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Why High Turnover Means High Employment Practices Risk

JANINE TRACY
HNI Director of People

who_needs_epli1_2Seeing high turnover in your organization?  While you are likely well aware of the costs involved with recruiting and onboarding a new employee, high turnover may also be exposing you employment practices liability that you may not have coverage for.

Why Turnover Leads to Risk

The two riskiest times when it comes to employment practices are hiring and parting ways.  This is when emotions often run high and where thoughts of litigation most often enter the equation.

Even if you think you’re being fair to all applicants, one of them might find something that leads them to believe that you didn’t offer them the job based on the race, gender, age, religion, or other protected attribute under Title VII of the Civil Rights Act of 1964.

Scrutiny on employers is higher now than it’s ever been. The EEOC and DOL have more investigators on the ground and additional funding backing them up – and in recent years, we’ve seen a record high level of complaints.

The Best Offense is a Good Defense

How can you manage your employment practices risk when hiring?  A few key best practices include:

  • Clear job descriptions and requirements for each role
  • Consistency in hiring processes
  • Documenting policies and procedures
  • Training managers on interviewing
  • Training on harassment and discrimination
  • Post-offer fitness for duty testing
  • Carrying employment practices liability insurance with appropriate limits

Claims brought against your company don’t have to be true to be costly, unfortunately.

Even if an employee's suit is completely unfounded or frivolous, you may still need to hire a lawyer, prepare your case, and spend time in arbitration or in court. For this reason, we recommend employment practices liability insurance for most companies, even those with rock solid HR policies and procedures.

Companies Who Need to Be Aware of this Risk

Some industries have naturally higher turnover rates than others – landscaping and construction, for example, see a great deal of seasonal fluctuation in their employee populations.  Transportation is wrestling with turnover and a shortage of drivers.

Within an industry, some companies have higher turnover rates than their peers.  Maybe your company is picky about who is a good fit for your organization, or maybe you have some employee retention issues that need to be addressed.

Want to learn more about your own risk and other factors that impact it?  Download our employment practices liability whitepaper to learn more about other considerations may apply to your business.

5 Signs You NEED Employment Practices Liability Insurance   [Free 5-page White Paper] 

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Topics: HR / Employee Benefits