Employment Practices Liability Insurance and the Hospitality Industry

There are distinct aspects of the hospitality industry that make companies in this sector more susceptible to employment related claims. Some of those characteristics include having a considerably higher proportion of minority employees in hotels and restaurants, as well as a higher proportion of single female employees, including 78% of restaurant wait staff.

Employment practices are one of the fastest growing areas of litigation for businesses both large and small. Many of these allegations come from both employees and candidates for hire, and can include everything from sexual harassment, racial discrimination, wrongful termination, wrongful discipline, and negligent evaluation.

In addition, individuals may also bring charges citing a failure to employ or promote, allowing a hostile work environment, breach of employment contract, and deprivation of career opportunity. Having a lengthy list of exposures points out the significance of having hospitality insurance that includes employment practices liability coverage.

Examining risks related to the hospitality industries

The cost of employment-related settlements and defense costs can be devastating to a business. Amendments to the Fair Labor Standards Act made not so long ago have made the filing of wage and hour lawsuits easier for complainants. Additionally, undocumented workers continue to be a liability for employers, especially with the U.S. Immigration and Customs Enforcement’s renewed efforts.

Add to this the fact that there are a higher proportion of younger employees in the industry and this can result in a greater frequency of claims under the Age Discrimination and Employment Act. Another part of the problem is that there is a vulnerability of the hospitality industry to market pressures, which can result in increased lay offs, coupled with the labor-intensive nature of most jobs in hotels and restaurants.

Things you can do to reduce exposures

With such high risk and costs associated with employment-related charges, businesses within the hospitality industry need to take a proactive approach in helping to mitigate their risks. This approach should include an adequate risk management plan.

Review current management and human resources policies and procedures to ensure that they are well defined and established. Employment procedures training for managers can also reduce the likelihood of an employment-related claim.

In addition, an employee manual should be in place and accessible to employees. This manual should include all corporate policies on relevant topics and include performance evaluations. Reducing risk, while not eliminating risk altogether, does help and only exemplifies the need for hospitality insurance that deals with employment practices liability concerns.

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