Protect Your Restaurant Against Employment Practices Liability Exposures

Like all companies, restaurants are vulnerable to claims brought by their employees, former employees or potential employees.

The cost of defending employment-related claims can be financially devastating. More and more privately owned companies are finding out the hard way just how complex the employment relationship has become.

Employers face a growing multitude of serious employment practices liability (EPL) exposures in their day-to-day interactions with employees. Restaurants and their managers are subject to a widening collection of federal, state, and local employment laws, such as the Americans with Disabilities Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, and Title VII of the Civil Rights Act of 1964, just to name a few. The Equal Employment Opportunity Commission (EEOC) is taking a much more aggressive stance in investigating EPL claims and filing lawsuits for sexual harassment, discrimination, wrongful termination, retaliatory treatment, unfair hiring practices, and other types of workplace torts.

A hostile work environment can be created in any way, by anybody, or by any means, if the employer does not address an employee complaint that the workplace is hostile. In addition, the hostile environment does not have to be created by the employer or even a co-worker. Title VII of the Civil Rights Act of 1964, requires an employer to prevent known sexual harassment created by other employees or customers, regardless of the status of the harasser. For example, the Equal Employment Opportunity Commission (EEOC) settled a class action lawsuit for $200,000 against a restaurant for permitting female servers to be sexually harassed by a customer, who allegedly frequently grabbed their breasts and buttocks, made frequent sexual innuendos.

The average number of charges filed with the EEOC from 1997 to 2013 was nearly 90,000 annually. The average verdict in EPL cases now exceeds $450,000, and employment issues now make up 30% of all civil litigations in the U.S.

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According to the Society for Human Resource Management:

Employers are more likely to have an employment claim than a property or general liability claim.

  • 67% of all employment cases that litigate result in judgment for the plaintiff.
  • 41% of all EPLI claims are brought against small employers with 15 to 100 employees.
  • The average amount paid for out of court settlement is $40,000.

There’s no question that EPL claims can have a serious financial impact on small to midsized companies. As an employer, you do everything you can to treat your employees fairly. Even if you do everything right and comply with all federal, state and local regulations, you can still be held liable for the actions of your employees, vendors or customers. You could also be the subject of a discrimination suit if someone you interview but fail to hire feels that he or she was treated unfairly.

Employment practices liability insurance (EPLI) can protect your business against claims made by potential hires, employees currently on your payroll and terminated employees. With EPLI coverage, your company is protected against claims of:

  • Wrongful termination
  • Employment-related emotional distress and invasion of privacy
  • Defamation
  • Retaliatory/constructive discharge
  • Sexual harassment and discrimination
  • Workplace torts such as slander

EPLI coverage generally includes the cost to defend against the charges plus any damages you are ordered to pay.

Employers are responsible for ensuring a harassment-free workplace for their employees, regardless if the harasser is a co-worker, manager or customer. However, claims do happen. Learn how EPLI can provide much-needed protection and peace of mind. Your insurance broker can answer your questions and recommend the coverage that is right for you.

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