Six Employment Practices Statutes You Should Be Aware of as a Business Owner

If you’re a small business owner, chances are you don’t have the luxury of your own Human Resources department to oversee employment law compliance or employee relations and communication. You probably have your hands tied in many other areas just trying to make it through each day. To make your job more difficult, state and federal bureaucracies throw lists of employment statutes at you that you must comply with or run the risk of getting sued. Among the long list, the following statutes are some of the more noteworthy ones, but certainly not the only to be concerned about:

1. Title VII of Civil Rights Act of 1964 (Title VII): This statute is a common source of employment litigation. This Federal statute makes it unlawful for an employer to refuse to hire or terminate any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of race, color, religion, sex, including sexual harassment, national origin, and pregnancy, childbirth, or related medical conditions.
2. Equal Pay Act: This act deals specifically with unlawful differentials in compensation based on sex. The Equal Pay Act makes it unlawful to pay employees at rates less than the rate applicable to employees of the opposite sex for equal work for jobs requiring equal skill, equal effort, equal responsibility, and where the work is performed in similar working conditions.
3. Americans with Disability Act (ADA): The ADA prohibits discrimination on the basis of disability against a qualified prospective or current employee, defined as an individual with a disability who, with or without reasonable accommodations can perform his or her essential duties of the employment position for which the person desires or holds. Many states also have statutes that place additional requirements upon employers.
4. Age Discrimination in Employment Act (ADEA): The ADEA applies to employees who are age 40 or over and makes it unlawful for an employer to fail or refuse to hire or terminate any employee or otherwise discriminate against any individual with respect to his or her compensation, terms, conditions, or privileges of employment because of their age. Many states apply ADEA to all ages prohibiting age discrimination of any kind.
5. Fair Labor Standards Act (FLSA): The FLSA sets the minimum wage and maximum hour/overtime requirements. The Wage and Hour Division of the Department of Labor manages the administration of the FLSA.
6. Family Medical Leave Act (FMLA): The FMLA offers certain employees with up to 12 weeks of unpaid, job protected leave a year, and requires health benefits to be maintained during leave as if the employee continued to work instead of taking the leave. This statute is the responsibility of the Department of Labor (DOL).

As a business owner, how do you feel when you read these? Content and compliant? Or disturbed? What if a lawsuit was brought against your business tomorrow for wrongful termination or emotional distress, among other things? You probably wouldn’t feel as bothered if you knew you had an Employment Practices Liability Insurance policy in force to protect your business.

As I’ve written on prior posts, Employment Practices Liability Insurance provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. Employment Practices Liability Insurance (EPLI) is needed by any business with employees and those which begin to hire employees. EPL claims are not limited to major corporations. In today’s litigious climate, employers of all sizes are vulnerable. In fact, six out of ten employers have faced employee lawsuits within the last five years.

The cost of employment practices liability coverage depends on your type of business, the number of employees you have, and various risk factors such as prior claims or loss history. Your insurance agent can provide a quote with very minimal information, often right on the spot. If you don’t have a policy in force now, you must consider calling your insurance agent right away to discuss. This might be your best alternative to not having your own HR department or HR director.

-JK