A new survey indicates employers expect to see more employment-related claims within the next year, according QBE North America’s Employment Practices Liability Report.
The report, based on a survey of 200 legal and human resources professionals at organizations with annual revenues between $500 million and $5 billion, examines employment-related risks.
The survey found that in the past 12 months, 69 percent of legal and HR professionals reported their organization experienced claims made by employees alleging discrimination, harassment, retaliation, or other employment-related issues.
Forty-two percent of respondents expect the frequency of employment-related claims at their organization to increase over the next year.
Respondents surveyed believe wage, hour, and leave-related issues (55 percent); breach of employment contract (55 percent); use of artificial intelligence for HR purposes (51 percent); and workplace harassment and discrimination (51 percent) are areas that are most likely to lead to employment-related claims at their organizations in the next 12 months.
Strict state-level legislation on paid leave and enforcement of wage-and-hour laws pushed wage-related claims to the top concern, while the increased use of AI in hiring has raised new legal and ethical questions around bias, transparency, and compliance.
Diversity, equity, and inclusion programs are another area of focus, with 69 percent of respondents reporting they are concerned about related claims or litigation.
Return-to-work policies are also driving EPL claims.
The survey found that employment-related claims costs and litigation are having an impact.
According to those surveyed, the amount of time it typically takes to resolve an employment-related claim at their organization varies: three to six months (61 percent), less than three months (22 percent), six months to 12 months (17 percent), and 12 months or longer (1 percent).
Sixty-three percent of respondents believe financial costs are the most significant consequence of employment-related claims and litigation.
Other impacts include damage to reputation and brand, and loss of employee morale and productivity.
To mitigate potential claims and litigation, respondents identified opportunities for stronger employee education and training related to the use of artificial intelligence (AI) for HR purposes (54 percent), employee data privacy concerns (47 percent), and workplace harassment and discrimination (47 percent).
As hybrid work arrangements, regulations, and technologies like artificial intelligence continue to evolve, employers must balance workplace progress with protection,” said Mary Anne Mullin, senior vice president, EPL and Fiduciary Product Leader, QBE North America. “Many organizations are adjusting their risk strategies to address new vulnerabilities.”
Nearly three-quarters of those surveyed (72 percent) feel confident in their risk management practices as related to employment risk, and many organizations leverage EPL insurance as a key component of a broader risk management strategy, the survey found.
Among respondents who have EPL insurance, the most common value-added services included in their coverage are comprehensive risk management assessments (60 percent), employee training programs (60 percent), and support for managing workforce reductions or layoffs (59 percent).
Among respondents whose companies have EPL insurance, over the next 12 months, 60 percent plan to adjust deductibles or premiums, 57 percent intend to update coverage to reflect new legal requirements, and 51 percent plan to add coverage for specific risks.
Those surveyed who do not have EPL insurance cited the following reasons, including already having adequate coverage through other policies (60 percent), believing internal risk management efforts are sufficient (59 percent), and the perception that the level of risk does not justify purchasing EPL insurance (57 percent).
“Employers are being tested in new ways as exposures increase,” said Eden Stark, vice president, Financial Lines Claims, QBE North America. “Organizations should review their employment practices and risk management strategies to address new and emerging risks.”