Employment Practices Liability Claims
Employment Practices Liability Claims: A Real Case and What It Means for Employers
Most of the time, employment practices liability claims develop in ways that are not always immediately visible. This is more likely to happen when expectations around roles, promotions, and workplace decisions are not clearly aligned.
The example discussed in this blog highlights how employment practices liability claims can arise from a combination of communication gaps, employment decisions, and legal exposure.
A Real Employment Practices Liability Claim
This case revolves around a female attorney who accepted a new position at a law firm after being given assurances of a future promotion to partner.
Shortly after joining the firm, the expected promotion did not occur. Instead, the position was given to younger male attorneys. The promised attorney was later terminated, with the firm citing performance concerns.
What followed was a lawsuit including multiple allegations, including:
- Breach of contract
- Gender discrimination
- Age discrimination
- Fraud
- Wrongful termination
Ultimately, the case resulted in a settlement of $150,000, with defense costs exceeding $85,000.
Understanding Employment Practices Liability Claims
The case above reflects how employment practices liability claims are mostly not based on a single issue, but a combination of factors.
When expectations differ between an employer and an employee, situations involving hiring decisions, promotions, and termination can escalate rapidly.
Even if a case does not go to trial, the legal costs alone can be significant. As seen, the case discussed had its defense costs exceed $85,000, which was additional to the settlement amount.
Where Risk Often Develops
Looking at this scenario, several common risk areas can be identified:
- Verbal assurances or informal promises regarding promotions
- Perceived inconsistencies in hiring or promotion decisions
- Termination decisions that may be challenged after the fact
- Lack of clear documentation around performance concerns
While these situations do not seem high-risk, when reviewed under a legal context, they can become complex.
How Employers Can Reduce Risk
Situations like these can happen to anyone and are inevitable; however, there are steps organizations can take to reduce the likelihood of similar employee practices liability claims. This includes:
- Document key decisions clearly
Ensure hiring, promotion, and termination decisions are supported by written documentation.
- Avoid informal assurances
Be cautious when discussing future roles or promotions unless they are formally defined.
- Maintain consistent processes
Apply the same criteria when evaluating employees for promotions or performance actions.
- Provide clear performance feedback
Regular, documented feedback helps reduce misunderstandings.
What to Do If a Situation Escalates
If you notice a developing dispute, early actions can make a meaningful difference:
- Involve legal counsel as early as possible
- Review all documentation and communication
- Avoid reactive decisions without proper evaluation
- Work with advisors to understand potential exposure
Final Thoughts
Employment decisions carry both operational and legal implications. To gain clarity and become better prepared, it is crucial for organizations to deeply understand how employment practices liability claims develop.
