Employment practices liability insurance is changing and responding well to this evolving workplace environment, but there are challenges ahead for both employers and their insurance carriers. Let's look at some of the factors that are bringing new risks and responsibilities to business owners.

Uncertainty over federal employment policies

With the election of November 2016, political observers suggest that President Donald Trump is more "employer friendly" than past administrations. So far we know the President has called for less government regulation, and will likely look closely at minimum wage requirements.

In the future, immigration requirements might include the use of a nationwide e-verify system for guest workers.

There also could be changes in the enforcement practices of the Occupational Safety and Health Administration (OSHA) and Equal Employment Opportunity Commission (EEOC).

Related: 4 diversity challenges stifling insurance innovation

States take the lead in workplace regulation

Although federal policies are still important to employers, the strengthening of state employment laws and enforcement efforts have become the dominant force in the workplace. State laws are often broader than federal laws and we have seen dramatic changes in workplace enforcement over the past several years as the states shape employment regulations in the United States.

Some of the employment issues the states are focusing on include:

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      • Paid leave and family leave. Several states are expanding leave programs, which can directly impact smaller employers with limited staffing options and limited resources.
      • Equal pay. States are focusing more on equal pay, highlighting the need for gender and sex equality within the workplace.
      • Overtime rules and overtime pay. States are strengthening overtime regulations, whether by mandating minimum wage pay or setting overtime rules.
      • Background checks. States continue to ban criminal history questions on employment applications. As a result, the questions are asked later in the interview process in order to give candidates a better opportunity at obtaining the position.

Employment law is increasingly "local"

The recent interactions between the states and the federal government around major policy issues such as pollution controls and the Paris Agreement on climate change illustrate a clear path for state laws in the future — that regardless of federal law, the individual states are going to do what they feel is in the best interests of their citizens.

Often, in the case of employment law, that means enacting state regulations that are much more employee friendly than employer focused, with broad reach into new and emerging causes of loss that employers may not fully grasp. Employment law is also becoming increasingly "local" and the impact of city or county regulations on businesses should not be overlooked.

The landscape for employers and insurers is changing rapidly, driven in part by significant shifts in claim activity. (Photo: Fotolia)

The country is changing, so are the exposures

Even as longstanding types of complaints such as sexual harassment are still prevalent, newer categories like bullying are expanding. LBGT-based (lesbian, bisexual, gay and transgender) discrimination claims increased 118 percent from 2013. Color-based discrimination charges have risen 9.5 percent from 2015 and 190 percent from 2006.

Related: 4 steps businesses can take to be inclusive of transgender employees

Another developing exposure for employers is website accessibility. If you have a website, you should be thinking about accessibility guidelines, since an increasing number of demand letters have been sent to businesses by plaintiff attorneys and advocacy groups. They claim some websites are not accessible to individuals with disabilities, consumers with hearing or visual limitations for example, so they can't access the site and conduct business like other customers.

Title III of the Americans with Disabilities Act provides for equal access for persons with disabilities in places of public accommodation. Yet, the ADA was signed into law in 1990, a year before the World Wide Web became available to the public. Claim activity has picked up over the issue and it could create uncertainty for businesses and other employers because of the lack of clear guidance from the ADA or the U.S. Department of Justice.

The right tools to embrace today's workforce

Employers, risk managers, insurance agents, insurance carriers need to be well versed in changing state and federal employment laws. Business owners should talk to their agent or broker to make sure they have appropriate protection with employment practices liability insurance. That coverage should include robust loss prevention services, legal expertise, and other best practices to help prevent and defend against employment-related claims and lawsuits.

With the right mix of company standards, employee training, and workplace safeguards, our strong, diverse workforce and hard-work ethic can be embraced and encouraged. Employment practices liability insurance can help provide the proper risk management tools to navigate the confusion and uncertainty around our changing workforce and evolving employment laws. 

Todd Cincotta is vice president, strategic products, at The Hartford Steam Boiler Inspection and Insurance Company. He can be reached by sending email to [email protected].

The opinions expressed here are the writer's own.

See also:

Diversity in insurance: beyond the quotas

Hiring and firing practices can help protect employees from workplace violence