When one mentions employment practices liability insurance, most homeowners likely would think of
corporations, small businesses, hospitals, schools or commercial construction sites.
Yet according to the U.S. Dept. of Labor, there were 917,120 maids and housekeepers employed in 2009. And households who hire residential employees should be aware of the potential risks associated with becoming an employer, because domestic employees also sue.
Homeowners must recognize that they become employers the moment a domestic employee first walks through the front door. This relationship exposes the homeowner and all household residents and guests to litigation for conduct toward domestic employees.
Consider the following scenarios:
1 The maid begins to feel like she has been sexually harassed because the husband often displays a bawdy sense of humor and tells obscene jokes
2 The wife makes a racially derogatory comment to a friend on the phone, which is overheard by the employee, who is later fired
3 The property manager brings a groundless sexual harassment lawsuit against his employer because he has fallen on hard economic times
4 The employer terminates the nanny because the employee was unwilling to do something illegal or immoral.
The above examples show how accusations of harassment and discrimination—originally found in the workplace—have entered into the perceived safety of the home as well.
Jeff Cox, president and CEO of Lloyd Bedford Cox Inc., with offices in Bedford Hills, N.Y., and Greenwich, Conn., said that his clients should know about significant exposures when they hire domestic help. "It’s amazing how quickly a relationship can turn south when there is a dispute and money is involved," he said.
Cox pointed out that his agency uses a "risk analysis interview" to identify its clients’ exposures. Once the agency assesses the clients’ lifestyles and realizes that they have domestic employees or are planning to hire someone, the conversation switches to personal-line employment practices liability (EPL) coverage.
"Clients are bound by the employment rules and regulations of their state, so we work with them and the carrier to insure proper coverage," Cox said.
Liability
In today’s litigious society, inappropriate words from a guest to a housekeeper or a few seemingly innocent jokes can create a hostile work environment and ultimately cost a client thousands, if not millions, of dollars.
In today’s litigious society, inappropriate words from a guest to a housekeeper or a few seemingly innocent jokes can create a hostile work environment and ultimately cost a client thousands, if not millions, of dollars.
Moreover, homeowners are subject to wrongful employment allegations. According to reports from Jury Verdict Research, the median employment practices settlement for 1999-2005 was $75,000; this figure increased from the previous time period of 1997-2003, in which the settlement was $60,000. However, these settlements do not factor in the incalculable cost of a damaged reputation. Even if the allegations are false, substantial defense costs averaging more than $100,000 can result. Additionally, research has shown that juries have a tendency to be sympathetic to the plaintiff in these cases.
With today’s shrinking economy, some homeowners may decide they need to trim their domestic staff. Letting employees go may open homeowners to wrongful termination lawsuits. To help avoid a suit, a written agreement between homeowners and employees should contain an "employment at will" clause that allows termination without cause for any reason.
Employers’ Responsibilities:Even conduct among the residential staff creates exposure. Clients often lose sight of their responsibilities as employers because the household is seen as a safe and informal space and verbal contracts are often vague.
Wealthy individuals often think of domestic employees as "part of the family" instead of maintaining a traditional employer/employee relationship. However, state and federal employment laws do apply to these relationships. Homeowners place themselves at high risk if they do not manage their staff by communicating clear rules and expectations. In fact, with the assistance of qualified legal counsel, homeowners should draft employment manuals and contractual agreements.
Household employers need to clearly communicate their expectations and keep a well-organized and documented human resources file on every employee. An appropriate household management assessment can provide clients with advice on hiring, legal issues and security measures with regard to household employees. Proper background checks, well beyond simple Internet research, are recommended for anyone working in the home.
Homeowners also need to know that they cannot totally control the work environment. They can be held liable for conduct that might be perceived as obscene, discriminatory or offensive. Thus, homeowners should take steps to educate themselves and their families about their responsibilities toward domestic help. Staff members also need to be trained on proper work conduct.
Employment Practices Liability:EPL insurance can provide coverage for settlements, legal fees and jury awards for insured employers accused or convicted of wrongful employment acts. In addition, this insurance sometimes includes
overage that can help pay public relations expenses to minimize damage to the homeowner’s reputation.
Homeowners and umbrella policies exclude employment-related exposures. For the few insurance carriers that offer domestic EPL insurance, it may be offered as stand-alone or as an endorsement to a homeowners or excess liability policy.
Homeowners need to be aware of the many liability exposures that are associated with hiring domestic help. "Clients should not be afraid of the risks, but understand that these realities do exist," Cox said.
Clients of Jason Shroot & Diversified Insurance working closely to help their clients mitigate the risks and secure proper employment liability practices coverage in the event a loss does occur.
For More Information Please Contact
Jason @ 714-988-3325 or jason@diversifiedinsurancequotes.com or http://www.diversifiedinsurancequotes.com/
