Reducing Private Company Exposure to Employee Claims Brought Against Directors and Officers

Directors and Officers for Private Companies

Liability lawsuits brought by a diverse group of claimants against directors and officers are on the rise for both public and private corporations. The most important areas of exposure are from shareholder actions and lawsuits brought by employees for employment related practices. The results of a 2013 survey reported by the Insurance Institute of Information show that over 60 percent of claims filed under D&O policies came from these two areas. Although your Directors and Officers for Private Companies provides coverage for this type of litigation, jury verdicts and penalties are increasing. Fortunately, there are additional steps that your company can take to reduce its exposure.

Common Types of Employment-Related Practice Claims

Some of the most common type of claims brought by employees are:

  • Workplace or sexual harassment
  • Discrimination
  • Whistleblower
  • Wrongful termination or demotion

Reducing Exposure to Claims Brought by Employees

At a minimum, companies should tighten their internal procedures by instituting the following steps:

  1. Adequately train HR personnel
  2. Hold seminars for management on topics of concern in the workplace such as sexual harassment or discrimination
  3. Provide a written employee handbook to all employees

It is also important to keep the employee handbook updated in order to be in compliance with local and government regulations.

By tightening up internal control procedures and making sure that all management staff is adequately trained and kept informed of changes, you can likely avoid a lot of employee-related claims, while ensuring that your Directors and Officers for Private Companies premium costs are contained.


photo credit: Boston (license)
This post was written by , posted on February 25, 2015 Wednesday at 5:30 pm