Employment-Related Lawsuits Do Not Discriminate


The hiring, disciplining and terminating process can bring high-risk exposures for employers. Restaurant and food service companies of any size are vulnerable to claims brought by their current, former and even potential employees. These lawsuits can be extremely costly and draining. Luckily, there is insurance coverage available to defend against the damages that the restaurateur is scheduled to pay and steps your restaurant can take to help prevent these lawsuits in the first place.

Employment Practices Liability Insurance (EPLI) can protect your restaurant against claims such as wrongful termination, sexual harassment and discrimination made by potential hires, employees currently on your payroll and terminated employees.

Gaining an awareness of the different types of employee claims and having objective company policies and procedures in place are key. Some of the most common emerging Employment Practices Liability (EPL) claims include: fair pay, wage theft, worker classification, gender identity and restroom access and effective compensation.  Protecting your business from risks begins with understanding how to spot a potential claim, avoiding common pitfalls and creating formal policies and procedures as a first line of defense.

Fair Pay

The Federal Equal Pay Act has tried to abolish wage disparity based on sex since 1963. Employers looking to avoid liability related to fair pay must be proactive and self-audit. Questions to ask to ensure you’re compliant with the Fair Pay Act include:

  • Do you have up to date job descriptions on the books, including established criteria for assigning values?
  • Do you assign consistent compensation to similar jobs performed by individuals with similar skill, experience and responsibility?

Wage Theft

Common wage theft violations include: forcing employees to work “off the books,” not providing constant meal and rest breaks, failure to pay overtime, and stolen tips. In any given week, two-thirds of low-wage workers experience at least one pay-related violation. Just this past July, one of several lawsuits accusing McDonald’s of unfair pay practices has been granted federal class-action status. The alleged violations include misrecording of timecards to reduce pay, unpaid overtime, failure to pay the minimum wage and failure to pay wages owed to employees who quit or were fired.

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The most effective way to avoid wage theft is to write clear and consistent policies and train managers and supervisors on compliance with them.

Worker Classification

When determining independent contractor status, the question lies in the control of the individual by the hiring operation. Even where the control isn’t exercised, workers can be deemed employees. The best way to avoid worker’s classification (WC) contests is to be proactive. Review federal economic reality and state labor tests as well as IRS tests for classifying workers. Then ask:, “are we classifying workers performing similar tasks consistently?” Performing misclassification audits on a monthly or quarterly basis is another way to ensure consistency.

Gender Identity and Restroom Access

This potential lawsuit exposure is increasing as it is becoming more highlighted by the media in recent times. In  order to avoid restricting employees from the use of restrooms that are not consistent with their gender identity, or segregating them from other workers when it comes to workplace restroom access, OSHA suggests the following:

  • Employees should be permitted to use the restroom associated with their gender identity.
  • Transgender employees should not be segregated from other workers by requiring them to use a gender neutral restroom.
  • Don’t ask employees to provide medical or legal documentation of their gender identity in order to access gender appropriate facilities.
  • As a best practice, OSHA suggests businesses provide additional options, including single and multiple occupancy, gender neutral facilities with lockable stalls.

Navigating EPL risks to avoid potential claims is more critical than ever in today’s volatile workplace environment. Staying on top of current EPL trends will help your restaurant maintain compliance and protect your company’s reputation and revenue.  Speak to your insurance broker about EPLI coverage for your restaurant and a review of your current workplace procedures.

Robert Fiorito serves as Vice President, HUB International Northeast., where he specializes in providing insurance brokerage services to the restaurant industry. As a 20-year veteran and former restaurateur himself, Bob has worked with a wide array of restaurant and food service businesses, ranging from fast-food chains to upscale, “white tablecloth” dining establishments. For more information, please visit www.hubfiorito.com. For more information on HUB’s Employee Benefits practice, please visit www.hubemployeebenefits.com