsuits for poor treatment to happen to other businesses, not to them. Unfortunately, that is not always the case. Any business can find itself on the receiving end of an employment practices lawsuit.

Sexual Harassment Lawsuit

A California hospital thought it was dispensing justice equally when it fired two employees over an allegation of sexual harassment. A nurse who had worked there for 20 years with an excellent service record complained about a new supervisor. The supervisor allegedly made inappropriate comments, physical contact and lewd displays to him. He maintained that he never consented to such conduct. The supervisor claimed the opposite, that the nurse did consent and even participated in the interactions.

Following an investigation, the hospital fired both men for "unprofessional conduct." The nurse sued the hospital for wrongful termination of employment. A jury awarded him $238,328 plus interest and court costs. The hospital appealed the verdict. While finding that the trial judge gave bad instructions to the jury, the appellate court found that substantial evidence supported the judgment.

Racial Harassment Lawsuit

An employee of a water authority in upstate New York began to experience harassing behavior after he got engaged to a woman of another race. His supervisor and several co-workers allegedly cursed him, vandalized his property, threatened him, and made offensive comments that could be construed as racist. He complained to his superiors but did not file a formal complaint with the authority's human resources department.

At the same time, the authority was accumulating a file documenting instances of poor performance and misconduct by the employee. Ultimately, he was fired. He sued the water authority and 10 individuals who worked there, alleging physical assault and battery, unlawful discrimination, hostile work environment, disparate treatment, retaliation, deprivation of his constitutional rights, and intentional infliction of emotional distress.

After dismissing the claims against five of the individuals, the jury awarded the employee $305,000 in back pay and $5,000 in punitive damages from each of the five remaining defendants.

A director with a New York City social services agency was allegedly subjected to disparate treatment, sexual harassment, and retaliation after she filed complaints. Her white supervisor treated her with hostility, excluded her from management meetings, and demoted her. Her new supervisor sexually harassed and threatened her. She was effectively fired shortly after returning to work following a mini-stroke.

She sued the agency, alleging a hostile work environment, disparate treatment, retaliation, and sexual harassment. The trial court dismissed her claims, but an appellate court reinstated most of them. It dismissed the sexual harassment claim only because she had not followed complaint procedures under the law.

Even well-managed organizations can have employees who behave badly. For this reason, organizations should consider buying employment practices liability insurance. It covers the costs of defending and settling employee lawsuits for discrimination, harassment, retaliation, and other offenses. General liability insurance policies do not cover these types of lawsuits, so this special coverage is essential.

Businesses need to protect themselves from the acts of their own employees. Employment practices liability insurance may prove to be one of a business's best purchases.

Contact The Insurance Loft today to learn more about protecting your business.

Call 800-409-9790 or email us at [email protected].         

February 21, 2017
by John Connor
Business Advisor