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A company is small, under 30 employees. It has just two offices, the main office in Big City and a three-person satellite in Small Town.
As revenue grows, a fourth person is hired in Small Town. Three weeks later the new hire walks out of the Small Town office and does not return. The supervisor describes the situation as, “I was overheard complaining to a customer about a new hire’s mistakes, which was no doubt embarrassing.”
The following month, an Equal Employment Opportunity Commission (EEOC) notice arrives with a different story: the other three employees in the Small Town office were openly hostile, with offensive comments and jokes commonplace, nearly all of them at the expense of the new hire.
Somewhere between the supervisor’s version and the new hire’s account lies the truth. But sorting out the facts to get the truth will be difficult and expensive. The new hire hadn’t been there long enough to establish much of a personnel file, but the interview records will be sourced for details. All of the employees at Small Town at the home office will need to be deposed by attorneys.
Will the facts reveal a serious problem? Or will it be resolved easily?
Employment disputes are a risk all companies face, no matter their size.It may seem that a small company can keep an eye on everyone’s behavior, and would be nimble enough to effectively intervene when conflicts arise, but sometimes the conflicts arise so quickly that even the most conscientious companies aren’t able to avoid claims.
Employment Practices Liability insurance is available to help alleviate the costs of these unavoidable conflicts. Coverage is often broadly worded to protect companies not only from employee complaints, but also discrimination and harassment claims by customers or members of the general public. Beyond hostile workplace claims, coverage extends to failure to hire or promote, wrongful termination, whistle blower retaliation, and violations of Family Medical Leave Act regulations.