The Top 5 Reasons Employees File EPL and Workers’ Compensation Claims—and What Your Company Can Do To Avoid Them

In today’s increasingly litigious society, it’s not uncommon for companies to face Employment Practices Liability (EPL) and Workers’ Compensation claims that often lead to costly lawsuits and harsh legal damages.

In some cases, these types of claims aren’t directly related to one isolated incident. They may be the compounded result of an employee that doesn’t feel valued or has issue with the organization, and is willing to pursue the claim as far as they can take it. It’s an unfortunate reality, though not uncommon.

There are many proactive steps that business owners can take to monitor these situations and make an effort to intervene before they boil over and create a much bigger issue than initially reported.

Here are five of the top reasons why employees file EPL and Workers’ Compensation claims and the steps you can take to address them:

1) Employee is Fearful of Downsizing

In the event that an employee is worried about the financial condition of the company, along with his/her employment security, sometimes employees will report an injury that sometimes is legitimate, along with filing a complaint with the company for harassment, or discrimination. Most times these claims are dealt with simultaneously although the carriers rarely, if ever, compare notes to see if there are any commonalities.

Best Approach: It’s important for employers to be transparent with their employees about the financial condition of their company, and if downsizing is going to happen, offer solutions to employees that could be affected far in advance by offering to help them find their next opportunity. This will greatly reduce the ill will and deception that employees feel, and will help you avoid this scenario.

2) Underperforming Employee has Been Notified that a Change is Eminent

Often times, employees that are either in their probationary period, or have had a series of performance concerns, find themselves looking for a way to get financial relief from their employer. Unfortunately, most of the time deception is involved, it’s very hard—given the current employment law environment—to prove.

Best approach: When an employee is underperforming in his/her probationary period or after, the reasons should be identified and communicated to the employee as soon as possible. If the employee is truly not suited for the job, you should clearly communicate that the position he/she is in may not be a fit, and that you may have another department they could thrive in. Most times, communication by supervisory staff is what tends to miss the mark, or is non-existent.

3) Employee is Upset with the Company/Environment Created by His or Her Teammates

There are times when the very business climate in which an employee works creates hostility that can lead not only to conditions that foster an EPL claim, but also a health condition which needs to be addressed by the Workers’ Compensation carrier. While these typically share clear lines of their origin, they need to be addressed as this is one of the few examples where employers can have a positive impact by proactive management.

Best Approach: Hostile work environments start from the top, and the only way to change this is to change the way you lead. Coming from an environment where the leader chose to lead by fear and manipulation, it’s hard to voice this to your team as there’s not much of a solution if the leader is the source. Sometimes it will take a wholesale approach to your company’s direction that involves a shake up at the top, but in the end, it’s what’s best for the company and will send a very strong message of your commitment to improve the environment they work in.

4) The employee doesn’t feel appreciated and has been passed over for promotions

An employee that feels underappreciated will eventually have the attitude that leads to a workplace injury, or EPL claim. The current legal climate, combined with the pro -employee tendency, has become a hotbed of claim activity that causes Workers’ Compensation claims to inflate greatly (from the lost time standpoint) and the allegations of wrongful treatment from the employment side. Added to this is the aggressive nature of attorneys that are seeking to form classes which add costs, and financially devastating outcomes for employers.

Best Approach: Underappreciated employees will typically isolate themselves, find co-workers to vent with, and become more and more detached from the team, it’s the management’s job to identify those teammates that are struggling to feel appreciated, and find ways to express the company’s thanks to that employee. It’s our job as leaders to provide kudos to our employees—it not only shows our trust, but also demonstrates our appreciation.

5) Employee Knows He or She is Going to be Terminated and Acts Preemptively

When employees have been counseled, coached, been given multiple written reviews and feedback, and find themselves facing the likely scenario of termination, some will choose to have a workplace accident, and combine that with the allegation of harassment or wrongful termination. Most will commonly  reference a hostile workplace and being targeted based on their race, sex, etc.

Best Approach: This could a be a situation where the employee simply wants to make a financial gain at the expense of the company. Sadly, there’s no preventive action you can take to combat true criminal, or fraudulent behavior. These individuals sometimes will have a track record of similar behavior, so look for short tenures at prior employers, gaps in service, etc. when interviewing candidates.

If you have any questions about this topic or you would like to learn more about how you can protect your business from these times of claims, please feel free to contact me.


Hugh Scott

About Hugh Scott

Hugh Scott has over 20 years of experience insuring hundreds of multi-state, multi-location franchised and non-franchised restaurants across the United States and Canada. As Sr. Vice President with Bolton’s Restaurant practice, Hugh helps clients in this ever-evolving industry review, develop and strategize insurance programs that serve their individual business needs and objectives.

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