How Social Services Organizations Can Improve Recruitment to Reduce the Risk of EPLI Claims

Employment practices liability insurance (EPLI) claims have been on the rise in recent years as former employees felt they were unfairly let go. From racial discrimination to sexual harassment, EPL insurance has seen a sharp rise and is headed for a $3.1 billion marketplace by 2025.

But even if claims wind up being unfounded, EPL cases can be a total drain on a regular mid-sized business, which means they can be even more draining for nonprofits and social services organizations who don’t have as much money to back them up financially in the event of a claim. The average cost of a discrimination case can exceed $235,000 and set back any organization.

Social services organizations can avoid costly EPLI claims by implementing better recruitment tasks and goals. Here’s a better look at how.

Leading Causes of Claims

The leading charge filed in EPLI claims is an allegation of racial discrimination. In fact, 36 percent of all EPLI cases are due to this kind of claim. Next, gender-based discrimination came in at 30 percent, according to the EEOC, and age-based was in at 24 percent. Employees are feeling encouraged to bring discrimination of any kind to the attention of their superiors or HR staff, and if they feel they are unjustly let go or retaliated against, then they have the grounds to bring a case to light.

When it comes to nonprofits, that can be just as responsible for these types of claims as a regular business, any one of these claims can not only make it hurt financially, but hurt its reputation. Nonprofits can benefit from types of social services insurance programs as well as better hiring and training practices.

Even small organizations need to be concerned with things like writing an updated employee handbook and employment application to make sure they are setting the record straight on how it operates from the start.

Ways to Avoid EPLI Claims

There are a handful of ways to encourage better recruiting practices among new volunteers and employees. The goal is to be transparent about how your organization should treat its employees and vice versa so everything is upfront and honest.

• Distribute an employee handbook. It’s not as important how long or detailed a handbook is as what topics are covered. A handbook should contain the nonprofit’s equal employment opportunity policy and provide those working at a nonprofit with an internal platform to complain about discrimination or harassment.
• Develop code of ethics. This kind of policy tells employees that they shouldn’t do certain things. This will reduce the employer’s exposure to punitive damages, which may not be covered by certain types of social services insurance programs.
• Include an anti-retaliation provision. With new rises in claims of retaliation, there should be a statement written up that says it’s the policy of the nonprofit not to retaliate against employees over claims of discrimination or harassment.
• Implement handbook auditing procedures. Having an audit procedure in place under which the handbook is regularly updated to instill changes in the law is also an important thing and can help in the defense of a business.

About Tangram Insurance Services

Located across the Golden Gate Bridge, just outside of San Francisco, Tangram is a full-service Managing General Underwriter and Program Manager offering specialty programs. We focus on industry-relevant coverage, competitive pricing, and practical business and risk management solutions for your clients. Since we are not all things to all people, we make sure to create outstanding custom-built solutions that matter to those businesses, and the brokers who serve those industries. Contact us at (888) 744-9810.