One of the most common lawsuits a staffing firm may encounter involves claims that trigger coverage under Employment Practices Liability Insurance (EPLI). There is exposure with both internal office staff and temporary associate or contract staff. Discrimination can occur either on the premises of the staffing company’s office location or at the client worksite. Discrimination can be based on sex, race, color, age, religion, disability, wages, national origin, and sexual orientation.
To take it a step further, employees and applicants are also protected from retaliation by an employer under several employment laws enforced by the Equal Employment Opportunity Commission (EEOC). Retaliation occurs when an employer takes a materially adverse action against an applicant or employee asserts rights protected by the EEOC’s laws. Specifically, an employer an employer cannot retaliate if an employee:
- reports discrimination or harassment to a supervisor
- answers questions during an investigation of discrimination or harassment
- refuses orders that would result in discrimination
- resists sexual advances
- requests accommodation for a disability or religious practice
Adverse employment actions can take many forms beyond disciplining or terminating employees, including transferring an employee to a less desirable position or shift, threatening to report immigration status, verbally or physically abusing an employee, and giving an employee a lower performance evaluation than deserved.
Minimizing the risk of retaliation claims
According to EEOC statistical data, retaliation claims account for roughly 55% of all claims filed with the EEOC. Given the concentration of this specific type of claim, how can a staffing company protect itself?
- Documentation – A staffing firm should document any incidents that lead to an employee’s termination. Whether discrimination occurred before or after termination, it’s imperative that the staffing firm is conscious of the timing of the termination as it relates to the claim, as well as providing a clear reason why termination was warranted. When in doubt, document, document, document!
- Client education – Client companies must be taught how to deal with a temp employee who is underperforming and at-risk of reassignment, replacement or termination. There isa shared responsibility of obtaining feedback from the client company on performance of the temp employees at the worksite. The client company should be open to disclosing this feedback, but the staffing firm should continually be asking for it as well. If problems with specific employees are noticed, it should be discussed, documented and a plan of action should be created.
- Third party communication – When in doubt, it’s always best to alert your EPLI carrier and/or consult an employment attorney. The rate at which retaliation claims are occurring is consistently growing and something every staffing firm should always have top-of-mind.
The EEOC has detailed an entire Q&A regarding retaliation, which can be found here. As stated in question 14 of the Q&A, the burden of proof is on the employee, rather than the employer having to disprove the claim.
For more information, contact a Marsh McLennan Agency (MMA) advisor.
