What Impact does #MeToo Have on Your Small Business?

What Impact does #MeToo Have on Your Small Business?

A message from our president, Tom Minkler

Over the last two years we have seen and read about high-profile examples of “managers behaving badly”. We’ve certainly seen it on the national stage in the form of sexual abuse by powerful male executives against female employees; film producer Harvey Weinstein, Fox News Host Bill O’Reilly, MSNBC political analyst Mark Halperin and Les Moonves, the chief executive of the CBS Corporation, just to site a few examples.

We have read about it locally and it’s happening to employers of all sizes across the nation. In some cases the payouts from these suits and settlements can be enormous, and the reputational damage that can result is devastating to an employer.

Of course, sexual harassment is not the only type of bad management behavior that can result in claims. Other areas include; race, disability, age, national origin, religion, color, etc.

According to the Equal Employment Opportunity Commission, the biggest source of claims in this space is retaliation. For example, a key employee is found to have harassed a subordinate and is disciplined. In turn, the key employee retaliates against the other party through a negative job action. This could include; pay reduction, demotion or unfair discipline, or even something more subtle.

Age discrimination has become another major topic. According to the U.S. Bureau of Labor Statistics (BLS), about 40% of people ages 55 and older were working or actively looking for work. According to Chubb Insurance; “the perception that the growing population of older employees is not dynamic, energetic, adaptable, tech savvy, or innovative can yield negative outcomes when acted upon by employers”. As a result, these types of employment claims may rise in the next several years.

How does it impact your bottom line?

Recent Hiscox research indicates that among small and mid-sized businesses; (500 employees or less) 1 in 10 businesses will be involved in an employee lawsuit. Among 1,214 closed claims reported by small and mid-sized businesses, 24% of employment charges resulted in defense and settlement costs averaging a total of $160,000. On average, those cases took 318 days to resolve. Of these cases, 76% resulted in no payment by the insurance company because the employer did not purchase Employment Practice Liability insurance (EPL), or purchased an inferior insurance policy.

This does not even take into consideration the dramatic psychological and physical impact such events have on your employees, as well as how they affect morale, longevity and your
overall reputation in the community.

What can you, as a small business, do to protect yourself?

  • Create a work environment that is free of employment discrimination, and all forms of harassment.
  • Put policies in place that state, in writing, what is not acceptable and what will happen to those who violate these rules.
  • Train your staff on how to avoid potential problems and give them the tools to avoid these issues.
  • Be consistent with how you treat all employees. There are no ‘favorites’ when it comes to employees in the workplace. Bad behavior is not allowed by anyone – period.
  • Obtain insurance to cover your business. Even if you do all of the above, you are still susceptible to an employee bringing action against the employer. You should strongly consider adding Employment Practices Liability insurance to your insurance program. This is a type of liability insurance covering wrongful acts arising from the employment process. It is not automatically covered in your other insurance policies.

Clark-Mortenson can help you with all of the five steps listed above. We provide training, ready-to-use procedure and policies and best practice information. Feel free to contact us for more information and upcoming seminar training dates or click here.

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