Know the Basics About Employment Practices Liability

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Like any business, your club has exposure to employment practices liability. Even in the most professional work environment, there are opportunities for an employee to become disgruntled with employment practices. Many times, the result is a lawsuit or administrative charge, so even a small, seemingly insignificant mistake by a manager can lead to significant financial losses for your club.

Here are examples of employment practices liability risk a club may encounter:

• A well-compensated personal trainer is replaced by a younger, lower-paid trainer and sues the club for age discrimination.
• A club manager who had recently received a raise is subsequently terminated for unsatisfactory performance following allegations of sexual harassment by several female employees and sues for wrongful termination.
• An employee who is passed over for a promotion, reassigned duties or reprimanded feels discriminated against and sues for discrimination.

Employers face increased financial risk of potentially violating evolving and complex employment laws such as the Americans with Disabilities Act, Civil Rights Act of 1964, Family and Medical Leave Act, and the Age Discrimination in Employment Act. Your directors, managers, supervisors and employees may not fully understand the ins and outs of these laws and may be unaware of new requirements, rulings and interpretations.

As the basis for employment practices lawsuits continues to evolve, so does your potential legal liability if found in violation of the law. While most lawsuits are filed against large corporations, your club is not immune. Large fitness organizations and small studios are equally at risk. Many gym owners think of their employees as family, but just one infringement of employment practices law can lead to allegations against your club.

Defending your club from any complaint filed with the Equal Employment Opportunity Commission can be costly. Jury awards can be large and continue to grow. Regardless of the outcome, the unbudgeted expense of defending your club may cause your club financial hardship.

Make sure your club has adequate insurance protection for financial loss due to employment practices liability. While other types of commercial insurance can protect your organization from outsiders’ claims, your club may require separate coverage for employment-related claims filed by your own employees.

*This loss control information is advisory only. The author assumes no responsibility for management or control of loss control activities. Not all exposures are identified in this article.

Jayson Scott has 14 years of experience as a commercial lines underwriter at The Cincinnati Insurance Company. Since 2014, he has supported Cincinnati’s growing Fitness, Sports & Recreation program, initially as the program’s dedicated specialist and now as national program director. For more information, contact Jay, Jayson_Scott@cinfin.com or 513-603-5885. Please visit www.cinfin.com/fitness-sports for more information.