Education
October 21, 2024
3 Employment Practices Liability Trends to Watch in 2025
As employment laws, regulations, and norms evolve, employers of all sizes constantly encounter new risks and challenges. What’s more, as a rental property owner, your risk exposure is even greater, since many of these developments can also impact your tenant relationships.
Millers Mutual is committed to helping you navigate these complexities and protect your rental business from financial losses stemming from lawsuits, penalties, or reputational damage.
In this article, we’ll cover three key trends in employment practices liability that are important to understand and follow in 2025 and beyond.
1. Artificial Intelligence
As AI has rapidly transformed from a niche technology to a standard workplace tool, it’s increasingly being used to screen applicants. Whether you’re evaluating job candidates or prospective tenants, AI can help you streamline the process – but it can also inadvertently introduce bias.
In 2023, the Equal Employment Opportunity Commission (EEOC) settled its first AI-related lawsuit. The employer had used AI software that automatically rejected older job applicants, in violation of the Age Discrimination in Employment Act of 1967. The settlement included over $300,000 in compensatory damages to rejected applicants.
In the wake of that case, many states and municipalities have enacted laws regulating AI in HR, and the Department of Housing and Urban Development (HUD) has issued guidance regarding the use of AI in vetting renters. It’s a good bet that 2025 will bring more laws and regulations along these lines, as well as more hefty judgments against companies that fail to audit their AI tools for bias and implement proper human oversight.
2. Pay Transparency
Ever since the passage of the National Labor Relations Act of 1935, U.S. workers have enjoyed the legal right to discuss their compensation with coworkers, labor organizations, and the public. However, the broader issue of pay transparency has only recently gained momentum.
In 2019, Colorado passed the nation’s first law requiring employers to disclose compensation and benefits in job postings. Since then, dozens of states and municipalities have followed suit, and dozens more bills are under consideration. Many of these statutes apply to businesses with as few as one employee.
Meanwhile, the push for greater transparency in money matters has also reached the rental housing sector. The Biden-Harris administration recently announced a crackdown on “junk fees,” and several states now require landlords to disclose all charges and deposits in their listings.
In 2025, we can expect to see more legislative action around the principle of transparency, along with an increase in claims against businesses whose practices are viewed as inequitable or lacking in accountability.
3. Sexual Harassment Prevention
Every good landlord wants to cultivate a safe and respectful environment for employees and tenants alike. However, good intentions aren’t always good enough when it comes to avoiding sexual harassment or gender-based discrimination claims.
Discouragingly, a 2024 McKinsey & Company study shows sexual harassment in the workplace remains as prevalent as it was at the dawn of the #MeToo movement in 2018. What has shifted, in many cases, is an employer’s duty to prevent and respond to such incidents.
Since 2018, many states, including Delaware and Virginia, have passed legislation requiring employers to develop anti-harassment policies and provide anti-harassment training to employees. In just the last year, we’ve seen further expansion of claimants’ rights, including increased statutes of limitation and bans on nondisclosure agreements (NDAs) that prevent employees from discussing hostile work environments.
Another noteworthy trend is the extension of “employee” protections to contractors, vendors, and other parties, as the District of Columbia accomplished in 2022.
As we move into 2025, it’s important to keep an eye on new laws and regulations to make sure your business stays compliant and protected from potential liability. These ongoing reforms, along with the U.S. Department of Justice’s new Sexual Harassment in Housing Initiative, highlight the importance of implementing robust anti-harassment policies and having the right insurance coverage in place.
Are You Covered?
Whether you’re an enterprise of one or running a real estate empire, it’s vital to stay informed about the latest developments in employment and landlord-tenant law, consult with experienced legal professionals, and enforcing sound policies to proactively defend against costly disputes. But even the most diligent and well-intentioned landlord can face legal action, and even groundless claims can threaten your financial stability and public image.
That’s why Millers Mutual offers Employment Practices Liability Insurance (EPLI) with automatic third-party coverage. That means you can secure up to $1 million in protection from claims made by employees, contractors, vendors, and tenants. Plus, our EPLI policyholders get access to free risk-management resources, including a legal advice helpline, training materials, and employee handbook templates.
To learn more, call one of our dedicated Underwriting Leaders: Coleen Craig at (717) 585-8457 or Derek Shaffer at (717) 237-7244.
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