What You Need to Know
- Rise in discrimination, sexual harassment claim means firms need to understand laws.
- Financial service firms have a higher risk due to possible workplace inequalities.
- Insurance companies can provide education materials and provide guidance.
Employers today face a myriad of employment-related liability exposures, the most prevalent arising from heightened awareness to issues of diversity, inclusion and, more recently, equity among peers.
Last year’s social unrest signaled a politicized culture shift, increasing the potential for employers to face allegations of discrimination and retaliation in the workplace.
Employee assertions of such claims already were rising, however, as the predominance of retaliation and discrimination lawsuits against employers has increased annually over the past decade.
Discrimination accusations can be based on gender, sexual orientation/gender identity, race, religion and disability among other factors. Any charge of inequity or intolerance against an employer can fall within this broad-based category.
Retaliation claims occur when an employee believes he/she has been punished by his/her employer for participating in legally protected activity, such as reporting concerns of discrimination in the workplace.
Equally important, pregnancy and family leave issues interpreted under the discrimination and retaliation umbrella have been escalating more than traditional liability exposures.
The Equal Employment Opportunity Commission’s (EEOC’s) fiscal year 2020 statistics, ending Sept. 30, 2020, reflected the agency filing of 93 merit lawsuits relating to discrimination, a decrease from 144 such suits in the full year of 2019. Primary areas of discrimination were related to sexual orientation, disability and retaliation.
Although cases declined in 2020, the EEOC’s Annual Performance Report revealed a dramatic upsurge in monetary recoveries, increasing from approximately $29.1 million in 2019 to $106 million – the highest annual recovery dollar amount since 2004.
An Employment Practices Liability (EPL) claim can include more than one allegation, such as when an employee asserts that retaliation was directly tied to an act of discrimination. EEOC annual statistics show that lawsuit retaliation complaints for all applicable statutes increased from approximately 27% of cases filed in 2000 to more than 53.8% of all cases in 2019.
No employer is immune. Two top complaints related to claims in the financial services industry have to do with maternity/family leave and discrimination.
Financial Services Firms Have Higher Risk
Unfortunately, financial services companies, asset managers and wealth management firms face greater risk of significant monetary loss from employee claims of workplace inequalities. An employee allegation of discrimination seeking pay parity and/or equality due to promotion disparities can lead to outsized demands, reflecting salary levels of wage earners within the sector.