HOW TO KEEP FROM GETTING SUED – BY AN EMPLOYEE?

I have some bad news for us as club owners. The next claim or lawsuit you will experience will very likely come from your own employee. The new hot issue for attorneys this year is “employment” related law. Now for the really bad news; your workers compensation and liability insurance probably won’t protect you.

If you have read any of my previous articles, you already know that I am not a big fan of the American Bar Association. Litigation in this country is running rampant and too many people have adopted the battle cry, “It’s not my fault”. Whether it involves a member who falls on a treadmill, or an aerobics instructor who has been “released” because of frequent tardiness, we are forced to deal with the backlash of these individuals who refuse to admit accountability. Our liability insurance policy is designed to protect us from the member suing us, but we are wide open to litigation involving an employee. If you don’t think that it could ever happen to you, think again. All it takes is one disgruntled employee to ruin your day. The insurance industry has reported the number of lawsuits filed against employers for employment related grievances has doubled every year for the past four years and there is nothing to suggest that the trend won’t continue.

Most of the claims brought against the employer involve sexual harassment. It has become a serious enough problem that the Courts have now made it mandatory for employers to maintain a written policy regarding sexual harassment and discrimination in the workplace. How many of you have Anti Sexual Harassment and Anti Discrimination Guidelines? How many of you have an Employee Manual? By the way, the Supreme Court has also upheld the doctrine that the employer is held accountable for the actions of their employees. In other words, if you have a manager or trainer who tends to be a little too “friendly” with certain aerobics instructors, you could be held liable for that pervert employee’s actions.

Wrongful termination, discrimination, invasion of privacy, and sexual harassment all fall under the category of Employment Practices Liability. Up until a few years ago, most business owners never worried about this exposure and even today, the vast majority of club owners don’t understand the ramifications of what an employment related lawsuit can do to their business. Frequently, these lawsuits are accompanied by a complaint filed with the Equal Employment Opportunity Commission (EEOC). This bureaucratic agency tends to take the attitude that you are guilty until proven innocent. They are not pleasant to deal with. Needless to say, employment related litigation can be costly, time consuming, and emotionally draining.

There are two steps that we can take to address this problem. The first and most important step would be to develop or purchase an Employee Manual. The manual should outline what is expected of your employees and address your anti discrimination and anti sexual harassment policies. Once you have an employee manual, make certain that all employees have access to it and be prepared to follow your rules and employment related procedures to the letter. The underlying theme of a good employee manual should emphasize the basics of our society; “All men (and women) are created equal.” Treat everyone the same and practice zero tolerance regarding any form of harassment. Here is a little hint; don’t date your staff.

Now that you have an employee manual and have established good controls with your staff, you should consider purchasing Employment Practices Liability Insurance (EPLI). EPLI is a separate distinct policy that is designed to protect the club owner from employee litigation and damages associated with discrimination, sexual harassment, and wrongful termination. Premiums are based on past employment related claims, number of employees and what part of the United States you are located in. A typical 15,000 square foot club with 5 full time and 35 part time employees can expect to pay about $2,000 a year for $500,000 of coverage with a $2,500 deductible.

All in all, the health club industry needs to take this issue very seriously. Business is tough enough without the added distraction of dealing with the EEOC and your ex-employee’s attorney. Take the time to re-evaluate your management procedures and update your employee manual then contact your insurance agent to get a quote.