Employment litigation is at historical highs. The Equal Employment Opportunity Commission (EEOC) reports they received close to 100,000 discrimination claim charges during the 2011 fiscal year, the highest level in the commission’s history. The poor economic conditions and sustained layoffs, coupled with new laws and expansion of existing laws, are all likely to lead to an increase in claims filed in 2012.
With lawsuits on the rise, employers must do all they can to stay ahead of the employment curve and to make compliance with 2012 labor laws a priority in the new year. The challenge for small employers, however, is understanding and complying with the multitude of regulations that affect their business. Particularly in certain states, such as California, employment laws are overwhelming and can be significantly different than their federal counterparts.
Outsourcing Human Resources with a PEO
There is a solution! In a Professional Employer Organization (PEO) relationship, the business owner outsources human resources administration to the PEO and relies heavily upon the PEO firm to to stay abreast of changing laws and regulations. The PEO/HRO firm provides clear direction and support, assisting them in all areas of HR compliance. Typically, clients are assigned a Human Resources expert to personally help them understand the law, and how the law impacts their business and employment practices. HR consultants provide support in all of the following areas:
- Resolving employee complaints
- Fielding general inquiries
- Performing terminations
- Assisting in exit interviews
- Assisting with investigations
- Auditing employee files and records
- Conducting salary surveys
- Speaking confidentially with employees regarding complaints or grievances.
Studies show that businesses that offer an outlet for employees to speak to professionals not only experience a reduction in lawsuits, but also lower health insurance costs, turnover, and workplace injuries.
The PEO also assists businesses comply with HR forms, documents, and employee management. They review the client’s current Employee Handbook and Policy Manuals, and update it to enhance compliance with all mandatory state and federal guidelines. By taking a hands-on, proactive approach, clients enjoy increased protection against unnecessary and expensive employment litigation.
EPL Insurance
Finally, most PEOs offer Employment Practices Liability Insurance (EPLI). EPLI is a comprehensive insurance that provides protection to employers against a wide range of employment practices and is designed to cover certain claims and lawsuits brought by employees alleging wrongful termination, discrimination, unlawful harassment, and other related torts, including but not limited to:
• Discrimination • Wrongful employment decision or act • Comprehensive omnibus wording • Wrongful termination or demotion • Sexual and non-sexual harassment • Wrongful demotion • Assault and battery.
While companies have long recognized the value of General Liability or Errors and Omissions insurance, many now understand the importance of EPLI.
In short, a PEO relationship can help employers in all aspects of their employment compliance, significantly reducing the chance of being the victim of an employee lawsuit. Perhaps investigating how a PEO can help protect your business should also be a priority in 2012.

The first and most immediate strategy employers should employ as they look towards rebuilding their business in 2012 is reducing employment-related costs. As these costs continue to skyrocket, employers must review all human resources related expenses, including health insurance premiums, workers’ compensation costs, employment compliance, payroll/tax costs, salaries, and other overhead relating to employee administration.

