Complaints over harassment, discrimination and retaliation have had a notable impact on the hospitality industry over the past several years.
The U.S. Equal Employment Opportunity Commission (EEOC) has continued to intensify its enforcement efforts, with 2022 marking a notable increase in employment discrimination lawsuits. As of 2023, the EEOC has reported a significant rise in the number of discrimination charges filed, reflecting its ongoing commitment to addressing workplace inequality.¹
Employment discrimination complaints can lead to substantial charges and penalties from the EEOC. In fiscal year 2022, U.S. employers paid over $506 million to individuals who alleged discrimination, demonstrating the financial impact of these claims.²
A history of employee complaints can also influence the cost and conditions of an organization’s employment practices liability insurance (EPLI). Premiums for EPLI are expected to continue rising, with an estimated increase of 10% to 20% in 2024.³
The hospitality industry, characterized by high turnover and demanding work environments, is particularly susceptible to EPLI claims. Addressing these issues has become crucial for the industry’s financial stability and operational success.⁴
Notably, the restaurant industry remains the sector with the highest volume of complaints. “Tight working conditions, late nights, alcohol prevalence, high turnover, tipping culture and stressful working conditions, all make hospitality especially vulnerable to EPLI claims.” said Amanda M. Fugazy, Head of the Labor & Employment Group and Co-Head of the Hospitality Practice Group at Ellenoff Grossman & Schole LLP.
“In an industry already financially stressed from razor thin margins, and inflationary forces, using best practices to curbing EPLI and other employment liability claims by using HR best practices has become essential.”
Best practices guard against rising employment liability claims in hospitality:
Following best practices is the most effective defense against costly EPLI claims and potential EEOC actions and fines. Here are four ways to prevent claims:
1. Open lines of communication. When communications break down, EPLI claims tend to mount. Employees need to know how to report inappropriate and discriminatory behavior and acts. When employees feel heard through a swift and thoughtful response to complaints, it lessens the likelihood of a future claim.
2. Formalize policies and procedures. Prohibitions against discrimination and harassment must be in writing and included i in an employee handbook. Ideally, policies should be revisited annually to reflect any legal and regulatory changes and must spell out workers’ rights and recourses. Important aspects of these policies include reporting protocols, which formalize how employees can lodge a complaint, report inappropriate behavior and the avenues to do so, as well as investigation procedures that detail who performs investigations, how they are conducted and when they are typically completed.
3. Document everything. Every employee complaint or request should be documented in writing. In the event of litigation, written policies and documentation are critical to the employer’s defense. Maintain a separate investigation file that includes all written correspondence and ensure verbal communications are summarized in emails to the employee. All investigations should include a written conclusion, whether the allegations had merit or not.
4. Training counts. Employees need clear instruction on what constitutes harassment, discrimination or retaliation; managers need training on handling complaints. Many states, including NY and California, require mandatory annual training. DC requires that trainers be certified.
Work with an experienced insurance advisor to learn more about how to prevent employee practices liability claims in the hospitality industry. Learn more at Hub International’s website.
1. U.S. Equal Employment Opportunity Commission. (2023). “EEOC Announces the Number of Charges Filed and the Total Benefits Secured for FY 2022.” Retrieved from EEOC.
2. U.S. Equal Employment Opportunity Commission. (2023). “EEOC Reports on Benefits Secured for Victims of Discrimination.” Retrieved from EEOC.
3. Gallagher. (2024). “Employment Practices Liability Insurance: Trends and Predictions.” Retrieved from Gallagher.
4. National Restaurant Association. (2024). “Impact of EPLI and Liability Claims on the Hospitality Industry.” Retrieved from National Restaurant Association.
